Future Fund boss David Neal says RBA comments about a "violent" market correction are overstated. Unless the Fed "makes a mistake".

The head of the Future Fund has played down comments from the Reserve Bank that financial markets are heading towards a "violent correction".

The Fund's managing director David Neal says there would only be a crisis if the US Federal Reserve makes a mistake when it eventually starts moving interest rates from the current level of close to zero percent.

Mr Neal says the Fund is also paying attention to the outlook for its investments in fossil fuels and the possibility that falling demand for oil could damage traditional energy assets.

Here's my report from The World Today.

Ireland calls time on "double Irish" tax dodge; G20 leaders under greater pressure to deliver real reforms in Brisbane next month

Ireland says it will phase out a well-worn loophole that allows multinationals to avoid paying billions of dollars in tax.

The avoidance scheme known as "the double Irish" is exploited by corporate giants including Google, Apple, Facebook, Linkedin and PayPal.

The move by Ireland comes as G20 leaders who'll meet in Brisbane next month face renewed pressure to rein in corporate tax dodgers with consistent global reform.

Listen to my report from this morning's "AM" program.

The announcement by Ireland's Finance Minister Michael Noonan comes as Ireland begins to recover from the global financial crisis which saw it bailed out by the European Union and the International Monetary Fund.

 "I want to make sure that the slur of the "Double Irish" is no longer attached to Ireland's reputation. it had become something that was thrown at us internationally" Mr Noonan said. 

"There's a big advantage I believe for Ireland to be the first mover. Our competitor countries, if you were investing there tomorrow you would still be uncertain about what the regime might be in two years time."

Ireland slashed its corporate tax rate in the late 1990s to 12.5 percent to attract investment by global companies.

But the "double Irish" allows corporations to use complex structure where untaxed revenues are funnelled to a subsidiary company in a tax haven like the Cayman Islands or Bermuda.

The loophole means multinationals end up paying very little tax or no tax at all.

Throughout the year, G20 finance ministers have been ramping up pressure to end corporate tax dodging so that more revenue can go into government treasury coffers.

However, a G20 committment to reform global tax rules is reliant on individual members such as Ireland to tighten up laws locally.

Ireland is a participant the G20 as a member of the European Union, so the decision by Ireland's Finance Minister Michael Noonan to end "the double Irish" is significant.

As part of the phased-in reforms, multinationals currently using the "double Irish" will be able to keep exploiting it until 2020 when the loophole will be closed.

New participants will be blocked from minimising or avoiding tax.

However, analysts expect tax lawyers for the corporate giants using the "double Irish"  will be working on a response and most likely new ways to minimise their tax.

The move to rein in multinationals poses a big risk for Ireland's soft economy as it recovers from the financial crisis.

Around 160,000 workers are paid by the hundreds of foreign firms incorporated in Ireland and any threat to relocate to another tax haven is an ever-present threat.

RBA cash rate on hold tomorrow - but tea leave readers will scrutinise statement for subtle changes

To most outsiders, it all sounds a bit ho mum.

But tomorrow's meeting of the Reserve Bank board is shaping up as anything but a dull affair.

While almost every market economist thinks the RBA will leave rates steady, all eyes will be on any changed language that could signal the start of a softening up period for a rate rise next year.

The anticipation for even subtle changes or the removal of key phrases is against the background of 2.5 percent cash rate for the past 13 months - one of the longest period of rates stability since 1990.

In statements throughout the year, RBA governor Glenn Stevens has been at pains to signal that the cash rate would remain low for an extended period and that any change in policy would be flagged well ahead.

In his September rates statement, Mr Stevens once again said "the most prudent course" was "likely to be a period of stability in interest rates".

Source: Reserve Bank of Australia September rates statement

  

Tea leave readers who scrutinise the RBA musings, including economist Annette Beacher of TD Securities, think the RBA is on the brink of preparing the market for an eventual cash rate increase.

"While we're not there yet, I think the time is coming where 'period of stability' of interest rates will be dropped from the statement," Ms Beacher said.

"I think from hereon in with all the discussion of the hot housing sector, we're wondering how long this period of stability will be in the statement."

The RBA has also noted that commodity prices " in historical terms remain high" but this is also likely to change with the iron ore price down dramatically from mining boom highs at US$79.60 a tonne  

"So tomorrow we expect to see 'historically high levels' and 'period of stability'. Technically that is a cut and paste from recent months but the risk is that one of those statements is not there," Ms Beacher said.

"So that makes tomorrow's RBA board meeting a must see event."

Source: Reserve Bank of Australia September rates statement

 Economists will also be watching for commentary on the slowdown in China's economy, the outlook for earlier than expected rate rises from the US Federal Reserve and a landscape of geopolitical flashpoints in Syria, Iraq, Ukraine and Hong Kong.

The steady decline of the Australian dollar - forced in part by rate cuts of 2.25 percentage points since November 2011 - could also feature tomorrow.

This morning it was buying 86.63 US cents after hitting a year high of 95.04 in July.

In September, Glenn Stevens said the dollar "remains above most estimates of its fundamental value".

While the RBA will take comfort from the recent falls in the currency, economists are expecting the RBA to maintain its jawboning to force the Australian dollar even lower.

The ramped up interest in the RBA's statement tomorrow comes amid positive private data out today on inflation and employment.

The monthly inflation gauge from TD Securities and the Melbourne Institute shows inflation rose just 0.1 percent in September after two months of flat results, making 2.2 percent over the year.

The survey  says underlying inflation probably rose 0.5 percent in the September quarter and 2.6 percent over the year - at the midpoint of the RBA's comfort zone of 2 to 3 percent.

The closely watched ANZ Job Advertisements series shows job ads in newspapers and on the Internet rose almost one percent in September - the fourth consecutive monthly rise.

ANZ believes this indicates that the labour market is gradually improving and that he official jobless rate will stabilise at just above 6 percent for the next few quarters before decreasing.

Two million Australians risks defaulting on basic debts, credit bureau warns; 500,000 deliberately lie in credit applications

A report out today warns that more than two million Australians risk defaulting on their basic household debts over the next year.

According to an annual scorecard from the credit reference agency Veda, the bills in the too hard basket include small ones for gas, electricity and mobile phones.

Listen to my interview with Veda's Belinda Diprose on the credit minefield

The study also says half a million people have jeopardised their credit-worthiness by lying or intentionally omitting information from the credit applications.

The warning comes amid speculation that the Reserve Bank might introduce tighter lending controls to protect investors from rising interest rates and falling property values.

Economists warn that any associated rise in unemployment could see some overly-indebted borrowers defaulting on their mortgage repayments.

However, Veda spokesman Belinda Diprose says mortgage defaults are not yet problematic and the primary default risk relates to unpaid utility bills, credit cards or personal loans.

"It's those easy to miss bills that come up first - telco bills, utility bills - and then they'll move on to credit cards, personal loans and usually it’s the mortgage that's the last one to go," Ms Diprose said.

The Veda report singles out Generation Y Australians - those born in the 1980s - as having the worst scorecard, despite being the most financially ambitious.

The study found that 22 percent of Gen Ys  are likely to overspend to maintain lifestyles they can't afford and are "keeping up with the Joneses".

"They have this real fear of missing out. They're quite an ambitious group of people and they are not afraid to use credit to fund their lifestyles and to fund their goals," Ms Diprose said.

"One of the key things they need to understand is that if they do default it can really impact their ability to get credit in the future," Ms Diprose said.

However, the Veda study says slightly older Australians - Generation X - are at most risk from damaging their credit profile through late bill payments.

"Gen Xers are those who at the moment have young families and it's really hard to keep up with the daily pressures of bills for childcare and things like that," Ms Diprose said.

"So it's really important for people to understand what's on their credit history, what they can do to influence it and how it can impact them down the track when they really do need to get access to credit."

The scorecard also warns that the 500,000 Australians who have lied about their credit history need to be aware of new privacy rules where financial institutions can now view both positive and negative credit behaviour.

"It's certainly fraud. But as part of the new comprehensive credit reporting laws there's more information available for banks and lenders when they're assessing you on your credit application," Ms Diprose said.

"So if you omit for example that you have three credit cards and you only put two on it, they can see that information so it's probably best to tell the truth on your application form."

Australian shares fall on China economy concerns; Australian dollar slides to 87.1 US cents

There have been more heavy falls on the Australian sharemarket this morning in reaction to continuing concerns about China's economy.

The uncertainty has also helped take the Australian dollar to 87.1 US cents - its lowest level in seven months.

And shares in the world's biggest wine company, Treasury Wines, have been hammered as much as 15 percent  this morning after it called off $3.4 billion takeover talks with private equity firms.

Here's my coverage from The World Today broadcast on the ABC.

Jobs to go as energy prices surge without gas reservation policy, AWU warns

A national campaign is being launched today for greater controls over Australia's natural gas exports.

The union-backed campaign wants the federal government to enact laws to ensure a certain percentage of Australian gas is kept for domestic use rather than being exported.

A study by BIS Shrapnel warns that one in five manufacturers could shut down over the next five years because of spiralling gas prices.

The "Reserve Our Gas" campaign, headed by the Australian Workers Union, comes amid fears that Australian gas prices will triple from July next year as LNG exports ramp up.

AWU national secretary Scott McDine told AM that Australia is out of step with other major nations such as the United States that reserve a percentage of gas for domestic use.

Listen to my interview with Scott McDine from this morning's edition of AM

"Australians have a right to know their rapidly rising gas bills are actually completely preventable. We just need to do what every other gas-exporting nation does and bring in laws to look after the local population. Australians should pay the Australian price for gas - not the global price - because it's our gas," Mr McDine said.

"We currently have a situation in which our abundant gas reserves are hurting Australian jobs and households instead of helping them. That's crazy and it's no wonder no other gas-exporting nation allows it.

"We are throwing away hundreds of thousands of jobs, and our national competitive advantage, simply so gas exporters can squeeze a little extra profit out of what is already a spectacularly profitable business.

"Of course our abundant natural gas can and should be exported to the world. But a portion of it also needs to be providing a competitive advantage to our local industry, and a cost of living benefit to Australian consumers. We can have both, just like every other gas exporting nation."

The AWU campaign is being supported by major Australian manufacturers exposed to rising energy prices including Alcoa and Australian Paper.

The study by BIS Shrapnel, commissioned by the AWU, finds that rising gas prices will have significant impacts on the economy:

* One in five heavy manufacturers will shut down within five years

* Total manufacturing production will be reduced by 15.4 per cent by 2023

* 91,3000 jobs will be lost in this period as a direct result of manufacturing shutdowns, with 235,000 jobs to go economy-wide

The BIS Shrapnel report also notes a high profit ratio of 66 percent compared to 32 percent for iron ore producers.

While there is no national gas reservation policy, Western Australia mandates the reservation of 15 per cent of the state's gas.

The report says the WA policy has not damaged gas investment or create sovereign risk, with $88 billion invested in WA gas production since reservation was introduced in 2006.

RBA warns property investment is "unbalanced" and that speculation raises risk of price falls

The Reserve Bank has warned that investment in Australia property is becoming unbalanced and that speculation increases the potential for the current stellar prices to fall.

In its latest Financial Stability Review, the RBA says recent house price growth in Sydney and Melbourne has encouraged more lending and construction activity by investors.

But the central bank has signalled that the boom in rising prices could unravel if there is "a significant reassessment of risk" lead to a "sharp reprising of assets".

The RBA cites revised expectations for monetary policy - in other words, rate rises sooner than expected - that could derail investors overburdened with debt.

The RBA says "additional speculative demand" could amplify the property price cycle with a subsequent fall in prices hurting household wealth and spending.

"The apparent use of interest only loans for both owners and occupies and investors might also be consistent with increasingly speculative motives behind current housing demand."

And in a stark warning, the Review signals that the dynamics of a fall in asset prices would not only hurt those who fuelled to the speculation.

"The households most effected by the declines in wealth would not necessarily be those who contributed to the heightened activity."

While not directly suggesting the need for tighter lending standards through macroprudential regulation, the RBA said recent measures announced by the Australian Prudential Regulation Authority (APRA) "should promote stronger risk management by lenders".

The RBA says it is now discussing what it calls "additional steps" that might be taken to reinforce sound lending practices to property investors.

The Review has also raised concerns about Australia's commercial property sector which has also been the focus of strong demand from both domestic and foreign investors.

The RBA warns: "any significant reversal of demand could expose the market to a sharp repricing."

The RBA gives Australia's financial system a tick, saying it is underpinned by the strong performance of the banking system.

It says while some households have taken on more debt, lower interest rates for now allow them to service the debt load.

Follow Peter Ryan on Twitter @peter_f_ryan

A third of Australian listed companies risk financial catastrophe, CPA Australia warns

A report out today on the health of Australia's listed companies says nearly a third are confronting the risk of a financial catastrophe.

Analysis of almost 16,000 annual reports by the professional accounting body CPA Australia, shows there are more alarm bells ringing now than during the depths of the global financial crisis in early 2009.

Listen to my extended interview with CPA Australia chief executive Alex Malley from this morning's edition of AM on ABC Radio.

The research, conducted between 2005 and 2013, says the red-flagged companies are exposed to the dual risks of end of the mining investment boom and an unexpected slowdown in China.

The CPA study is based on the snowballing of "going concern" warnings from auditors which are used to flag "significant uncertainty" in a company's ability to survive.

CPA Australia chief executive Alex Malley says the findings are a sobering reality check that many Australian companies are fragile.

"We've been talking about the potential impacts of the slow-down in China, the strength of the Australian dollar and the effects of the tapering mining boom on the economy for some time," Mr Malley said.

"Now, this report, compiled based on virtually all companies listed on the ASX, shows these economic factors are being felt across the market and are putting almost a third of ASX listed companies at risk of 
financial catastrophe.

"It really begs the question how our economy would be placed were we to face another shock like the GFC?" 

According to the research, the "going concern" warnings has risen significantly in the energy and mining sectors with more than 40 percent of companies feared to be at risk in 2013.

The report comes as evidence mounts that China's economy is slowing faster than expected and that the official growth target of 7.5 percent might not be achieved this year.

Australian miners are exposed with the iron ore price now at a fresh five year low of US$79.80 per tonne.

However, the CPA report says non-mining sectors sych as consumer staples, industrials, healthcare and utilities are also facing concerns about their financial health and how they would fare in another global shock.

White flag goes up from big end of town - independent regulation of financial advisers needed now

The peak body representing the financial services industry has admitted that an independent external regulator is needed to stamp out unethical and at times unlawful behaviour.

In the face of worsening image problem after a string of financial planning scandals, the Financial Services Council (FSC) has recommended that the federal government establish a statutory body to regulate professional standards within the industry.

Listen to my interview with FSC chief executive John Brogden.

The Council's chief executive John Brogden acknowledges the recommendation reflects the deepening public distrust of financial advisers and the low qualifications to enter the industry.

"The reality is that public trust is so low, public expectations are so low, yet public demand for advice is so high that we have to acknowledge that self regulation has failed and we need to go to government and independent regulation," Mr Brogden told the ABC.

"At the moment the standards are far too low - everybody agrees with that. We've seen lots of different suggestions as to how they might be improved. We've decided to go right over the top of all of those and call for the creation of a standalone independent statutory body."

"Self regulation is no longer a credible option for establishing higher standards."

The surprise recommendation to the parliamentary joint committee into adviser competency and the Murray Review into the financial system is being seen as the financial planning industry putting up the white flag in a hostile consumer and government environment.

The FSC paper calls for the creation of the Advice Competency Standards Board (ACSB) which would regulate professional standards and the education of financial advisers.

While the FSC does not specify educational standards, it says the Board should determine minimum qualifications which could include a single national exam for potential advisers,

John Brogden acknowledges that higher regulated standards could hurt veteran planners who have been in business for decades especially if they don't already possess a university degree.

"I feel very sorry for good professional advisors who have always acted ethically, have very happy clients, have always acted in the best interests of their clients who have been dragged down by bad advisers," Mr Brogden said.

"For them I feel very sad that their reputations have been tarnished."

Mr Brogden says the Board should be funded by the financial planning industry but have an independent chair and directors.

Rupert Murdoch says page 3 topless girls here to stay as long as customers want them

Rupert Murdoch has take to Twitter once again to defend the use of topless women on page three of his mass circulation British cash cows, The Sun and The Sunday Sun (which replaced The News of the World).

While Mr Murdoch thinks the page 3 pinups are "old fashioned", he says average readers still want them.

But the media titan asked his Twitter followers for their opinions tweeting  "aren't beautiful young women more attractive in at least some fashionable clothes?".

It's a long debate between profit and punter preferences - assuming of course that readers of The Sun buy it to read the journalism.

Not surprisingly, Mr Murdoch reminded his critics who is in charge.

"Brit feminists bang on forever about page 3. I bet never buy paper. I think old fashioned but readers seem to disagree."

Scotland independence poll puts banks on alert; Deutsche Bank warns "be afraid, be very afraid".

After being overshadowed by other greater geopolitical events - such as turmoil in Ukraine and the Middle East - next week's referendum on whether Scotland should secede from Britain is starting to get interesting.

An opinion poll has shown for the first time that a narrow majority of Scots might vote for independence and splinter the 307 year old union with the United Kingdom.

The poll points to a knife-edge result but already it has caused enough uncertainty to push the British pound to its lowest level since November.

Here's my report from yesterday's edition of The World Today.

Now some of the world's biggest banks have gone on alert given the implications of a "yes" vote which until now has been seen as unlikely:


DEUTSCHE BANK

• "Be afraid, be very afraid."
• "The implications of a yes vote would be huge, and are magnified by the sense of institutional unpreparedness. A 'yes' vote could easily derail the UK economic recovery.
• Could cause a "destabilizing crisis" in the banking system and at best leave the rest of the UK with an unstable currency union during talks on the new fiscal and monetary arrangement.
• "There is now no question that the momentum is now all with 'yes'."

GOLDMAN SACHS

• Near-term consequences of a "Yes" for the Scottish economy, and for the UK more broadly, could be "severely negative". In the long run, "little reason why an independent Scotland could not prosper: there is no evidence to suggest that smaller countries are richer or poorer, on average."
• Highlights risk that uncertainty over whether an independent Scotland would be able to retain sterling could result in an "EMU-style currency crisis" for the UK.

UBS

• "Significant risk" of bank deposits fleeing Scotland within days of a Yes vote.
• Investor concerns would likely focus on currency issues, EU membership and future Scottish economic policy. This could deter investment in Scotland from foreign and British companies.
• The increase in the net debt-to-GDP ratio for the rest of the UK if Scotland refuses to repay its debt is "relatively slight" and potentially a price worth paying for avoiding a dysfunctional monetary union. Scotland would pay more relatively for issuing its own debt as a result.

CITI

• The forex market's single biggest player made sell sterling its trade of the week on Monday. A "Yes" vote could drive the pound to $1.56 or lower.
• "With the lessons of the euro zone debt crisis still fresh in investors' minds, a currency union (after a "Yes" vote) may weaken sterling in the same way it weakened the euro."
• Concerned that a Scottish exit will raise the chances of Britain leaving the EU within years.

BARCLAYS

• Yes vote would prevent the Bank of England from raising interest rates, encourage "financial fragmentation risks across Europe".
• Negotiations on debt and North Sea oil to fuel volatility.
• "Yes" voters tend to underperform their pre-voting polls by a significant margin as minds change in the privacy of the voting booth.
• Lenders would likely ask for risk premium for borrowing to newly independent nation.

STANDARD BANK

• A quick 5 percent move, towards the high 0.80s for euro/sterling, is certainly possible after a Yes vote, and, with this, a move to the mid-1.50s against the dollar.

MORGAN STANLEY

• Yes vote could knock 10 percent off value of sterling.
• One of the few banks to focus earlier this year on the potential that Scotland might not take on its portion of UK public debt.
• Bank's economists chiefly concerned on Monday by the prospect of Scotland being refused EU entry and the rump UK following it out after a 2017 referendum on membership.

SOCIETE GENERALE

• "Market complacency on Scotland is shattered."
• Scotland leaving the UK would make the UK leaving the EU considerably more likely, which could reduce potential GDP growth by as much as 0.5 percent per annum.
• Sterling could drop as much as 5 percent against the dollar after a Yes vote.

BNP PARIBAS

• A transition to other currency arrangements would be complex, with "sterlingisation" or a fixed exchange rate likely to put upward pressure on Scottish interest rates.
• Still expect downside for the euro against the pound, but it "could be a bumpy descent" into the vote.
• Scottish bonds could yield between 50 to 150 points more than AAA gilts, depending on how talks on independence pan out.
• In an "unfriendly outcome" of such talks between London and Edinburgh, the 10-year gilt asset swap could cheapen by 20 basis points, consistent with a 1-notch credit rating downgrade.

BANK OF AMERICA-MERRILL LYNCH

•  "If elevated uncertainty receded fairly swiftly, the effects of any lasting decline in the currency might be the dominant consideration, potentially adding to the case for the BoE to begin raising rates."

Qantas $2.8 billion loss a record for the airline and one of the biggest in Australian corporate history. So is it time for CEO Alan Joyce to go?

I interviewed Qantas chief executive Alan Joyce for The World Today on the ABC.

Despite growing calls for his head, Alan Joyce says he has no plans to quit and that the Qantas board has no plans for succession.

Space junk deal sees Electro Optic Systems shares rocket more than 30 percent

Shares in a small company that tracks space junk have gone into orbit after it struck a deal with the US defence giant Lockheed Martin.

The strategic partnership announced this morning by Electro Optic Systems will see the development of a tracking centre in Western Australia to detect and monitor 25 percent of all space junk.

The massive problem of space junk was illustrated last year in the film "Gravity".

News of the deal with Lockheed Martin saw E-O-S shares rocket by more than 30 percent.

I spoke with chief executive of E-O-S, Dr Ben Greene, on the The World Today.

Actuaries call for review of retirement income system; worried about limited guidelines for reverse mortgages

The professional body representing actuaries is urging the government's inquiry into the financial system to recommend ways to make retirement income streams work better.

The Actuaries Institute says the current choices for retirees of lump sums, account-based pensions or annuities are not necessarily appropriate given the rapidly ageing population.

The Institute is also worried about the lack of regulatory oversight of reverse mortgages where retirees are able to access the equity in the family home.

Listen to my interview with Actuaries Institute chief executive David Bell.

Second round submissions to the Financial System Inquiry led by former Future Fund boss David Murray close later today.

Read the FSI's terms of reference which were announced in December last year.

Construction sector plagued by phoenix tax, pay dodges

Some of Australia's biggest construction projects are being probed by regulators in relation to claims of corruption and tax avoidance.

The Australian Tax Office (ATO) and the Australian Securities and Investments Commission (ASIC) are paying special attention to what is known as phoenix activity in the construction sector, where companies go into liquidation to avoid paying entitlements to their staff.

The ATO and ASIC have joined forces with the Fair Work Building and Construction directorate to examine illegal phoenix scams which are costing as much as $3.2 billion per year.

AUDIO: Listen to Peter Ryan's report. (AM)

The investigations will also examine allegations that some scams in the construction industry have links to organised crime.

ASIC commissioner Greg Tanzer told the ABC's AM program that the phoenix activity was focused on "off-the-books" sectors such as transport, security and cleaning services.

"Our intelligence suggests that there's a range of issues that arise in the construction industry," he said.

"What we're finding is that there is a disproportionately large number of cases perhaps because of the nature of the industry and the number of workers involved in those industries but, whatever the reason, it seems to be a target for this type of activity.

"We have found that the construction industry is a particular hotspot for phoenix company activity, and this affects not just the employees in the construction industry who might be affected directly because their superannuation entitlements might not be paid, or their leave entitlements might not be paid.

"But also, critically, other contractors - sub-contractors and sometimes head contractors - are affected by companies going out of business, doing so intentionally with the absolute deliberate intent of defrauding all of those creditors and employees."

Consulting firm PwC, in a study for the Fair Work Commission in 2012, found that illegal phoenix activity costs between $1.2 billion and $3.2 billion per year.

"From our perspective, we see just far too many individual problems that are caused by this type of activity, because it doesn't need to be a large amount of money if you've been gutted out of your leave entitlements or your superannuation entitlements," Mr Tanzer said.

ASIC has commenced a wide ranging program aimed at the construction industry in which 6,000 smaller companies were targeted, and hundreds visited, to be reminded that heavy penalties apply for proven phoenix activity.

Mr Tanzer said the investigations would examine claims that organised crime is involved in construction sector corruption.

"We are concerned that the construction industry in particular seems to be a target for this type of activity and it really can be quite pernicious and cause very serious effects for the employees and the other creditors of companies that phoenix," he added.

Phoenix activity, where a company "rises from the ashes" of liquidation, without paying taxes or entitlements, is constantly in the sights of ASIC and the ATO.

Greg Tanzer told AM that such activity appears to increase during softer economic times, such as those being experienced now.

Small bank shows up big end of town on boardroom diversity

Sometimes it takes a small player to prove that diversity is possible in company boardrooms and the ranks of senior management.

While the big end of town often often talks about diversity, the financial minnow Teachers Mutual Bank can boast four women from a Board of nine.

It's an important and interesting case study in a world where blokes still rule in the boardroom.

Although almost all ASX 200 listed companies have policies on improving diversity, only around 19 percent of companies have turned an unenforcable ambition into reality.

The Australian Council of Superannuation Investors (ACSI) last year expressed its concern at the slow progress and the Sex Discrimination Commissioner Elizabeth Broderick recently warned quotas might be necessary.

So how has Teachers Mutual Bank done it?

I spoke to chief executive Steve James on the ABC's "AM" program.

He says it's all about representing members - of whom 59 percent are women.

Bank of America pays US$16.6 billion to settle claims on role on subprime mortgage collapse

The Bank of America has paid almost $US17 billion to settle allegations about its role in the events leading up to the global financial crisis.

US regulators had been probing claims that the bank misled investors into buying dodgy mortgage-backed securities which exploded when America's housing boom went bust more than six years ago.

It is a record payout, but Bank of America was not on its own in spruiking these risky subprime mortgages.

There were trillions of dollars of bets that US housing prices would continue to rise.

However, at almost $US17 billion, Bank of America is paying a much bigger price than other banks to resolve around a dozen state and federal investigations.

This morning, the US attorney-general Eric Holder said Bank of America's unlawful, unethical and immoral behaviour in marketing dodgy products had taken to US economy to the brink of collapse.

"These loans contained material underwriting defects. They were secured by properties with inflated appraisals. They failed to comply with the federal, state and local laws and they were insufficiently collateralised," he said.

"Yet these financial institutions knowingly and fraudulently marked and sold these loans as sound and reliable investments."

AUDIO: Bank of America fined US$17b over role in subprime crisis (AM)

Around $US7 billion of the settlement will be used for what is being called "consumer relief" for Americans who found the value of their home was suddenly a lot less than the outstanding mortgage.

Some will see their mortgage debts reduced, others will get lower interest rates and some of the settlement will be used to build affordable rental housing.

While that is a long-awaited positive, there is criticism that, so far, no banking boss has faced criminal charges in relation to the subprime mortgage collapse.

Dennis Kelleher of US financial watchdog Better Markets says, while a $US17 billion fine for Bank of

America sounds like a lot, it might be only be a fraction of what banks made from marketing dodgy products.

"There's no way to evaluate whether or not it is a lot of money, or whether or not it's fair punishment, or whether or not it will deter or incentivise future crime unless you actually know how much money the Bank of
America actually made from its illegal conduct, how much money its investors, customers and clients lost," he argued.

"So, for example, if they paid $US17 billion but they actually made $US200 billion from illegal conduct, then that's not much money and not only won't it deter future crime, it actually incentivises future crime."

Fed softening world up for rate rise in early 2015

Throughout the year, the US Federal Reserve has been softening up for the world for what - at the moment at least - appears to be inevitable.

Once the US economy is on a firmer footing, inflation starts rising and the labour market has sufficiently strengthened - interest rates will need to move from their current emergency level of between zero and 0.25 percent.

But the big question has been one of "when".

The minutes from the Fed's July meeting released early this morning Australia time stoked anticipation about what will almost certainty be a dramatic event for global financial markets.

"Many participants noted that if convergence toward the committee's objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated". 

The unusually direct and optimistic tone from the Fed - almost six years after the Wall Street collapse - was fresh fodder for pundits who are now talking about a small rate hike early next year.

The changed language comes as the Fed's massive quantitative easing program is set to evaporate in October, having been reduced by a steady US$10 billion per month since late last year.

This time last year, the money printing program was pumping out US$85 billion per month as speculation began to build that an improving labour market meant the party of cheap and easy money was about to end.

Today's measured signal is not to say the messages from the Fed have always run to plan.

Back in March, in her first major appearance as the world's most powerful central banker, Federal Reserve chair Janet Yellen perhaps accidentally triggered the softening up strategy she told reporters that the first rate rise could be six months after the money printing ends. 

REPORTER: Could you tell us how long of a gap we might expect before the rate hikes do begin?

JANET YELLEN: You know, probably means something on the order of around six months or that type of thing but you know, it depends, what the statement is saying is it depends what conditions are like. 

Those surprisingly frank comments from Dr Yellen sparked a small fall on Wall Street as the prospect of an eventual rate rise began to take on some distant reality.

This morning's reaction was more subdued as investors focused on what they saw as positives - that the Fed will continue to support America's still-recovering economy for as long as needed and that any rate movement will be gradual.

While the US jobless rate is down from global financial crisis highs to 6.2 percent, there's growing scrutiny on hidden unemployment and whether the quality of jobs on offer amount to what America once regarded as a living wage.

BHP Billiton boss plays down Clive Palmer's "bastards" & "mongrels"swipe at China

The chief executive of BHP Billiton has played down Clive Palmer's comments that the Chinese are "bastards" and "mongrels" who shoot their own people.

Andrew Mackenzie says the relationship that BHP and the Australian government has with China remains warm and strong despite Mr Palmer's slap-down.

But the federal government has attacked Mr Palmer's comments about Australia's biggest trading partner as "hugely damaging" while the Chinese Embassy has branded them "absurd and irresponsible".

The diplomatic war of words overshadowed  a 23 per cent jump in BHP's full-year net profit to US$13.8 billion which in large part is from its trade with China.

Mr Mackenzie told AM that Mr Palmer's swipe, directed at the state-owned firm Citic Pacific, is unlikely to cause long term damage to either BHP or Australia.

"I believe that the strength of our company's relationships and the relationships that are enjoyed at government level and also many other companies are warm," Mr Mackenzie said.

"The mutual regard for the quality of our product, the security of our supply, are the ones that are going to rank more highly .. in the minds of the Chinese.

"China can see through that and the vast majority of Australians and how they relate to the Chinese people  and their country."

Mr Mackenzie sought to characterise Mr Palmer's comments on the ABC's Q&Aprogram as personal as the the federal government cautioned the mining magnate not to misuse his political postion.

"They're comments by an individual and you know, they're not on behalf of any other Australian supplier. And I do repeat that I think the quality of the relationships and the way in which companies like us and many others is what will actually be the bigger picture that'll be seen by most if not all Chinese. "

The head of the world's biggest miner also weighed in on the government's difficulty in getting key Budget measures though the Senate and agreed the impasse was a threat to business and consumer confidence.

Not surprisingly, Mr Mackenzie called for the urgent repeal of the minerals resource rent tax (MRRT) which was one of the Abbott government's key election pledges.

"I am concerned about that. I'm very supportive of the Government's agenda to build the competitiveness of Australia," Mr Mackenzie told AM.

"Something like the MRRT raises very little revenue, is highly volatile, and is no basis for strong fiscal planning in the country. And yet for many potential investors this is quite a disincentive to invest."

But Mr Mackenzie had a pragmatic response to growing calls for a Budget "reset" or a mini-Budget to smooth passage through the Senate - and to win approval from Clive Palmer's PUP which hold the balance of power.

"Look, I'm a businessman and they're politicians and politics is the art of the possible. I leave that to them."

Reserve Bank warns of "significant uncertainty" about economic outlook

The Reserve Bank says the outlook for Australia's economy appears uncertain and that the high exchange rate remains a key problem.

Underscoring the challenge of managing an economy in transition, the RBA has pointed to "a significant degree of uncertainty about the the outlook, given the number of forces working in different directions".

And in the minutes from its August meeting, the RBA says that despite a record low cash rate the exchange rate "remained high by historical standards".

The RBA also says the high dollar is "notable" given the decline in the prices of some key commodities.

Appearing to express some frustration in the face of a record low cash rate, the Board says the high dollar is "offering less assistance than it might in achieving balanced growth in the economy".

The RBA has cut the cash rate by 2.25 percentage points since November 2011 with the aim, in part, of lowering the currency.

In leaving the cash rate on hold at 2.5 percent at the August 5 meeting, the Board repeated that monetary policy "was appropriately configured" and that "the most prudent course was likely to be a period of stability".

The August meeting was held two days before the release of official employment figures for July where the jobless rate spiked unexpectedly to 6.4 per cent.

In its Quarterly Statement on Monetary Policy released after the surprise unemployment increase, the RBA signalled the result could have been a blip caused by a revised definition of employment.

However, the RBA's August board meeting was referred to "a notable degree degree of spare capacity" in the workforce with a relatively high unemployment rate and the participation rate remaining steady.

Echoing the quarterly statement, the Board was told that despite recent higher reading, inflation was remain within the 2 to 3 per cent target band over the next two years.

The minutes repeat that economic growth will be below average over 2014/15 before getting back above average pace in 2016.

Commonwealth Bank boss Ian Narev signals need for gov't compromise on budget woes; warns uncertainty not helping business and consumer confidence

The chief executive of the Commonwealth Bank has weighed in with advice on the government's budget woes, signalling compromise might ultimately be necessary.

Ian Narev has told the "AM"  program that the Prime Minister and Treasurer need to be pragmatic about what spending and cost-cutting measures will make it through the Senate.

Mr Narev says while the government's controversial paid parent leave policy "is ultimately a political judgement", in the eyes of voters it was a key part of Tony Abbott's election mandate.

"By and large, I think when people elect politicians they understand they stand for certain policies but we've also got to be pragmatic and understand that in a certain political environment that governments need to make compromises," Mr Narev said.

But Mr Narev rejected suggestions that a review of all budget measures in the form of a mini budget might be necessary to reset the debate.

"I'm not sure a mini budget is the answer. The Treasurer can make his own judgement on that. He has outlined what we consider to be a very appropriate high level vision which is to say over the medium to long term you need a government which is fiscally responsible," Mr Narev said.

"In order to achieve that, there's a series of  policies that need to be passed showing where the  allocation of that is going to happen in terms of cost cutting or revenue raising.

"That is a big political challenge in the context of the current makeup of the Senate." 

Mr Narev also warned that the uncertainly surrounding elements of the budget had the potential to harm business and consumer confidence.

"It doesn't help. But there's no doubt that to the extent we can get a very clear medium to long term policy picture of the environment, that most be good for confidence.

"The budget is a challenge. We've got a lot of a lot of political tensions still in Canberra, there's a lot of debate around individual policies and it is a tough time to be the government."

Mr Narev, who was speaking after the CBA revealed a full year net profit on $8.63 billion, said the government needed consider how its budget problems might be viewed by international ratings agencies.

Last week, respected economist Saul Eslake warned that a failure to get the budget deficit below $3 billion as forecast by 2017-18 could put Australia's AAA credit rating in the spotlight.

"He (Mr Hockey) has outlined  that he feels that is a risk and I think there's no doubt that there is a risk," Mr Narev told AM.

"The idea of getting  the fiscal balance sheet to the point where it is in balance has got to be a critical part of the economic vision.

"The ratings agencies in the long term are some of the important stakeholders you've got to bear in mind."

Commonwealth Bank record profit fails to quell heat from financial planning scandal

For Ian Narev, today's full year financial results presented a rare opportunity to accentuate the positive.

There was little else to do given the damage already done to the Commonwealth Bank's reputation over the scandal embroiling its financial planning arm.

So today, the full tool box of public relations spin was deployed as the results hit the stock exchange just after 8.30am.

Here's my analysis from today's edition of The World Today.

Not surprisingly, the CBA's team of media, investor and government relations advisors have spent recent weeks and days polishing messages and preparing Ian Narev and chief financial officer David Craig for the inevitably tricky questions on how they plan to defuse the fallout from the scandal.

This morning's investor briefing was a tame affair and Mr Narev was under little pressure to account for the conduct of his financial planners.

However, journalists are certain to pose harder questions at a media conference later today given the financial and reputational cost to the CBA, which over 102 years has been trusted for its conservative strategy and management.

The intensifying scrutiny is unavoidable, and today despite some hoarseness, Mr Narev will embark on print, television and radio interviews that will run until late in the afternoon.

And given the widespread concern about the financial planning scandal, Commonwealth Bank media minders are likely to have received interview requests from the range of media outlets across Australia.

As the CBA boasts in today's media release on today's results, there are nearly 800,000 households who own the bank's shares directly or through their superannuation schemes.

And in addition to employing 50,000 Australians, the CBA reminds us of its contribution to the economy and $4 billion pumped into local suppliers and partners.

The CBA brands itself with charities, sporting organisations and communities across the country with big financial contributions that are part of its charter for corporate social responsbility.

However, even another record result of $8.63 billion posted today will not be enough to deflect the glare of a concerned federal government and a corporate regulator under pressure to lift its game.

Ian Narev knows it will be a long road before the noise from the scandal begins to fade.

But it emerged on his watch when he was a key member of the CBA's senior management team and one that could partly define his legacy as chief executive.

Paul Zahra quits David Jones as South African owners take control

Paul Zahra has resigned as chief executive of David Jones a month after shareholders backed a takeover of the department store chain by the South African retailer Woolworths.

Mr Zahra will be replaced by Ian Nairn, the current chief executive of the Woolworths-owned Country Road.

Woolworths chief executive Ian Moir says apart from Mr Zahra's eventual departure and the appointment of a new chief operating officer, no other significant management changes are expected at this stage.

I spoke with Ian Moir this morning for "The World Today" on the ABC.