Thursday, October 24, 2013

Claims of rent gouging in Blue Mountains fires - NSW Fair Trade to name and shame

The New South Wales Department of Fair Trading is investigating claims of price gouging in the state's rental market in the wake of the bushfires, and says it will name and shame offenders.

The loss of hundreds of properties is putting increased pressure on an already very tight rental market in Sydney and surrounding areas.

NSW Fair Trading Minister Anthony Roberts has told AM that landlords are on notice for any unethical behaviour during a time of distress for so many people.

"We've had one case where the landlord went to their agent and said I want you to put up the price as much as possible because of the lack of availability of homes following 200 homes being burnt down," Mr Roberts said.

"The real estate agent was very cooperative and of course contacted the authorities, and we'll be running a zero tolerance policy on this."

Mr Roberts said another home listed for $350 a week "not two weeks ago" is now priced at $420 a week.

"What we're seeing is when someone loses their home the insurance companies have been very proactive in this area finding homes for people.

He called the actions "white collar looting" and said the department would investigate and prosecute if necessary.

"There are serious financial penalties for unconscionable conduct and those fines are $220,000 for an individual or $1.1 million for a corporation," he said.

"What I can also do under the Fair Trading Act is name and shame individuals and we will not hesitate to name and shame individuals who are profiteering from this crisis."

Mr Roberts says his department has officers in the field inspecting rental arrangements.

"We have agents in the field at the moment, visiting real estate agents, informing them that whilst it's okay within a market place to charge a fair rate, if we find any instances of what we consider unconscionable conduct with respect to price gouging, people taking advantage of this crisis to make money, we will again use the full force of the law to prosecute them."

Inflation revival puts RBA rate cuts party on hold

Could the era of benign inflation that has been unpinning the Reserve Bank's rate cutting cycle be nearing an end?

That is the key question from today's consumer inflation data, which posted an unexpectedly high reading of 1.2 per cent in the three months to September.

It is the biggest quarterly inflation rise in a year.

Here's my analysis from The World Today broadcast just after the inflation data hit.

Economists were wrong-footed after many bet that the Australian Bureau of Statistics would print 0.6 per cent in the quarter after a decidedly soft result of 0.4 per cent in June.

While the annualised headline rate of 2.2 per cent is at the bottom end of the Reserve Bank's two per cent to three percent target band, the mild resurgence of the inflation dragon might be ringing alarm bells in the RBA's headquarters in Sydney's Martin Place.

It is now a safe bet that the RBA board will leave the cash rate steady at the 50 year low of 2.5 per cent it next meets on the first Tuesday of November - Melbourne Cup day.

The race that stops the nation has been a key day for rate movements over the past decade with five rate rises, two rate cuts and three "on hold" outcomes.

But the steady economic environment coupled with the outlook for slowing rising inflation is raising expectations that the next move for the RBA could be up.

The RBA will also be quietly monitoring the steady rise in housing prices in Sydney, although a senior official recently described fears of a housing bubble as "excessively alarmist".

A key indicator of the changing mood is the Australian dollar, which peaked at 97.55 US cents after the quarterly inflation news hit.

The Reserve Bank has cut the cash rate by 2.25 per cent since late 2011 firstly in response to the euro zone debt crisis, which was threatening social and political unrest across the continent.

But then the stubbornly high Australian dollar, which surpassed 110 US cents in July 2011, posed a real and present danger to Australian exporters.

While the RBA has noted in recent months that the dollar has fallen in part because of rate cuts (to below 89 cents in August) cuts to the cash rate can only have limited impact.

At the very least, today's inflation result gives the RBA board a big reason to access the changing environment.

Any fresh commentary from the RBA governor Glenn Stevens will be scrutinised for signals on if, or when, the rate cutting cycle is exhausted.

Monday, October 21, 2013

David Jones boss Paul Zahra to quit. DJs announces "succession plan" but no successor revealed.

It appears that Paul Zahra's decision to resign as David Jones chief executive caught the  retailer's board by surprise.

The timing of the announcement is less than helpful in a tough retail atmosphere a few months out from Christmas as online sales continue to erode the traditional consumer base.

So this afternoon, after trading had closed on the ASX, David Jones was put in the predicament of announcing  "a succession plan" with no clear successor in sight.

As the market announcement makes clear, the succession process "could take some time".

Mr Zahra's apparently sudden decision, exposes the lack of succession planning by the David Jones board.

Mr Zahra was appointed in June 2010 when he replaced Mark McInnes who was forced to step down over allegations of sexual harassment.

While Mr Zahra had been in the role for more than three years, it is long enough for a board to begin to consider succession candidates to ensure a smooth transition.

The murky circumstances in which Mr McInnes left the company should have provided plenty of lessons on how boards need to expect the unexpected.

The most recent case study of succession planning came earlier this year when Marius Kloppers joined BHP Billiton chairman Jac Nasser in announcing Andrew Mackenzie as his replacement as chief executive.

Investors are unlikely to welcome the new uncertainty, despite assurances from DJs chairman Peter Mason that Mr Zahra leaves the company "in a solid financial position."

Any prolonged search could put a cloud over Mr Zahra's ability to take major decisions on the direction of the company.

David Jones spindoctors are being cautious about today's surprise announcement and have declined the ABC's requests for interviews.

David Jones shares closed 0.7 per cent higher today $2.85 which is below the year's high set in April of $3.15.