PM must restore stability and community confidence - says super fund boss Ian Silk

Australia's biggest superannuation fund says the newly-elected Turnbull government needs to re-establish political stability to regain the confidence of the community.

Ian Silk, chief executive of AustralianSuper, says it's now imperative that the Prime Minister send a positive message about stability after several years of uncertainty under both Labor and the Coalition.

AustralianSuper chief executive Ian Silk with the ABC's Peter Ryan

"I think that's the number one task - to establish some political stability and regain the confidence of the community," Mr Silk told The World Today.

"Obviously the rise of the independents and the minor parties in the Senate is reflective of a community that is seeking strong leadership and a clear direction for the country."

But with two million members and a $100 billion dollars of superannuation funds under management, AustralianSuper worries that navigating the makeup of the new parliament and a fragile Senate will be "challenging" for the Prime Minister.

Mr Silk also cast doubt on the government's proposed corporate tax cut for small business which is expected to be revised after the global ratings agency Standard and Poor's put Australia's AAA rating on a negative outlook.

""I think the prospect of the company tax cut even being legislated is remote," Mr Silk said.

"Even if it was, I don't think there are too many people who thought a decade long company tax program would actually be implemented without any changes over that period."

However, business groups are urging the government to maintain the proposed corporate tax cut despite the warnings about the need for budget repair.

James Pearson, chief executive of the Australian Chamber of Commerce and Industry, told AM  the tax cuts remain justified.

"We still support that. It makes just as much sense today as it did before the election," Mr Pearson said.

" I think it's a phony choice to say it's about cutting spending or raising taxes.

"It's a moderate measure. It comes in over 10 years, and it starts off with small businesses. And the benefits as shown by Commonwealth Treasury research flow overwhelmingly to households."

But Mr Pearson agrees that despite Mr Turnbull's narrow win, the new parliament is an opportunity to build new stability.

"There's no doubt that the Senate which has been elected, it will be a much more diverse body than it was before," Mr Pearson said.

"The degree of difficulty may well have gone up but business is ready to build a constructive relationship with the new crossbenchers and the old, and we'll do so with genuine goodwill.

The responsibility is on all politicians, be they Government, Opposition or on the crossbenches. We cannot afford another three years of policy gridlock."

Business edgy on election deadlock amid AAA rating concerns

Business groups are warning the election deadlock is likely to create of an extended period of uncertainty with critical decisions set to be put on hold in the absence of a clear outcome.

The looming prospect of a hung parliament or a minority government also puts doubt over budget repair, raising concerns that Australia's prized AAA credit rating could be in jeopardy.

Listen to my interview with Business Council chief executive Jennifer Westacott broadcast on The World Today

Australian Industry Group chief executive Innes Willox says there are concerns that the Turnbull government's  reform agenda could be derailed or compromised.

"Uncertainty is the word of the day.Business craves certainty and stability and what this election has so far givenis uncertainty not just for the week ahead or a month ahead but for a long timeahead," Mr Willox told AM.

"What's the tax regime that they're going to have to deal with? What incentives are there around investment? What are the issues around hiring a new apprentice or a new trainee or hiring new staff?

"We may go into a period of some weeks of those sort of decisions being deferred or delayed unfortunately."

Australian Chamber of Commerce & Industry chief executive James Pearson also worries about the uncertainty but is urging compromises amid the political chaos.

"We'll be calling on the minor party MPs and the senators to move beyond the narrow agendas and make new decisions in the new parliament in the national interest," Mr Pearson told AM.

"It's important that whatever major party forms government they build a constructive relationship with the cross bench because they need to get things done.

"We can't afford three years of policy gridlock."

Innes Willox warns international investors could become more wary about stability in Australia and that the election deadlock rekindles memories of leadership coups under both Coalition and Labor governments.

"We already have a reputation that Australia is a very difficult place to do business and political risk certainly came on to the agenda during 2010 to 2013 because of unstable or minority government," Mr Willox said.

"Those sort of things that were around are likely to return."

Mr Willox says whoever forms government must ensure the necessary budget repair is undertaken to ensure Australia's AAA credit rating is preserved.

"The last thing that any government that is elected as a result needs to do is to rack up further debt in a way that does impact on our credit rating."

Business edgy on election deadlock amid AAA rating concerns

Business groups are warning the election deadlock is likely to create of an extended period of uncertainty with critical decisions set to be put on hold in the absence of a clear outcome.

The looming prospect of a hung parliament or a minority government also puts doubt over budget repair, raising concerns that Australia's prized AAA credit rating could be in jeopardy.

Listen to my interview with Business Council chief executive Jennifer Westacott broadcast on The World Today

Australian Industry Group chief executive Innes Willox says there are concerns that the Turnbull government's  reform agenda could be derailed or compromised.

"Uncertainty is the word of the day.Business craves certainty and stability and what this election has so far givenis uncertainty not just for the week ahead or a month ahead but for a long timeahead," Mr Willox told AM.

"What's the tax regime that they're going to have to deal with? What incentives are there around investment? What are the issues around hiring a new apprentice or a new trainee or hiring new staff?

"We may go into a period of some weeks of those sort of decisions being deferred or delayed unfortunately."

Australian Chamber of Commerce & Industry chief executive James Pearson also worries about the uncertainty but is urging compromises amid the political chaos.

"We'll be calling on the minor party MPs and the senators to move beyond the narrow agendas and make new decisions in the new parliament in the national interest," Mr Pearson told AM.

"It's important that whatever major party forms government they build a constructive relationship with the cross bench because they need to get things done.

"We can't afford three years of policy gridlock."

Innes Willox warns international investors could become more wary about stability in Australia and that the election deadlock rekindles memories of leadership coups under both Coalition and Labor governments.

"We already have a reputation that Australia is a very difficult place to do business and political risk certainly came on to the agenda during 2010 to 2013 because of unstable or minority government," Mr Willox said.

"Those sort of things that were around are likely to return."

Mr Willox says whoever forms government must ensure the necessary budget repair is undertaken to ensure Australia's AAA credit rating is preserved.

"The last thing that any government that is elected as a result needs to do is to rack up further debt in a way that does impact on our credit rating."

Global markets bounce but cloud over London banks, EU passports

With global markets less stressed about Britain's shock decision to leave the European Union, the focus is turning to the consequences for Britain including its once prestigious banking sector.

Listen to my report broadcast on The World Today

EU leaders are warning Britain that its financial services industry including a major hub in the City of London could be damaged once the exit provisions under the Lisbon Treaty are triggered.

Critically the current right to a European Union passport is set to disappear under the Brexit meaning the current easy access Britain has to financial services in Europe could become history.

The chair of the Eurozone group of finance ministers Jeroen Dijsselbloem says major banks based in London could see their businesses decline and prompt some to leave.

"Larger international financial institutions, if they have to decide where do we go and where do we invest, will take into consideration that London is in the future outside this very large European market," Mr Dijsselbloem told the BBC.

"London and its financial services industry is servicing all of Europe now and they do that with the (EU) passport that gives them access to all the markets in Europe.

"That position will inevitably change."

Britain's finance sector employs more than two million people across the UK, many in the City of London.

Most workers have an EU passport which currently gives them free movement to make deals and to service clients across Europe.

The Brexit impact on British banking and the City of London was sitting quietly in the background in the leadup to the referendum.

But London lawyer Simon Gleeson says with deals potentially unravelling for the British banking sector there would be an impact on related businesses in the United Kingdom.

"Passporting is pretty much essential for the provision of services to European corporates," Mr Gleeson told the BBC.

"If you take passporting away then something changes in the city of London and some businesses will simply have to be relocated elsewhere."

In Brussels as the fallout continues, the German chancellor Angela Merkel warned that whatever deal is hammered out, Britain must honour the free freedoms of the EU - the free movement of workers, goods, capital and services.

"The United Kingdom needs to clearly state its intention as to how it wishes to shape its future relationship with the European Union," Ms Merkel said.

"Access to the single market will only be possible with due respect of the four freedoms."

Meanwhile, global markets rallied for the second day in a row with some investors comforted that the Bank of England and other central banks are poised to blockade any Brexit related credit crunch.

London's main index ended 3.6 percent higher and has now recovered its Brexit related losses.

The Australian sharemarket bounced in the global optimism and the big miners were helped by a higher iron ore price.

The All Ordinaries Index was index 1.4 percent higher in late morning trade.

Brexit political turmoil escalates, UK credit rating downgraded

The political and economic fallout from Britain's decision to leave the European Union is continuing to escalate.

Here's my report broadcast on The World Today

Britain's outgoing prime minister David Cameron has once again called for unity after the "leave" vote triggered more turmoil in his Conservative party and the Labour opposition.

European leaders are urging Mr Cameron not to waste time in getting the agreed mechanisms in place to exit the EU as quickly and cleanly as possible.

Global sharemarkets ended sharply weaker and two major ratings agencies downgraded Britain's credit status adding to concerns that the UK might slip into recession.

Central banks on emergency standby with Brexit fallout set to escalate

Central banks around the world are standing by to intervene amid fears that the global fallout from Britain's exit from European Union will escalate in the coming days.

Listen to my report broadcast on The World Today

The Bank for International Settlements - known as the central bank of central banks - is warning of a "period of uncertainty and adjustment" given Britain's status in the global economy and the impact of it withdrawing from the EU.

The bank's general manager Jaime Caruana says "extensive contingency plans" are in place by central banks and the private sector to limit market disturbances such as the shock Brexit decision.

"Central banks have already communicated that they are closely monitoring the situation and stand ready to take the necessary actions to ensure orderly market functioning," Mr Caruana said at the Bank's annual general meeting in Basel, Switzerland.

"Central banks have acted swiftly in the past. They stand ready to act again, and they have the tools."

The Australian sharemarket is set to open 0.1 percent higher tomorrow (Monday) after losing $50 billion in value as part of a global selloff.

The Bank of England moved swiftly after the Brexit outcome and announced it was ready to provide A$460 billion in liquidity to help calm currency and equity markets which went into free fall.

Bank of England governor Mark Carney - who had previously warned a "leave" vote would have serious economic consequences - declared he would take "all necessary steps" to ensure financial and monetary stability.

In Australia, the Reserve Bank provided a briefing to both the government and the opposition under caretaker conventions in the leadup to the Brexit referendum.

In its annual report released on Sunday evening Australian time - but written before the Brexit shock - the BIS pointed to "the declining impact of monetary policy" on domestic economies eight years after the Lehman Brothers collapse.

The BIS calls for "stability oriented monetary policy" and that policy makers should take financial stability into account at all times "during both booms and busts".

"We need policies that we will not once again regret when the future becomes today," the BIS warns.

The BIS message comes against the backdrop of slowing global growth, low inflation, falling commodity prices and concerns that traditional central bank tools like quantitative easing are not working.

In comments made with the release of the annual report, Jaime Caruana said despite deleveraging in the private sector problems were building elsewhere.

"Signs of unsustainable financial booms began to appear especially in emerging market economies," Mr Caruana said.

Mr Caruana urged a global rebalancing to deal with what he called a a pattern "similar to that of previous boom episodes".

Brexit market turmoil but EU ambassador says little impact on Australia

Britain's shock decision to exit the European Union should have little impact on Australia's diplomatic and trade relationships, according to the EU's ambassador to Australia.

Speaking to the ABC's AM program, Sem Fabrizi said despite global financial fallout from the Brexit vote nothing would change immediately.

"Until the new agreement for the separation from the UK takes effect, rights and obligations under the treaties will continue so there will be no immediate change," Mr Fabrizi said.

"Certainly Australia is a stronger partner of the European Union and we will continue to work with Australia as we will continue to work with all our partners."

But Mr Fabrizi said the Brexit outcome was not a shock to the EU and that said "war gaming" had been under way to manage the unexpected.

                            

"Certainly not. We were expecting a close call and the people of Britain have decided. A democratic decision has been taken," Mr Fabrizi said.

"So we're now in a period where clarity is needed more than ever. But there's a procedure in place and we would like to have this process started as soon as possible."

Earlier today on WallStreet, the Dow Jones Industrial Average ended 3.4 percent lower or 611 pointsin the red.

Analysts estimate US stocks lost US$700 billion contributing to global losses of around US$3 trillion.

The banking sector was hardest hit with Citigroup down eight percent and Goldman Sachs and JP Morgan Chase five percent weaker.

The losses on Wall Street follow plunges across Europe in the wake of the Brexit vote with Paris down 8.6 percent, Frankfurt 6.2 percent weak and Madrid plunging 12.3 percent.

The Chicago volatily index which measures market anxiety surged as much as 48 percent given the unknowns about the process for Britain's exit from the European Union.

But Sem Fabrizi told AM that while there was complexity ahead the EU would not seek payback with Britain.

"The spirit is always to find the best solution. I don't think we need to enter a conflict mode."

Brexit "leave" vote to spark UK recession, economist warns

The polls might be tipping a tight outcome in the Brexit referendum, but behind the scenes experts have been war-gaming the potential impact of a possible "leave" vote.

Research by the London School of Economics in "Life After Brexit" is warning Britain would most likely fall into recession if it leaves the European Union as a myriad of agreements unravel over several years.

The report's co-author Professor Swati Dhingra is the latest to agree with warnings from the British Treasury that a "leave" vote would be a shock to the UK economy and rattle global financial markets.

Professor Dhingra speaks with the ABC's Peter Ryan

Low inflation, rising dollar, moderating jobs. August rate cut firming?

The outlook for low inflation and a rising Australian dollar could lay the foundations for another cut in official interest rates, the Reserve Bank has signalled.

In the minutes from its June meeting when the cash rate was kept on hold at 1.75 percent, the RBA says measures of both short term and long term inflation remain below average.

Low inflation and fears about deflation drove the RBA to deliver an interest rate cut in May, coinciding with the release of the Federal Budget.

Reflecting on a world of low inflation and the potential impact here, the RBA says "monetary policy was very accommodative in the major economies and was expected to remain so given that inflation was below most central bank targets."

Consumer inflation in Australia is running at 1.3 percent - well below the RBA's target range of 2 to 3 percent over time.

The RBA says while the Australia dollar had depreciated around four percent against the US dollar, a recent recovery "could complicate the adjustment of the economy to lower terms of trade."

The central bank is also watching the labour market and says despite strength seen at the end of 2015 there had been "some moderation" in employment growth this year.

While there has been recent evidence that the transition out of the mining investment boom is occurring, the RBA is seeing "a further sharp fall in mining investment and a decline in non-mining investment in 2016/17."

On housing, the RBA noted that while residential building approvals increased strongly in April, this could be balanced by a flood of apartments coming on to the market in the next two years.

The RBA says there continue "to be indications that the effects of supervisory measures" have strengthened lending standards by major banks.

The RBA also cited the coming "Brexit" referendum on Britain's membership of the European Union as a factor increasing market volatility.

On China, the RBA says measures by Chinese authorities to curb speculation in commodity prices had led to recent falls in spot iron ore prices.

While money markets are factoring in a small chance of a rate cut in July, expectations are growing that the RBA will cut again in August after fresh consumer inflation data is released in late July.

Follow Peter Ryan on Twitter @peter_f_ryan

Brexit fears to rattle markets this week; I go to lunch and find "uncertainty" on menu

Nerves are running high on global financial markets with this week's vote on whether Britain should stay in the European Union only days away.

Polls on the Brexit referendum are now pointing to a lineball outcome when the poll is declared on Friday afternoon Australian time.

But in an already edgy world of slow growth, financial institutions and fund managers are working overtime to brief investors on their potential exposure to Britain leaving the EU.

The ABC's Peter Ryan goes to lunch and finds plenty of uncertainty on the menu.

Brexit breather but referendum has shock potential, says CMC's Jasper Lawler

There's been a brief respite on European markets overnight but in the background serious concerns about a possible British exit from the European Union loom large.

Just this morning, the US Federal Reserve left interest rates on hold as expected but cited uncertainty over a possible "Brexit" next week as a key factor.

That's ramped up worries about ramifications for the global economy - including Australia.

Jasper Lawler is an analyst with CMC Markets and I spoke from London earlier today.

Jobless rate steady but full time jobs growth evaporates

Unemployment has remained steady at 5.7 per cent in May with the estimated addition of 17,900 jobs.

The participation rate, the proportion of people in work or looking for it, remained steady at 64.8 per cent.

However, the entire growth in jobs was in part-time work, with fulltime work remaining flat.

Here's my reading of the May jobs outcome broadcast on The World Today

Medibank Private accused of misleading customers on health fund claims

Australia's biggest private health fund Medibank Private has been accused of misleading customers by failing to tell them about changes to benefits for pathology and radiation treatment.

The consumer watchdog the ACCC is taking Medibank to the Federal Court accusing it of unconscionable conduct to protect its brand and reputation.

Medibank Private listed on the sharemarket two years ago after being sold off by the Federal Government and has been in a battle with private hospitals over benefit payouts.

ACCC chairman Rod Sims spoke with the ABC's Peter Ryan.

Digital disruption, automation to shake up traditional jobs, report warns

Digital disruption has the potential to threaten 40 percent of jobs over the next ten to 15 years as automation and machine learning shake up the economy, according to a Productivity Commission report out today.

In research entitled "Digital Disruption: What do governments need to do?", the Commission warns governments and regulators need to prepare for changing times as "disruption" moves beyond Uber and Air BnB.

Productivity Commission chairman Peter Harris says developing disruptive technologies of machine intelligence and automation will gradually change economies.

I spoke with Productivity Commission chairman Peter Harris on The World Today

"There's little doubt that in some sectors there will be dislocation of labour and dislocation of capital. It's not just a cost to employees, it will be a cost to certain businesses as well," Mr Harris told The World Today.

"Things like 3D printing are going to have an impact. Right now it's more of a niche product but over time, you're going to see this applied to manufacturing."

However, Mr Harris says despite a new world of hyper-connected technology and big data, some of the early fears about humans being replaced by machines are overstated.

"The majority of jobs in our economies today are services kind of jobs and that requires some form of human interface. So simply saying that we have automated or can automate something doesn't mean to say it will be readily acceptable to consumers," Mr Harris said.

"You can't necessarily imagine that a doctor will be replaced by a robot to whom you will speak and get an analysis."

While smart technology will inevitably replace humans, especially in manufacturing, the Productivity Commission says Australia's social safety net, including a strong Medicare, could be critical.

"We do have an important social safety net and maintaining that will be essential for the purposes of people who will have their lives disrupted as a consequence of this," Mr Harris said.

The era of digital disuption will also be a challenge for governments and regulators but the report recommends that new companies and businesses should not be given a heavy handed approach.

Peter Harris warns against regulatory models that use inflexible "black letter law" that is based on the time the legislation is written.

"Giving regulators the power to offer temporary periods of holiday from a regulatory impact to allow an idea to unfold while ensuring consumers are protected," Mr Harris said.

"That sort of initiative and flexible thinking is tremendously important for governments if they're going to allow creative ideas to unfold and to deliver benefits not just for consumers but for employees and investors in the future."

But Mr Harris takes a wry view on how disruption will change lives, reflecting on the 1960s cartoon series The Jetsons.

"No, not quite Jetsons yet although we do have our video phones," Mr Harris said.

"George communicating with Jane is now possible today. But rocket jetpacks - I'm afraid I'm still waiting for mine to be delivered."

Brexit jitters, German ten year bond goes negative. So why should Aust care?

I talk Brexit and global jitters ahead of the June 23 vote with Robbie Buck from 702 Sydney.

Listen to it here

Mining transition underway - NAB business survey

Conditions for Australian businesses outside the mining sector continued to recover in May, according to NAB's latest monthly survey.

While conditions were flat compared to April, they remained at historically strong levels, with an improvement in sales and profitability offsetting a disappointing moderation in employment growth.

Here's my analysis on The World Today on ABC Radio

AAA rating in jeopardy without budget repair, CEDA warns

A leading business-backed economic think tank has warned that Australia's prized AAA credit rating is in jeopardy without serious budget repair.

The Committee for Economic Development of Australia (CEDA) has raised the prospect of a downgrade to Australia's sovereign rating as both the Coalition and Labor adjust their economic plans to return the budget to surplus.

Three weeks out from the election, CEDA's chief executive Professor Stephen Martin has told AM the AAA rating could be in the balance unless both major parties need to deliver sustainable and holistic plans to drive growth over the next four years.

"There is no doubt that if we continue to let the budget deficit slip year in and year out that the ratings agencies are going to look at Australia and say you're not serious about trying to get your budget back into balance," Professor Martin said.

"It doesn't matter who happens to be the government. Government must make the hard decisions to  that will get the budget back into balance sooner.

"That's a problem you can then put to bed and then you can embrace the real change issues that will see us set sail for growth."    

The warning is contained in a CEDA report out today which says time is running out for both major parties to convince voters that they have a winnable and workable plan for the economy.

The report also says policies for budget repair and a return to surplus need to have broad community support.

CEDA is urging a bipartisan approach on the economy to ensure measures undertaken by one political party won't be overturned by a change of government.

The report titled "Australia's economic future: an agenda for growth" outlines policy priorities across ten key areas including innovation, competition policy, education, workplace relations and climate change.

But Professor Martin - a former Labor speaker - said there was deep disappointment that significant tax reform on the GST and negative gearing had been put in the too hard basket.

"There's no doubt that a genuine debate around tax reform is still required," Professor Martin told AM.

"The business community believes it's still important  and this goes into the term of whoever wins government and the one after that.

"It is a critical juncture for Australia now and we need to see people put politics aside because we really are going to be left behind if we don't embrace these sort of agenda."

Banks exposed to "credit negative" risk from housing, warns Moody's

A resurgence in Australian real estate prices and rising household debt are becoming a greater risks for the nation's banks, according to the Moody's credit ratings agency.

Moody's warns the two factors raise bank sensitivity to potential "downside risk" in the reheating housing market with potential implications for the wider financial system.

Listen to my interview with Moody's senior vice president Ilya Serov 

Moody's says increasing leverage through housing could be "credit negative" for banks, despite currently strong employment conditions and an economy supported by low interest rates.

A contributing factor to the housing concerns is the Reserve Bank's decision to cut the cash rate to 1.75 percent in May, according to Moody's senior vice president Ilya Serov.

"The housing market in Australia appears to have accelerated over the past couple of months partly on the back of the cut in interest rates that we've seen in May," Mr Serov told The World Today.

"We are already in an economy which is characterised by fairly high levels of debt particularly in the household sector and the debt to income ratio which had been stable is now creeping up again."

Mr Serov says although interest are at record lows and likely to get lower, investors are exposed if the RBA moves or banks hike rates independently.

"The economy from a household sector perspective is more sensitive to increases in interest rates should they occur," Mr Sherov said.

While an imminent shock to the housing sector is unlikely, Mr Sherov said there could be broader macroeconomic effects that would rattle the financial system if the worst case scenario unfolds.

"It would most likely effect consumption, therefore households and how much money people are prepared to spend on durables such as white goods and car which are typically linked to how well the value of their house is going," Mr Serov said.

"I think the housing market in Australia is interlinked with economy very much so it would be difficult to separate  the two in that kind of adverse unlikely event."

The Moody's warning comes after data released last week by CoreLogic showed signs of house price acceleration in early 2016 despite a moderation late last year.

The Reserve Bank has also warned that banks are potentially exposed although intervention from the prudential regulator APRA (Australian Prudential Regulation Authority) appears to have tamed investor appetite.

Data released yesterday by the ABS showed investor housing finance fell by five percent in April.

However, Moody's Ilya Serov says there are signs that the APRA pressure has some way to go.

"It's particularly challenging in the context of declining interest rates. To that extent always when interest rates drop some housing activity reaccelarates and I think that's what we're seeing here."

Yellen dampens June rate rise talk as RBA board meets

US interest rates are set to remain on hold this month after Federal Reserve chair Janet Yellen delivered a highly qualified speech that signalled a June move was off the table.

While Dr Yellen said the US economy was making progress, she failed to repeat earlier comments that a rate hike would be appropriate in "coming months".

"I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run," Dr Yellen said.

Fed watchers have taken the omission of "coming months" as a signal that Dr Yellen is no hurry to raise US rates after disappointing payrolls data showed US jobs grew at the slowest pace in six years in May.

Speaking in Philadelphia, Dr Yellen described the jobs outcome as "concerning" but said it was too early to draw meaningful conclusions about implications for the wider US economy.

"One should never attach too much significance to any single monthly report," Dr Yellen told reporters.

"If the May labor report was an aberration or reflects a temporary slowdown resulting from the weakness in economic activity at the start of the year, then job growth should pick up and support further gains in income."

Dr Yellen's softer comments are seen as significant ahead of the Fed's highly anticipated June meeting next week.

US rates have been kept steady at between 0.25 percent and 0.5 percent since last December when the Federal Reserve moved higher from near zero levels introduced at the height of the global financial crisis.

Since December, Dr Yellen has repeated that future rate rises would be "gradual" and depending on jobs growth and inflation rising closer to the Fed's target of two percent.

Wall Street investors applauded the apparent rates reprieve having already factored in the likelihood of a June rate rise after earlier hawkish signals from Fed members before the May jobs disappointment.

The Dow Jones Industrial Average closed 0.64 percent or 113 points higher on Dr Yellen's dovish comments while the US dollar fell to its lowest level in four weeks against major currencies.

Dr Yellen said she is monitoring "four areas of uncertainty" including the economic growth rate in China and the "Brexit" referendum on June 23 over Britain's membership of the European Union.

The focus on US rates comes as Australia's Reserve Bank holds it's June meeting after delivered a May rate cut on Federal Budget day.

While money markets are factoring in five percent chance of another cut, the focus will be on the statement after last week's better than expected economic growth figures for the March quarter.

However, most economists expect the RBA board will wait on the June 28 consumer inflation reading before deciding on whether to deliver a follow up rate cut in August.

Bondi hipster profile for media worker bad for diversity, warns PWC report

A report out today warns a lack of racial and gender diversity in Australia's media is dragging down the future growth of the industry.

Instead of reflecting real world Australia, the research shows the average media worker is a while male "hipster" who lives in Sydney's inner west or eastern suburbs.

Listen to my interview with PWC's Megan Brownlow broadcast on The World Today

In Melbourne - Australia's second biggest media market - the typical media worker lives in the inner city suburbs of St Kilda or Richmond.

The disturbing snapshot is revealed in PWC's annual media and entertainment outlook which urges the media sector to tackle internal culture and recruitment problems to create better diversity in ethnicity, gender and age.

The outlook examines workplace diversity in the media for the first time and says the industry is overrepresented by English monolingual staff with 75 percent of employees white, male and aged over 35.

Megan Brownlow, who edited the outlook for PWC, told The World Today the media sector needs to face up to some disturbing truths about media workers confirmed in the geospatial modelling.

"It turns out to be the Bondi hipster - a 27 year old white male who lives in Bondi," Mr Brownlow said.

Megan Brownlow, editor of PWC's media outlook 

"The top ten suburbs for media and entertainment people are all in Sydney, either in the eastern suburbs are the inner west."

Ms Browlow says the report shows that Australia has moved on dramatically from 1910 when the average Australian was a 24 year old white male farmer who was Anglican and of British background.

"I think it's fairly apparent that we are not a very diverse industry," Ms Brownlow said.

"If we fast forward to today, the average Australian has changed from being a male to a female.

"She's a 37 year old and her belief is not Anglican but Catholic and she works in retail."

But when it comes to decision makers - or senior managers - the average profile is a 45 year old white male who is less likely to be bilingual.

The PWC report reflects recently comments from ABC managing director Michelle Guthrie that the national broadcaster needs to better mirror Australian society.

But Ms Brownlow says all broadcasters including the ABC need to constantly review their strategies to improve diversity.

Ms Brownlow says the lack of diversity stems from "unconscious bias" or "similarity of attraction" where employers are drawn to people like themselves.

However, Ms Brownlow has highlighted Waleed Aly who recently won the Gold Logie as a role model of changing times in the media along with Rebecca Maddern who is now presenter of the Victorian version of The Footy Show on the Nine network.

Breaking in to lucrative China market - a hard road for Aust business

The rapid rise of China's expanding middle class is a potentially lucrative opportunity for Australian businesses.

But as many are finding out, it's not as simple as just arriving and setting up shop in the world's second biggest economy.

Listen to my special report broadcast on The World Today

Businesses have to deal with cultural differences, negotiate with a myriad of Chinese regulators and navigate harsh restrictions on the Internet - better known as the Great Firewall of China.

That's opened up an opportunity for Sinorbis, a specialist digital business which is helping Australian entrepreneurs exploit the burgeoning demand from China.

Chief executive Nicolas Chu says China's private consumption is rapidly expanding and there is massive demand for high quality goods and services from countries like Australia.

"Chinese consumers are increasingly looking internationally for premium goods and services and Australia is high on their radar, demonstrated by strong year-on-year increases in search volumes for Australian products," said Mr Chu said.

"This is a pivotal time for international businesses to position themselves to meet growing demand from China's new generation of upper-middle class consumers. Many businesses baulk at doing business in China, but with the right knowledge and local expertise it can be as easy as doing business in Australia."

Sinorbis co-founders Nicolas Chu (left) and Allan Wu with a client in Sydney

A big opportunity - but one fraught with cultural and regulatory issues - is the recent relaxation of the one child policy in China.

The prospect of middle aged Chinese couples racing to conceive a second child before it's too late is a major challenge for fertility specialist Dr Raewyn Teirney and he Sydney-based company "ConceivePlease".

"It's a great opportunity for my product to get into China and giving people advice and a one stop kit that will help them conceive naturally," Dr Teirney said.

Dr Teirney is using Sinorbis to develop a culturally sensitive Chinese name for her product and to use focus groups to develop the most sensitive way to market it.

But Dr Teirney should brace for big cultural and regulatory hurdles, warns tech entrepreneur Leo Coates who made his first attempt to set up shop in China four years ago.

"It blew me away. I had all the text book study and all the understanding you could have in the world thinking that business in China should be fairly straight forward," Mr Coates said.

"However I found myself sitting down eating McDonalds on the trade room floor thinking how on earth am I going to do this.

"From the authorities, the complications with the language and the culture to the pricing structure, I was in an absolute twirl."

Sinorbis has just released a white paper titled "Stoking the Dragon: Unlocking China's New Generation of Digital Consumers".

It says China's private consumption is rising rapidly through rapid urbanisation and ecommerce, and will grow by another 50 percent to A$8.6 trillion by 2020.

Get your tickets, visas now. Chinatown, Sydney.

"There goes the neighbourhood" - climate change warning on coastal real estate

Property owners in Australian coastal areas face significant and increasing losses the from impact of climate change, according to a report out today.

Research by the Climate Institute warns the potential damage bill from coastal erosion is conservatively estimated at $88 billion excluding the value of land.

Listen to my report on "There Goes The Neighbourhood" from The Climate Institute

With growing evidence of changing weather patterns, the Institute says governments, insurers and especially major banks need to provide better information to investors.

Climate Institute chief executive John Connor says more than two percent of all houses are already exposed to moderate to extreme risks of flooding.

Read the Climate Institute report here

"Growing climate impacts means the costs of these and other hazards exacerbated by climate change will have worsening repercussions for households, the financial sector and ultimately the economy itself," Mr Connor said.

"There has been insufficient action from government, insurers and most notably the banks, perhaps surprisingly as they are mortgage lenders."

The claims are contained in the Climate Institute's report "There goes the neighborhood" which examines the climate change risks to Australian housing and the overall financial sector.

The warning is critical given that the economy directly or indirectly drives a third of the economy and accounts for 60 percent of the assets of the big four banks.

"People continue to buy homes that continue to be built and sold in areas that may be at more risk than they realise," Mr Connor said.

But Mr Connor says that while the  climate risks "most banks have so far done relatively little to try and address this complex problem."

The research comes as the insurance industry continues to lobby local governments for more accurate flood mapping data to better address risks.

Mr Connor has called for great action from the finance sector and governments.

"It's not a political football. It's not ideology, it's real and we've got to get on with integrating climate change like other risks".

Climate Institute chief executive John Connor at Maroubra Beach    Picture: Peter Ryan

Digital startups thrive in Fishburners Sydney hub

Late last year - well before the election date was called - the Prime Minister unveiled his "innovation statement" to provide more support and opportunities for digital startups.

Malcolm Turnbull wants to drive an "ideas boom" and has set aside a billion dollars to promote research, development and innovation.

But how are those aspirations playing out in the real world of business where the race to commercialise the next big idea is more cut-throat than ever?

I visited the Fishburners startup hub in central Sydney to find out.

Listen to my report here

Read the the story on ABC News Online

Living standards to fall without budget repair, ACCI warns

  

A major business lobby group is warning that living standards in Australia are in jeopardy without significant budget repair.

The Australian Chamber of Commerce and Industry has jumped on research from the OECD (Organisation for Economic Cooperation & Development) which shows Australia has tumbled in a key ranking for global competitiveness.

Listen to the full interview with James Pearson broadcast on AM

According to the OECD, Australia slipped from tenth position to 21st over the past decade, coming in behind the tiny European nation of Luxembourg.

ACCI's newly-appointed chief executive James Pearson told the ABC's AM program Australia's demise on the competitiveness scale was "unacceptable" and risked living standards.

"Australia's global competitiveness must improve or we risk sacrificing the high living standards which we, our parents and our children have come to expect," Mr Pearson said.

"We are an economy in transition and a nation at the crossroads. We cannot be complacent."

The Chamber - which represents more than 300,000 businesses - will today unveil a ten point strategy to boost global competitiveness and to boost the path to budget repair.

The plan appears to back the Coalition's economic agenda with a lower company tax rate of 25 percent over ten years, tax reform and the restoration of the Australian Building and Construction Commission (ABCC).

However, James Pearson told AM  the proposal was bipartisan and aimed at protecting Australia against global shocks.

"Whichever party becomes the government after this election has it within their grasp to commit to sensible reform," Mr Pearson said.

"It is also vital that parties throughout this campaign demonstrate economic responsibility. Every dollar of additional tax places a bigger burden on future generations."

Mr Pearson also rejected suggestions that the return of the ABCC was the restoration of Workchoices under a different name.

"Workchoices is a ghost story told by the union movement. It really belongs to the past," he said.

"The Fair Work Act alone has around a thousand sections, over 200, 000 words. That's hardly streamlined system."

Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog http://mainstreetwiththeabcspeterryan.blogspot.com.au/

China flags growing demand for Australian dairy products

China has flagged an even greater appetite for Australian dairy products as consumer demand surges for high quality agricultural imports from downunder.

Listen to my report from The World Today

Bank of China executive vice president Gao Yingxin told a conference in Sydney this morning that Australian remains well positioned to feed China given its history of "riding on the sheep's back".

"Australia is endowed with a mild climate, vast farmlands and fertile pastures providing unlimited potential for agricultural development," Mr Yingxin said.

Mr Yingxin said China's appetite for Australian dairy products was a major focus in catering for the appetitie of its rising middle class.

"Between 2005 and 2013, the children's milk market in China great at average of 20 percent. Recently the adoption of a two child policy will create even more business opportunities ," he said.

More than six hundred delegates have travelled from China for a major investment conference hosted by the Bank of China and the Australian Chamber of Commerce & Industry.

Around 240 business - 120 from China - and another 500 attended have gathered by Sydney Harbour for the China-Australia Agribusiness Trade & Investment Conference.

The carefully choreographed event is designed to bring small to medium business from Australia and China together to develop trade opportunities.

Trade between Australia and China is estimated to be worth $150 billion a year.

The Federal Minister for Trade and Investment Steve Ciobo says Australia has to adjust to the changing commodity price landscape to exploit even greater trade opportunities with China.

Jobless rate steady, adds to case for August rate cut

Unemployment has remained unchanged at 5.7 percent, with the estimated addition of 10,800 jobs last month.

Listen to my analysis from The World Today

The Bureau of Statistics figures for April show that a small decline in the proportion of people in work or looking for it helped hold the jobless rate steady, despite relatively weak employment growth.

The Australian dollar fell, signalling bets are rising for a Reserve Bank rate cut as early as August.

US Federal Reserve surprises with signal for a June rate rise

The US Federal Reserve has signalled that a June rate rise is firmly on the agenda if economic conditions continue to improve.

In the minutes from the Fed's April meeting where rates were left steady at between 0.25 and 0.5 percent, officials say a hike would be “appropriate” if key indicators on inflation and employment stay on a positive track.

Read the Fed minutes here

"Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen and inflation making progress toward the committee's 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June," the minutes say.

But the minutes also show that Fed members remain divided on whether those critical conditions will be met.

"Participants expressed a range of views about the likelihood that incoming information would make it appropriate to adjust the stance of policy at the time of the next meeting."

The hawkish tone of the minutes surprised many Fed watchers who had pushed expectations for a US rate rise to later in the year.

Listen to this morning's report from the ABC's Rebecca Hyam

While the Fed awaits better news on the US economy, officials are cautious about global developments that have the potential to trigger volatility.

The minutes warn that global markets could be "sensitive" to the referendum on Britain's membership of the European which occurs a week before the Fed's June meeting.

The Fed also remains concerned about China and "unanticipated developments" associated the China's management of its exchange rate.

US dollar surges after Federal Reserve Minutes      Source: Bloomberg

National Australia Bank senior economist David de Garis agrees the likelihood of a June rate rise comes despite earlier comments from Federal Reserve chair Janet Yellen that the federal funds rate would only be increased gradually.

In a note to clients, Mr de Garis says despite the Brexit caution "the Fed is still seriously considering enacting some further gradual removal of monetary accommodation."

The US dollar rose sharply after the release of the Fed minutes, pushing the Australian currency as low as 72.15 US cents.

The Federal Reserve hiked interest rates in December ending a extensive period of emergency support in the wake of the Lehman Brothers collapse in 2008.

Feeling poorer? Wage growth hits fresh lows, ABS index shows

Wage growth has hit a fresh record low, with workers' pay rising just 0.4 per cent last quarter and 2.1 per cent over the past year.

Listen to my report on The World Today

The latest seasonally adjusted Bureau of Statistics Wage Price Index is growing at the lowest level since the data began in the September quarter of 1998.

The weakness in pay rises is particularly evident in the private sector, where wages edged just 1.9 per cent higher over the year to the end of March.

RBA says inflation a threat to wages growth; signals more rate cuts

Australia's recent dip into deflationary territory is unlikely to have been a one off and could prompt further interest rate cuts this year, the Reserve Bank has signalled.

Listen to my analysis from The World Today

According to the minutes from its May meeting where the cash rate was cut to 1.75 percent on Budget day, the RBA board was briefed about "ongoing inflation trends" and that the outlook could be lower for longer.

Referring to the March CPI result where inflation went backwards by 0.2 percent, the Board was told that the data "were less subject to measurement error than many other key data series".

"Moreover, the lower-than-expected CPI outcome could not be explained entirely by temporary factors" such as lower fuel prices and that the weakness in cost pressures "had been broadly based".

The RBA has also signalled that the outlook for lower inflation had the potential to dampen wages growth even though employers in general appear unwilling to make offers of wage growth below two percent.

"But if inflation was to be persistently lower than previously forecast, it was possible that in time this could be reflected in lower wage growth."

The minutes also highlight a stabilising but soft outlook for the labour market with employment growth slowing in the first quarter of 2016.

"Employment would continue to grow but at a somewhat slower pace than had been evident over the previous year," the minutes warn.

Australia's current jobless rate of 5.7 percent in March will be updated on on Thursday when the Bureau of Statistics releases official data for April.

The RBA has also singled out low wage growth as contributing to "heightened job insecurity" which is says "may be relevant to the current Australian experience."

"The broad-based softness in prices and labour costs signalled less momentum in domestic inflationary pressures than had previously been expected."

Economists are now betting the RBA will continue to cut the cash rate after being surprising by the depth of the latest inflation reading.

The Commonwealth Bank is predicting another two cuts in 2016 taking the cash rate to 1.25 percent.

The Reserve Bank's continued "accommodative" stance for monetary policy reflects today's low inflation world but also cautious comfort that Australia's real estate market is less hot than a year ago.

Women still hitting glass ceiling, warns US entrepreneur Kay Koplovitz

One of America's leading entrepreneurs says Australia still has a long way to go in getting greater diversity in business, particularly in corporate boardrooms.

But Kay Koplovitz, who founded the USA cable television network and the Sci Fi channel in 1977, says the balance is slowly tipping in favour of women.

Ms Koplovitz - who chaired Bill Clinton's National Council of Business for Women -  is in Australia this week as chair of Springboard Enterprises, which works with women entrepreneurs to raise venture capital.

Listen to my interview with Kay Koplovitz

Election jitters, warm weather means heralds cautious consumer for Myer

The head of the Myer department store chain has warned the election campaign has the potential to hit consumer sentiment.

Myer chief executive Richard Umbers says the company is bracing for a period of uncertainty in the leadup to polling day on July 2.

Listen to my report on The World Today

Inflation target relevance in low inflation world an early challenge for new RBA boss

It's a debate that's likely to confront Dr Philip Lowe when he takes over as governor of the Reserve Bank in September.

Should the central bank's target band for inflation be lowered given today's world - including Australia - where prices have slipped into deflationary territory?

Listen to my report broadcast on The World Today

Questions have been raised about the relevance of the RBA's mandate of keeping inflation within a target band of two to three percent over time after March quarter consumer inflation went backwards by 0.2 percent and rose by just 1.3 percent year on year.

Although both readings are dramatically below the RBA's target range, a former central bank governor Bernie Fraser says now is not the time to move the inflation goal posts.

Mr Fraser, who ran the RBA between 1989 and 1996, told The World Today the inflation target is still relevant.

"I believe it is. It's a sensible, a pragmatic target and it's served Australia pretty well over the last two and a half decades," Mr Fraser said.

"It's not something to be pursued rigidly and at times we have been above the three percent limit and that hasn't caused the world to collapse.

"If you stick to two to three percent inflation over time, inflation ceases to be a problem."

The March quarter move into deflation was a key reason which prompted the Reserve Bank to cut the cash rate last week to a new historic low of 1.75 percent.

But Matt Sherwood, head of investment research at Perpetual, says the RBA's move on budget day puts the relevance of the current inflation target firmly on the agenda.

"I tend to think that the RBA is going to struggle to hit that target in the next two and a half years," Mr Sherwood said.

"I don't think they would alter that target but if you're going to be that far below the target they would probably be questioning whether it serves any true purpose any more in a world with lower productivity growth and lower wages growth."

Even so Matt Sherwood thinks the RBA is unlikely to lower the tamper band.

"It would be an admission that while central banks are good at lowering inflation they can't actually raise inflation at the moment."

The big question for the RBA is how to consumers and businesses spending to get inflation higher.

But Bernie Fraser warns that cutting rates any further is not the answer.

"If 1.75 percent won't do it, 1.5 percent, 1.25 percent, 1 percent is not going to do it," Mr Fraser said.

"Monetary policy has run its race for the time being. Fiscal policy has to be a more prominent lever to be grasped."

Money markets are betting the cash rate will stay on hold at next month's meeting of the Reserve Bank board.

But economists are tipping a cut to 1.5 percent in September as the Reserve Bank confronts a deflationary world.

Source: Reserve Bank of Australia