Friday, March 8, 2013

Blokes still rule boardrooms, major super fund warns

By business editor Peter Ryan

A report out today shows the majority of Australia's listed companies now have policies to get more women into top corporate roles, but so far they have only managed to generate one woman for every six men in the country's top 200 boardrooms.

Accounting firm KPMG analysed 600 companies and found that almost all have a gender diversity policy in place or plan to introduce one.

ASX corporate governance guidelines on diversity are not mandatory, and the Australian Council of Superannuation Investors (ACSI) says the situation remains unacceptable.

As the world marks International Women's Day, the council is warning that quotas might be needed to get more balance in boardrooms.

ACSI president Gerard Noonan told AM that corporate Australia's commitment to diversity is disappointing given moves in Europe for 40 per cent female representation at the board level.

"Over the past year there has been some improvement, but it's pretty disappointing as an outcome because the top 200 companies in Australia, just over 15 per cent are women so that's up from 14 per cent last year," Mr Noonan said.

"At the same time at least two-thirds have less than two women on their boards and none has a majority. Even, oddly enough, in the health sector, where you've got an overwhelming majority of women working, it's still under 10 per cent."

The criticisms come as the ASX Group chose International Women's Day to release its diversity report which shows 196, or 99 per cent, of ASX 200 companies have adopted a diversity policy or explained why one is not in place.

However, Gerard Noonan says having a policy in the system or on a shelf is not good enough, and does not mean more women are getting into boardrooms.

"Look, it's a good thing to have a policy of that sort and we applaud that but in 2010 ASCI announced a benchmark of all companies in the ASX 200, that's the 200 biggest companies, having at least two women on their boards by 2014," he said.

"But at this rate, it's a very, very slow change. It'll be another decade before we get there let alone 2014."

ACSI's audit shows that an additional 24 women were appointed over the past year, meaning the target to have at two women on every ASX 200 board by 2014 will not be met.

"Men hold over 1,000 more board positions than women. In Australia there's about 1,250 men in the top 200 companies compared with about 230 women. So we've got a long way to go," Mr Noonan said.

ACSI has pointed to a report by European bank Credit Suisse showing the greater diversity resulted in higher average returns on equity, lower debt and better average growth over the course of the last six years.

AUDIO: Blokes still rule boardrooms, super fund warn

Mr Noonan warns that unless companies put diversity policies into action, it could call for regulatory intervention to mandate quotas.

"We say that if companies can't adapt to meet that 2014 benchmark without good reason - and it's a pretty modest benchmark - we may need to consider recommending that our members vote against re-election of incumbent boards if it comes to that," he cautioned.

"It'll be very difficult for us as a shareholder organisation not to consider calling at least for some regulatory intervention to see whether that can improve."

Topics: business-economics-and-finance, corporate-governance, management, women, australia

First posted 10 hours 5 minutes ago

Thursday, March 7, 2013

Business lobby urges carbon tax compromise

By Business editor Peter Ryan

A major business lobby group is proposing a compromise solution to the political impasse over the carbon tax.

The Australian Industry Group says the fixed carbon price should be scrapped in favour of an immediate switch to an emissions trading scheme, with the price floated.

The group says that is a more practical alternative to the current carbon pricing model, as it will be difficult for the Coalition to unpick the tax if it wins government.

Listen to my interview with Innes Willox broadcast on this morning's edition of AM.

"We have to start with the reality here that both major political parties have said that they want to achieve a 5 per cent emissions reduction cut by 2020. Both parties are locked into that, the question is how they get there," explained the industry group's chief executive Innes Willox.

"So what we've proposed today is that we drop the carbon tax immediately - it's a dead weight cost on business at the moment - and move to an internationally linked emissions trading scheme which we're due to do in mid-2015 in any case."

Mr Willox says an immediate move to emissions trading could still be a prelude to removing carbon pricing altogether if the Coalition wins a majority in both houses of Parliament at the next election.

"The issue here is the axing of the tax, how would that occur, how long would it take, what cost would business have to incur in the meantime," he said.

"What we're proposing here is what we think are quite sensible strategies for all parties to reduce the cost on business while they work through to the next step."

Mr Willox says business would be very happy to consult with the Coalition on its direct action policies on carbon emissions, but would like to see some reduction to the cost impost on business in the meantime.

"If the Coalition wants to develop direct action further, we are obviously part of discussions with them about that, but it's a policy that is still being developed and is continuing to be developed," he added.

"The Coalition have made it very clear that they'll continue to consult on this and consult through the election period."

The Australian Industry Group says its proposal to switch immediately to emissions trading would be a face saving win-win for both sides of politics.

"This debate is going to gain momentum right through the election period, and it doesn't take away from either party putting forward their points about which sort of overall strategy is best, who's right, you know, all the political argy-bargy will occur in any case," Mr Willox said.

"This is a sensible policy approach which gives both parties the out, and it also gives some business some certainty."

Innes Willox says the group has put forward its proposal to both major parties, but will engage in further consultation to convince them of its merits.

"We believe this gives both major parties about 80 per cent of what they want and does help us move towards reaching that emissions reduction target that both have committed to," he added.

Tuesday, March 5, 2013

UBS Libor cheats targeted Australia's bank bill rate

By Business editor Peter Ryan

It's been revealed that Australia was targeted in a strategy by the Swiss bank UBS to manipulate benchmark interest rates around the world.

The Australian angle is briefly mentioned in an internal investigation by UBS into the LIBOR rate fixing scandal which erupted in Britian last year.

While the corporate regulator ASIC is probing the attempted manipulation, financial market authorities are confident about the integrity Australia's benchmark rate mechanism.

The revelations are buried in a footnote on page 38 of a report by the US Commodity Futures Trading Commission which points to a culture of manipulation on a daily basis going back to 2005.

The Australian Securities & Investments Commission is known to have ramped up its inquiries with UBS since the the allegations moved from the British LIBOR scandal to those about Australia's bank bill swap rate or the BBSW.

But the Australian Financial Markets Association which represents market participants says the intregity of Australia's benchmark rate has not been compromised.

Read the full report here.

Executive director David Lynch told The World Today that Australia's BBSW operates differently from LIBOR:

DAVID LYNCH: In the Australian situation, it's quite different to LIBOR in the UK or LIBOR in Europe insofar as when you compare the actual outcomes from LIBOR and BBSW, you see the range of rates which might be contributed to LIBOR are quite broad, up to 40 basis points in terms of the range of rates that might be submitted, whereas in the case of BBSW, because of its structural design, the rates that are accepted for a calculation of the rate tend to be within one basis point of each other, in other words 100th of a percentage point of each other.

So the ability for a submitter to influence the rate inappropriately is very narrow in the context of BBSW, it's not material.

PETER RYAN: So while the LIBOR rate is based on a range of rates which tend to be theoretical, the bank bill swap rate here in Australia is much closer to a fixed rate.

DAVID LYNCH: Yes, I mean insofar as what banks and LIBOR are asked to provide submissions on are the rates which they individually could borrow in markets, so it's a matter of opinion because it's not an actually traded market.

Whereas in the Australian system, analysts are asked to provide their observations on where the market is trading, so in effect, each of the up to 14 panellists in BBSW should be providing the same rate.

PETER RYAN: But clearly this is an important development, given the whole LIBOR scandal coming out of Britain.

DAVID LYNCH: The LIBOR scandal and the nature of the issues there are quite different to the process here but the point we've always made is that all rate sets involve some element of risk. The question is how effectively you manage the risk in relation to that process.

Now in terms of submissions to BBSW, given the statistical characteristics of the rate and the structural design of the rate, it really is a very small scope for rates to be unduly influenced.

PETER RYAN: So you're saying that Australians can be very confident that the bank bill swap rate here in Australia is a true reflection of the market forces.

DAVID LYNCH: Yeah. What the BBSW rate is, it's a set of observations on where the market is trading, and in terms of submissions that we receive, they are sufficiently narrow in terms of variance to give a high level of confidence in relation to the accuracy of what's been observed.

Last year the British bank Barclays was caught manipulating the London Interbank Offered Rate - or the LIBOR - which indicates the rate for unsecured borrowing between banks.

A scandal erupted and Barclays was hit with more than 400 million dollars in fines.

Soon other banks started coming clean including the Swiss bank UBS - which settled with US, British and Swiss regulators for $1.5 billion.

Anything wondering if such bad banking behaviour was the tip of the iceberg had their cynicism confirmed by an internal investigation by UBS which reveals ofher markets around the world including Australia were targeted up by UBS bankers.

The World Today contacted UBS for more information but at the time of broadcast the ABC's calls had not been returned.

Monday, March 4, 2013

The Age and Sydney Morning Herald go tabloid as former editor gives hard copy weekday editions five years

By Business editor Peter Ryan

Commuters in Sydney and Melbourne found they had a little more elbow room this morning.

In what's more of a survival strategy than a cosmetic overhaul, the Sydney Morning Herald and The Age hit the streets today in a new tabloid format.

The larger broadsheet layout has been dumped for weekday editions as Fairfax Media fights to hold onto readers and advertisers in a digital media world that's forced the closure of papers around the globe.

Listen to my story from this morning's edition of AM.

Apart from the size - which Fairfax prefers to call "compact" - one of the biggest changes puts sport on to the back page, and in a newspaper first, brain imaging research was used to track what readers really want, according to Fairfax's head of advertising strategy, Sarah Keith.

"There was a concern that you think well maybe you're using the left brain, you know, sort of more detailed side of the brain when you read a broadsheet but maybe with compact you're just sort of skimming over things," Ms Keith told AM.

"Actually what we discovered is that the brain was in a very, very balanced state when reading the compact, which was great news, which from my point of view when I'm going out to talk to advertisers are saying look, actually your ads are going to be more engaging in this product."

A former editor of The Age, Mike Smith, says the long-resisted switch is now a matter of survival with the rivers of gold from classified advertising now a trickle.

"This is the most significant physical change to the Fairfax papers since they took ads off the front page and it took a world war to do that and it's taken a threat to their very existence to make them go tabloid," Mr Smith said.

And Mike Smith agrees Fairfax's biggest challenge is protecting the values of the old broadsheet brand, such as quality and high editorial standards.

"There are already some people who say that the Fairfax papers are tabloid papers in broadsheet clothing, and they've been very careful in their marketing of these papers that are coming out to try and protect the brand and persuade and convince people that nothing is happening to the journalism, just the size."

The former editor in chief of the Sydney Morning Herald, Peter Fray, who was ousted last year as part of Fairfax's restructure, says if the tabloid switch doesn't work, week-day printed editions of The Age and The Sydney Morning Herald might disappear within five years.

"If you can deliver what audience want in any form and any channel then you may have a future. My gut feeling is that we may not see a printed Monday to Friday in say five years. Some people say it's much sooner than that, one to two years."

Today's changes are just the start - next comes the digital pay-wall later this year and the closure of printing presses in Sydney and Melbourne, which will see The Age and the Herald published at less expensive regional sites.