Google has announced a series of new frame designs for its Google Glass augmented reality headset, as well as the option of getting prescription lenses fitted, ahead of its launch later this year. The tech giant has announced a deal with US-based optical health insurance provider Vision Service Plan that will see prescription lenses fitted to the device. The company has also unveiled its “Bold” and “Curve” frame designs, which will retail at $US225, as well as a range of different sunglass-style designs for $US150. Morry Schwartz to launch a new broadsheet newspaper Morry Schwartz, the publisher of the Quarterly Essay and the Monthly, has announced he will launch a new weekly print newspaper on March 1. The newspaper, named the Saturday Paper, will feature a range of prominent columnists including David Marr, Christos Tsiolkas, Robert Manne and Kirsty Simpson. It is set to be sold in Sydney, Melbourne and Canberra, with the first issue coming out on the same day Fairfax converts its weekend editions of The Age and Sydney Morning Herald newspapers to a compact format. Abbott pushes for ABCC return as CFMEU corruption allegations mount Prime Minister Tony Abbott has argued for the reintroduction of the Australian Building and Construction Commission (ABCC) as allegations of bribery, extortion and threats of violence rock the Construction, Forestry, Mining and Energy Union (CFMEU). The building industry watchdog, which was originally created under the Howard government, was abolished by former prime minister Julia Gillard in 2012. “What today's revelations demonstrate is the absolute pressing need for the reestablishment of the [ABCC] with full power, full authority, full funding," Abbott says. "If the Labor Party is serious about tackling corruption again they will stop standing in the way of the reestablishment of a strong cop on the beat in that particular industry. “The commission should have full authority to ensure that the law is upheld. Full authority to ensure that the law is upheld in an industry which has been long marked by lawlessness.” Overnight The Dow Jones Industrial Average is up to 15932. The Aussie dollar is up to US87.75 cents.
There was plenty of news and activity affecting Australia’s start-ups over the past 12 months, as the sector absorbed political strife in the Labor Party, an election that saw the return of the Coalition and attempts by Apple to trademark “startup”. It was also an interesting year for work trends, with the rise of online outsourcing and the expansion of co-working spaces around the country. As dull as it might sound, tax policy was also on the radar of readers, especially consultation around potential changes to employee share schemes, which could have a significant impact on the way start-ups can remunerate early staff and attract the best talent. All of which points to a busy 2014. Politics The election voters had long been waiting for to toss the Labor Party out of office finally arrived on September 7. There was plenty of interest in what the major parties would offer the start-up sector and small business. But ultimately, it was what the Coalition was offering that won over voters, although for start-ups, the impact was initially unclear. But before the election, readers were also entranced by the internal warring in the Labor Party, with the attempt to topple Julia Gillard that never was in March before Kevin Rudd finally secured the numbers to return as prime minister – albeit for a short time to “save the furniture” and soften the electoral drubbing the party suffered. Policy Employee share schemes and how the rules around them might be changed to support start-ups was a major issue that generated plenty of discussion during the year. That discussion is likely to continue into 2014 as the Coalition government, which in opposition had said it would consider making changes, awaits the results of a consultation process. Debate over the $1000 threshold on when the GST should apply on goods bought online from overseas retailers also arose, as Australians continued to embrace internet shopping. Questions have been raised whether lowering the threshold would do anything to influence the behaviour of shoppers. Australia’s fiscal position changed throughout the year, with promises that the budget would return to surplus giving way to huge deficits. What this year’s budget meant for new and small businesses drew readers’ attention, but with the change in government and the warnings of budget cuts to come, it’s unclear how the small business sector will fare in the coming years. How we work Freelancing, outsourcing, job matching and share work spaces all featured prominently throughout the year, reflecting the changing nature of work. Websites connecting freelancers to jobs around the world became more prominent, especially with the successful sharemarket listing of Australian-based Freelancer.com. As their popularity rises, the need to stand out from the crowd also becomes more important, making ‘tips’ stories on how to do just that popular. Sharing workspaces with others away from home or out of a corporate office environment also became popular, with like-minded people coming together to work and share ideas. Other top stories: Apple – Apple’s application to IP Australia to trademark “startup” sparked a storm of angry comments on StartupSmart. The application has had an adverse finding against it but the case could return after Apple was allowed to defer acceptance of the report. Investment funding – Artesian Ventures announced a $100 million fund to invest in other investment funds with the aim of investing in 1000 start-ups. MailChimp blocked – Numerous businesses use MailChimp to deliver material to the email inboxes of their subscribers. So there was plenty of concern when it emerged the service was having problems delivering to certain domain names. The issue has since been rectified. Sumo loss – Australian entrepreneur James Miller, who co-founded food franchise Sumo Salad before turning his attention to the re-launch of old Sydney pubs, died of a suspected accidental drug overdose.
Leaders from the Australian start-up community say while there will be little immediate impact from Kevin Rudd ousting Julia Gillard as Prime Minister, the new environment and leadership team has created a better opportunity for working with the government. Mick Liubinskas, co-founder of leading start-up incubator Pollenizer told StartupSmart the spill has generated a more risk-friendly leadership team, ripe for conversation and “aggressive action on innovation”. “The way the Labor Party is right now, they’ll be looking at ways to grow innovation. We’re looking at a new team with short space of time before an election, who may be more likely to take risks,” Liubinskas says. “Being an election year, we have the opportunity to get the ear of in power to see if they can put an election promise in.” Liubinskas says there have been ups and downs with Gillard and Senator Stephen Conroy, who had been the driver of the national broadband network but who has resigned as the minister for broadband, communications and the digital economy. “Conroy with the internet filter and Prime Minister Gillard with the 457-visas, those things have been looked on negatively by the technology industry,” he says. Liubinskas says the start-up community has big plans for working with government to build a strong entrepreneurial culture in Australia. “We have long term plans and we hope to do that with the government. But innovation can’t afford to be party-based because it’s too important,” says Liubinskas. “Australia has a big opportunity, but also a responsibility, to look at what will be the next industry after mining, and innovation should be the prime option,” says Liubinskas, who points out entrepreneurialism and innovation is a high value add, exportable option that’s good for the economy, education and health. Sebastian Eckersley-Maslin, the chief executive at investment group and tech start-up accelerator Blue Chilli, says the spill will have limited impact as two key policy changes the start-up community needed have both been already introduced. “I’m still digesting it myself,” Eckersley-Maslin told StartupSmart. “The biggest change we wanted has already been announced.” Eckersley-Maslin says this was the review of employee share schemes. He added the community is also keen to see progress on the idea of lowering the minimum required amount for government matching of early stage venture capital firms from $10 million to $5 million. Eckersley-Maslin adds he hopes the removal of Australia’s first female prime minister won’t have a negative impact on encouraging women to step into leadership roles and take risks. “A lot of the backlash she was facing was as a woman, from puppeteering by the media. Australia voted her in, and her party voted her out,” Eckersley-Maslin says. Blue Chilli has a 50-50 gender split across the company, and 42% of its founders are female. “That’s pretty rare in the IT tech investment space,” says Eckersley-Maslin. “We’ve still got the Governor-General and a female lord mayor of Sydney, so there are still women leaders out there, but I am looking forward to when we have another female prime minister.”
Kevin Rudd has reclaimed the prime ministership after winning a leadership spill of the Australian Labor Party last night, defeating incumbent Julia Gillard 57-45, with Anthony Albanese replacing Wayne Swan as the deputy leader. In his speech following the ballot, Rudd emphasised the business community and young Australians will be key priorities for his government. "Let me say this to Australian business: I want to work closely with you. I’ve worked with you closely in the past, particularly during the GFC and there were some white knuckle moments there, as some of the heads of the major banks will remember," Rudd said. "But we came through because we worked together and I’m saying it loud and clear to businesses large and small across the country, that in partnership we can do great things for the country’s future." Julia Gillard announced she would not recontest her seat at the next election, also saying that while “[gender] doesn't explain everything, it doesn't explain nothing; it explains some things” in terms of the challenges she faced as leader. Carriers demand more backhaul access Competition watchdog the ACCC will begin an enquiry into Telstra’s charges to other carriers for use of its backhaul networks, following complaints from a group of carriers including iiNet, Vodafone and Macquarie Telecom. Backhaul fibre optic networks are used to send calls and data to and from mobile phone base stations and exchanges, with Telstra owning the only cables to some parts of the country. "We need the NBN to change some of its priorities to be able to help us bring competition to Australians," says Vodafone Australia chief executive Bill Morrow. “This is a huge impediment, and you're now going to get customers faster and faster internet access and taxing them if they use it. It ends up being a disproportionate tax as well because for companies like iiNet and Internode, our customers have much higher usage than Telstra customers or Optus customers,” says iiNet chief executive Michael Malone. ATO warning on profit shifting Tax Commissioner Chris Jordan has issued a warning to Australian companies hoping to emulate the tax minimisation strategies of tech giants such as Google and Apple, telling the federal government it needs to do more to stamp out the practice. "They can see what is happening as a result of these international companies taking profit out of the country. They are thinking: 'What functions can we move offshore, what functions can we disconnect and have third-party providers fulfil to put the profit in a low-tax jurisdiction and receive an exempt dividend coming back into the system?'" Jordan says. “That might be their assertion, but we are going to test every single aspect of those structures. We will want to know whether what purports to happen actually happens on the ground… It is one thing to put in place a fancy structure, but it is another to have it tested five years later, because by their nature these schemes are quite, sort of, artificial. “We will be taking a leadership role internationally in addressing the problem, but we need to also look at how changes can be made here. The corporate tax base is under threat. What's happening is unacceptable to the community, the government, and to regulators.” Overnight The Dow Jones Industrial Average is up 1.02% to 14910.14. The Aussie dollar is up to US92.81 cents.
It’s prime ministerial party time, with Julia Gillard declaring a ballot for the Labor leadership will be held at 7pm this evening. Check Crikey’s liveblog for the latest developments. Prime Minister Julia Gillard has just announced that a leadership ballot for the Labor Party will be held at 7pm this evening. In an interview with David Speers on Sky News, Gillard said that she hopes to win the ballot and will leave the Parliament if she does not win.“Tonight is the moment for caucus to decide. I accept that so fundamentally that if I am not successful I will resign at the next election. I ask the same of any challenger,” said Gillard.Kevin Rudd is yet to announce whether he will challenge for the leadership. Rumours have been circulating all afternoon that a petition has been going around Parliament House with MPs calling on Gillard to allow a leadership ballot. Gillard says she has not seen the petition.“I’ve been wryly joking with some of my colleagues this petition is the political equivalent of the Loch Ness monster… I’ve got an obligation to the nation, we are talking about who leads the nation, I am not going to let that speculation run endlessly.”“This is the moment for Caucus to decide. I accept that outcome,” said Gillard.“I’ll let my caucus colleagues decide. What has always driven me in politics and will continue to drive me … is getting things done in the accordance of Labor values for a Labor purpose,” said the Prime Minister.“I accept responsibility for my own conduct but people need to accept responsibility for their conduct… what I can tell you as Prime Minister and Labor leader is I have never been diverted from that task.
The Australian Bankers Association has attacked a proposed new law forcing its members to notify customers when their security has been breached by hackers. The bill is one of 50 being considered by Parliament in its final sitting week before the federal election on September 14. “The real cost to banks involved with this legislation is the actual notification to affected customers," ABA policy director Ian Gilbert said. "The breach may have arisen beyond the bank's control. For organisations with large customer bases, the notification requirement may result in a disproportionate cost compared with the possible harm caused by the breach." Jobs growth in the retail sector The retail sector added 34,000 jobs during the May quarter, with the number of people working in the sector up 47,000 year-on-year, according to the Australian Bureau of Statistics. The jobs growth coincided with a seasonally adjusted 3.1% year-on-year growth in retail turnover during April. “In real terms, sales in the year to March were stronger for durable items like vehicles (up 17%), furnishings and house equipment (up 4.1%) and service items such as health (7.1%), education (up 2.8%), insurance and finance (up 3.4%), communications (up 2.6%) and recreation and culture (up 0.8%),” said Citi economist Josh Williamson. Another Newspoll disaster for Gillard as Conroy considers new media reforms Labor’s primary vote has fallen to just 29%, while Julia Gillard’s support as preferred prime minister fell from 35% to 33%, according to the latest Newspoll, which also shows the government now trails the opposition 57% to 43%. Meanwhile, Communications Minister Stephen Conroy has flagged the possibility of taking further media reforms to the federal election, after the government’s previous media reform package failed to gain support from key independent MPs in March. “Obviously the policies weren't able to pass Parliament, they are dead, we wouldn't be proceeding with them or pursuing them. So we are having discussions among ourselves about what to take forward to the election," Conroy said. "We have to reconsider all of the options, reconsider what we think we can achieve, and that's what I'm talking to my colleagues about at the moment." “Labor's media regulation package was a classic example of Conrovian over-reach and mismanagement. Labor do not understand the importance of free speech and the primary role an independent media plays in our democracy," shadow communications minister Malcolm Turnbull said. Overnight The Dow Jones Industrial Average closed up 0.28% to14799.4. The Aussie dollar is buying US92.24 cents.
Growing up, your humble correspondent was taught to support the mighty Hawks in what was then the VFL (now the AFL), the Glenelg Tigers in the SANFL and the Penrith Panthers in the NSWRL (now the NRL). So it is with some trepidation and reluctance that Old Taskmaster, after reading a story in this morning’s paper, types the following phrase: Go north! Don’t worry, dear readers. There has been no traitorous shifting of allegiances. No betrayal of loyalties to hop on the bandwagon of the Roos, the Roosters or the (former) Bears. No acts of high treason have been committed. However, there is potentially a business opportunity you should consider. At this point, it is almost redundant to point out that the federal government is in a lot of trouble politically. Since announcing the Carbon Tax very early in this term, the opinion polls have quite consistently placed Labor behind in two-party preferred terms. Polls may come and go, according to the manual, but if they all consistently show one thing, it’s time to pay attention. Barring either one of the most miraculous political comebacks in Australian political history, Julia Gillard and the factions peacefully standing aside to Kevin Rudd or a series of major scandals hitting the Liberals, the outcome of the September election seems nearly certain. Tony Abbott will be Australia’s Prime Minister in September. A change in government and a new era of tougher federal budgets in Canberra will likely mean the end of some business opportunities, especially those depending on handouts from Labor programs. But new possibilities will also emerge. As Tony Abbott revealed today, one of the major projects of an incoming Coalition government will be the development of northern Australia. Over the next 15 years, Abbott promises northern Australia will go from being our last frontier to our next one. Here’s where things get interesting: The Coalition is examining a range of policy options, including business tax cuts and major infrastructure projects, in order to encourage development near the cities of Darwin, Cairns, Townsville and Karratha. Key government departments, including the CSIRO and Quarantine, will also potentially be relocated under the plan. (If any Coalition MPs read this blog, it might also be worth considering start-up incubators or funding for new enterprises up north, but that’s an aside.) What all this means, depending on your industry, is some lucrative new business opportunities might be opening up in the top end over the coming years. If you are considering establishing or relocating your business, there could potentially be government incentives opening up if you base it in one of our northern cities. Don’t get me wrong. As long-time readers will know, Old Taskmaster certainly doesn’t advise you at this point to up-root your family and relocate up north on the hope a politician will be honest. However, it is worthwhile taking a close look at the potential business opportunities that will open up if Abbott is serious about his plan. It’s also worth taking a look at precisely what incentives Abbott’s plan has for establishing a start-up in northern Australia. Get it done – and go north!
Prime Minister Julia Gillard warned about the “significant legal risks” of compulsory arbitration in a confidential 2010 letter to the ACTU, leaked to The Australian. The letter points out the government’s view at the time was that fair Work Australia should not be given new powers to settle disputes about national employment standards or modern awards by creating new rights, with such powers bringing the risk of a constitutional challenge. “Such a challenge would take time to be resolved and this in itself would create significant undesirable uncertainty around the validity of agreements, the bargaining framework and the (Fair Work) Act as a whole,” Gillard warned in the letter. Coles planning to shelve independent field agents Coles is considering a radical plan to sideline independent field agents by licencing a small number of agents with agreed fees that would deal with suppliers and the supermarket. “One area suppliers tell us we could improve is how we work with their field force teams – reps they employ to support their brand in-store,” a Coles spokesperson says. “So we are currently exploring options to make this service better for suppliers, better for our stores and most importantly better for customers.” Retailers embrace UnionPay in a bid for the $800 million Chinese tourist market A growing number of retailers including David Jones are embracing UnionPay, a bank card system favoured by middle class tourists from China, with $800 million expected to be spent through the payment system this year. “Overseas merchants pay careful attention to Chinese consumers. For example, foreign visitors are responsible for a significant portion of consumer spending in Australia and the Chinese are the most important part of this group,” UnionPay chairman Su Ning says. “We have long recognised that as retailers we are competing internationally and the ability to tap into the lucrative Chinese markets is a great strategic advantage for us,” David Jones chief executive Paul Zahra said. Overnight The Dow Jones Industrial Average is down 1.4% to 15,115.57. The Aussie dollar is steady at US96.24 cents.
The Gillard government is set to unveil a multi-million dollar taxpayer-funded advertising campaign, along with a new ‘Medicare-style’ levy to help fund the government’s $14 billion national disability insurance scheme. The new levy, set to begin next year, is expected to be set at 0.5% of income and raise $3.5 billion towards the federal government’s share of the scheme. Meanwhile, using the tagline “stronger, smarter, fairer”, the government’s new advertising campaign, in the lead-up to the September 14th election, will promote the Gonski school reforms, Medicare, the NDIS, Child Care Assistance, the NBN and 12% superannuation increase. BCA warns government has “lost control” of the budget Business Council of Australia chief executive Jennifer Westacott has lashed out at the federal government following the revelation earlier this week by Prime Minister Julia Gillard of a $12 billion black hole in the federal budget. “Let's be clear here – we don't have an economic problem, our economy is fundamentally strong. What we have is a budget management problem and it's a problem the government has had four years to address,” Westacott says. “Australia's fiscal problem was not created by the community. It was created through loss of control of fiscal strategy.” Telstra rolls out net promoter system to resellers Telstra has rolled out a net promoted system (NPS), which uses surveys to measure customers’ willingness to promote its brand, across its retail partner network. Under the system, Telstra franchisees are offered bonuses for reaching key customer satisfaction targets. “We've had a company-wide rollout of the net promoter system. Now NPS is both a system but also a cultural change and this has been one of the largest change programs that we've really ever undertaken in the country,” Telstra chief executive David Thodey said. Overnight The Dow Jones Industrial Average is up 0.1% to 14839.8 points. The Aussie dollar is up to US103.7 cents.
Small business advocates have delivered a mixed response to Prime Minister Julia Gillard’s announcement yesterday of a $12 billion budget shortfall, saying now is a good time to introduce some much-needed tax changes. However, some advocates and economists have warned the announcement may have a detrimental impact, with Gillard warning that new taxes may be imposed in order to pay for new spending on disability insurance and education. Finance Minister Penny Wong told the ABC this morning the government is considering a wide range of options, and did not deny the possibility of a levy to fund the National Disability Insurance Scheme. While economists say the deficit is not an economic problem, as Australia’s credit rating is secure, the impact on confidence could impact businesses. “The impact here is more on confidence and uncertainty,” CommSec economist Savanth Sebastian told SmartCompany this morning. “Until we get confirmation about what measures are put in play, that will be a concern. We’ve seen some improvement in confidence, and further cuts to tax concessions could have a detrimental impact.” Gillard said yesterday the budget will be affected by a drastic fall in revenue of about $12 billion. The Australian Financial Review has reported this will translate into a deficit of between $16 billion and $17 billion. Gillard also said yesterday the shortfall would mean putting “every reasonable option on the table” in order to plug the gap, “even options previously off the table”. The Prime Minister said the government would spend “less in some areas than we had hoped, to raise more in revenue in some areas than we had planned”. While the government has not targeted any specific areas, previous speculation had pinpointed self-managed superannuation and high-income earners as potential sources of revenue. Peter Strong, the chief executive of the Council of Small Businesses of Australia, told SmartCompany this morning the government should consider financing SMEs in order to boost medium-term growth. “We need to have better targeted funds for businesses that are identified as growing quickly,” he says, also adding the government should consider taxing purchases made overseas in order to raise GST revenue. However, Strong says the size of the deficit isn’t necessarily an issue for small businesses, per se. “At the micro-level, we look for solutions. What this suggests to me is that we need to get our micro-economics right.” Savanth Sebastian agrees the size of the deficit isn’t necessarily a large problem, especially as it has shrunk since last year, but points out the impact on confidence such a big budget gap could have. “We’ve seen some improvement in confidence, and that translates to business confidence,” he says. “Further cuts to tax concessions and revenue can have a detrimental impact on that early boost to confidence.” Sebastian also says the deficit means the Reserve Bank is in a position to ease interest rates even further. However, not every business group is so pleased. The Australian Chamber of Commerce and Industry released a harsh response to yesterday’s announcement. Head of economics and workplace relations Greg Evans said the latest writedown “puts the onus on the government to properly deal with spending”. “Business is indicating that a major cause of uncertainty is the inability for the government to get its fiscal house in order and to set out a pathway back to surplus.” “This has become our number one economic priority as without a sustainable budget there is no scope for the major economic reforms required such as delivering a tax system that promotes incentive and enables productivity improvements.” This story first appeared on SmartCompany.
Prime Minister Julia Gillard has warned “every reasonable option is on the table” to deal with a $12 billion budget shortfall and fund the Gonski school funding reforms and NDIS, in a speech delivered to the Per Capita Institute yesterday. “I have expressly determined we need to have every reasonable option on the table to meet the needs of the times – even options previously taken off the table… The nation and the government must have maximum flexibility to deal with these complex, and rapidly changing, events … that is my approach,” Gillard said. “All options are on the table, so increased tax on superannuation, increased taxes on the family home, death duties, which Wayne Swan ruled out in Parliament – all options are on the table,” Shadow Treasurer Joe Hockey said in response. Merrill Lynch downgrades Woolworths over $800 million Masters loss Merrill Lynch has downgraded its earnings estimates for retail giant Woolworths over concerns its home improvement chain Masters is set to lose $800 million over the next four years. Despite Masters generating gross margins of 42%, compared to 32% at rival Bunnings, the brokerage firm predicts losses for the chain of $135 million this financial year, rising to $265 million in 2015/16. “The problem for Masters is, despite its very high gross margin… its costs per store are currently inhibitively high,” analyst David Errington said. BHP sells US Pinto Valley mine for $629.5 million Mining giant BHP Billiton has announced it has sold its Pinto Valley copper mine in Arizona to Canadian firm Capstone Mining for a better-than-expected price of $629.5 million. Pinto Valley was one of 10 non-core assets or offshore assets flagged for sale by BHP in response to weaker cashflows as a result of lower commodity prices. Overnight The Dow Jones Industrial Average is up 0.72% to 14,818.75. The Aussie dollar is down to US103.51 cents.
The small business community could be hit by the Coalition's proposal to tax the largest 3200 companies in order to fund its maternity leave scheme, with tax experts warning smaller companies are in danger of being affected. The warning comes as Prime Minister Julia Gillard's budget troubles have continued, as she is set to announce today the government will record a shortfall of $12 billion in next month's budget – a figure worse than expected. Economists and business groups have said they are concerned about the announcement, and what long-term effects it could have on the nation's finances. The Coalition has made the maternity leave scheme a pillar of its election campaign. The 3200 largest companies will be taxed an extra 1.5% in order to fund the plan, which will pay primary carers a full six months' salary. Coalition leader Tony Abbott has said the program will come alongside a reduction in the corporate tax rate for other businesses, although reports indicate this proposal is in jeopardy. The Tax Institute tax counsel Deepti Paton told SmartCompany this morning the category of largest 3200 companies squarely hits a number of SMEs. Paton points to the ATO's own statistics. The ATO categorises the number of "very large" companies existing in Australia at 927. These companies have income more than $250 million. However, there are only 1099 companies in the next biggest category, "large" businesses, which have income between $100 million and $250 million. This means, in order to fulfil the 3200 companies target slated by the Coalition, it needs to tax businesses in the "medium" category, of which there are 12,916 businesses. These have income between $10 million and $100 million. Paton told SmartCompany while the organisation has "always been very supportive of a tax rate cut when it can be afforded", the impact of taxing smaller organisations cannot be denied. "The notion of affordability has to be counter-balanced," she says. "We'd like to see a cohesive plan that maximises productivity for Australian businesses and SMEs." Paton also points out the ATO also can define an SME as a business earning anything up to $250 million. Meanwhile the government is set to announce the current budget shortfall is even worse than feared. Prime Minister Julia Gillard is set to announce today the May budget will produce a shortfall of $12 billion – but no new spending programs such as education and disability reforms will be targeted for spending cuts. The deficit of the 2012-13 year is now expected to be at least $11 billion. The Department of Prime Minister and Cabinet was contacted this morning regarding the announcement, but no reply was received prior to publication. The Australian Financial Review has reported Gillard will announce the deficit today. It comes as two new reports from the Grattan Institute and Macroeconomics have found the government is facing long-term deficits as a result of both weak revenue trends and new spending initiatives. Gillard will reportedly say today the budget must "respond to the huge reductions in revenue growth over the next four years", but it also needs to "make necessary investments in the nation's future to ensure that none of our people are left behind". The major problem is not spending, Gillard is expected to say, but falling revenue rates. Australian Chamber of Commerce and Industry head of economics, Greg Evans, told SmartCompany this morning the announcement "puts the onus on the government to properly deal with spending in the next federal budget". "Without a sustainable budget there is no scope for the major economic reforms required such as delivering a tax system that promotes incentive and enbales productivity improvements." AMP economist Shane Oliver says while the shortfall isn't a significant problem in the sense we already knew the budget wouldn't deliver a surplus, it does underline a "broader issue". "Where it's probably a longer-term problem is the fact it's underlined Australia has a revenue problem." "We're not in dire straits...but instead of years of surpluses we may expect several years of deficits." This story first appeared on SmartCompany.
Prime Minister Julia Gillard is set to use a speech at the Per Capita Institute think tank in Canberra to reveal a $12 billion forecast deficit in the federal budget this financial year, due to lower taxes from companies. However, despite the massive shortfall, the Prime Minister is expected to rule out cuts to major new spending initiatives, including the Gonski school funding reforms or DisabilityCare. “Put simply, spending is controlled, but the amount of tax money coming to the government is growing much slower than expected. As we make those decisions, let me be crystal clear about what we will and won't do,” Gillard is set to say in the speech. “Our nation cannot afford to leave children behind or to leave our nation's future economy limping behind the pack, unable to attract the high-wage, high-skill jobs of the future … DisabilityCare must not be jeopardised.” Rupert Murdoch to cash in on News Corp split Rupert Murdoch’s remuneration is set to jump by nearly $4 million as a result of a split that will see News Corp divided into two separate companies in June. Under the proposal, Murdoch is set to become chairman and chief executive of the 21st Century Fox corporation, which will control his media empire’s broadcasting and entertainment assets, as well as the executive chairman of the “new News Corp” which will control the company’s publishing assets. While Murdoch’s base salary will remain at $US20.6 million for his role with both entities, his long-term incentives are set to increase from $US4 million to $US7.7 million. James Packer gains approval for Sri Lankan casino The Sri Lankan government has reportedly granted approval to gaming tycoon James Packer for a new casino in Colombo, according to a report in Sri Lanka's Business Times. Under the proposal, the $250 million Crown Colombo complex will include a 36-story casino and resort complex, to be built in the D.R. Wijewardena Mawatha district of Colombo. A Crown spokesperson said the gaming giant is yet to make a final decision on whether to go ahead with the project, and is evaluating a number of other offshore expansion opportunities. Overnight The Dow Jones Industrial Average is up 0.1% to 14712.6. The Aussie dollar is down to US102.82 cents.
Prime Minister Julia Gillard has announced plans to boost school funding by $14.5 billion over the next five years, with the federal government to contribute $9.4 billion while the states contribute the remaining third. However, while New South Wales appears keen to support the plan, the federal government has met opposition from the state governments of Victoria, Queensland and Western Australia. “This model would see Western Australian students penalised because of this state's high level of investment in our schools. This investment in part recognises that some of our students are among the most vulnerable in the nation," WA Premier Colin Barnett said. Turnbull confident of Telstra deal Shadow communications minister Malcolm Turnbull says he is confident a Coalition government would be able to reach an agreement with Telstra over its alternative broadband policy. Announced last week, the Coalition’s policy would see fibre optic cables laid out to street cabinets, or nodes, with Telstra’s existing copper covering the final mile to subscribers’ homes. “Tension with government has never been good for Telstra shareholders. I am very confident that we'll achieve speedily the slight rearrangements to the agreements we're talking about,” Turnbull said. Private insurer attacks comparison sites over affordability Medibank Private managing director George Savvides has attacked health insurance comparison websites, claiming brokers drive up costs for consumers, ahead of a potential public listing. “[Comparison sites] haven't really changed the dynamics of affordability. In fact, I'd argue they're adding to costs because of the commission,” Savvides told Fairfax. The claim is disputed by iSelect chief executive Matt McCann, who believes the services also benefit insurance providers. “Those [funds] that don't participate in the comparison channel have found it hard to grow in this market. And for us, funds wouldn't use us if we weren't an efficient form of distribution for their products,” McCann said. Overnight The Dow Jones Industrial Average closed down 0.08 points to 14,865.06. The Aussie dollar is down to US105.05 cents
The business community has welcomed a new direct currency trading deal between Australia and China, but an entrepreneur says there are still key challenges facing Australian start-ups keen to strike partnerships within the economic powerhouse. Prime Minister Julia Gillard has announced the Australian currency will be directly traded and converted with the Chinese currency. Under the agreement, the Australian dollar will be directly convertible into Chinese yuan, easing costs for companies. China only has deals of a similar nature with the United States and Japan. ANZ and Westpac are the first two Australian banks licensed to handle the conversion in China. The Australian Chamber of Commerce and Industry welcomed the move, with chief executive Peter Anderson saying: "Making it easier to do business often involves a myriad of small steps, of which today's announcement is just one, but an important and welcome one." Speaking at the China Executive Leadership Academy in Shanghai, Gillard said the deal “reflects the rapid growth of our bilateral trade and the value of two-way investment”. Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, said in a statement the agreement is a boost to exporting businesses. “Whilst developing commercial and trading relationships in China requires the long-term relationships and business plans, the opportunity for direct currency conversion removes an obstacle,” Anderson said. “There is potential benefit not just to major resource industry investors, but also small and medium enterprises, such as Australian professional services companies.” According to Jim Vrondas, OzForex chief currency and payment strategist for the Asia-Pacific, the agreement could save small businesses thousands of dollars in exchange fees every year. “It would cut costs, due to no longer having two separate conversion fees,” Vrondas said in a statement. “Savings could be somewhere in excess of 1%, so for an Australian importer sending AUD1 million into CNY [yuan] at the moment, it could be a $10k saving.” But Dean Ramler, co-founder of online furniture retailer Milan Direct, which uses Chinese manufacturers to replicate European designs, says there are still challenges facing Australian start-ups in China. Here are Ramler’s top three potential hurdles faced by Aussie start-ups. Changing working conditions “Payment conditions have changed in the last five or six years,” Ramler says. “It used to be a low cost manufacturing base in China but no so anymore. Material costs have gone up, wages have gone up. “At the same time, the Australian market is seeing new competitors in the market every week. “Milan Direct was the first online seller of furniture six years ago. Today there might be 100 competitors… The price point is going down but the cost is going up.” Fewer niche operators “I think China’s caught onto the fact that anything they make, somebody’s going to buy it,” Ramler says. “I’ve seen factories that one week are selling timber furniture and the next week they’re making kitchen products… [They] don’t specialise in anything. “Everyone who quits their day job wants to be an online entrepreneur. They’re starting up online without having any passion for the product and just ordering containers off the internet. “The big shock comes when the consumers are really smart, and demand amazing products at amazing prices. “If start-up entrepreneurs don’t have a background in quality, the customer will be really disappointed, so you have to be careful there.” The slow burn “Chinese businesspeople value relationships first before doing business,” Ramler says. “If you want to be a long-term successful company in Australia, it’s definitely important that you continue speaking to all different factories in Asia every month. “With one factory, we were speaking to them for four years before we placed our first order… You really have to spend the time on the ground in China and Asia, and work together.”
Prime Minister Julia Gillard is set to announce a new small business minister as part of a cabinet reshuffle, following the mass-resignation of ministers aligned with Kevin Rudd. Attorney-General Mark Dreyfus has named Jason Clare, Sharon Bird, Mike Kelly, Andrew Leigh and Gai Brodtmann as potential beneficiaries of the reshuffle. Aside from the small business portfolio, other key ministries to be filled include resources, tourism, tertiary education, science and research, local government and the arts. Cyprus set to re-introduce one-off bank deposit tax The government of Cyprus is set to reintroduce plans for a one-off levy on bank deposits, with the government needing to raise $7.74 billion in order to obtain a $13 billion bailout package from European banking authorities. While the tax would not affect people with deposits less than $125,000, all deposits above that amount at the Bank of Cyprus will be taxed at 20% under the revised plan. The original proposal, which was voted down amidst large protests, would have seen all deposits impacted by the one-off tax. Tougher loans for “at-risk” businesses: Report Banks are imposing tougher loan conditions on businesses in sectors deemed to be at risk, according to a new survey of more than 30,000 businesses published by Macquarie and research company East and Partners. Around 10% of business in the mining sector surveyed for the report have seen their loans re-priced, compared to a national average of 6%. Businesses in the “at risk” retail, manufacturing and media sectors are also burdened with tougher loan conditions, according to the survey. Overnight The Dow Jones Industrial Average added 0.63% at 14,512.26. The Aussie dollar is steady at US104.38 cents.
Labor is in turmoil today after senior frontbencher Simon Crean called for a leadership spill, and announced he’d run for deputy. Refresh for rolling updates … 4.46pm: Julia Gillard remains PM. No one challenged her. ALP spokesman Chris Hayes MP has emerged from the caucus meeting to formally announce that there was only one nomination each for the role of prime minister and deputy prime minister; Julia Gillard and Wayne Swan respectively, “Both were duly elected unopposed and unanimously by the parliamentary caucus,” Hayes said. ”It puts beyond doubt the issue of leadership in the parliamentary Labor party.” 4.21pm: Kevin Rudd has just faced the media to announce he will not stand in the leadership ballot. Flanked by supportive colleagues in the corridor of Parliament House, Rudd said he had previously pledged he would only stand if the overwhelming majority of the party requested his return and the top position was vacant, circumstances, he said, which had not been met. Rudd said he would adhere absolutely to his commitment; “I take my word seriously”. He called on the party to unite to ensure Tony Abbott did not walk into the Lodge. 4.16pm: Labor MPs are expected to start filing into the leadership spill any minute. Meanwhile, spare a thought for the people affected by the forced adoption of children in the 20th century. They received a heartfelt and long-awaited apology from Julia Gillard and Tony Abbott this morning, but that’s been eclipsed by the #spill. 3.40pm: We still don’t even know if Rudd will nominate for leader at the spill at 4.30pm. This update from ABC reporter Latika Bourke: SkyNews reckons the following Labor MPs have been spied in Rudd’s office: Ed Husic, Tony Zappia, Richard Marles, Stephen Jones. Confusion reigns in Parliament House. Normally MPs would be getting ready to head to the airport and leave Canberra as the sitting week wraps up. Not this time. They’re frantically phoning around and changing their flights. 3.25pm: Sportsbet has Rudd the frontrunner at $1.30 with Gillard at $3.00. But she’s fighting back — she was at $6.00 half an hour ago. And she just now dropped to $2.80. And she’s got this vote sewn up — outspoken Labor MP Steve Gibbons tweets this (Gillard’s winning the race on Twitter FYI): 3.11: Treasurer Wayne Swan weighs in. He is highly likely to go down with Gillard should she lose today's ballot. 2.56pm: Bernard Keane writes: Question Time has come and gone, with an attempt by the opposition to suspend standing orders to move a motion of no confidence failing. The motion was supported by independents Rob Oakeshott, Tony Windsor and Andrew Wilkie but failed to achieve the necessary absolute majority of the House. A motion of no confidence — Tony Abbott’s first — may not have been particularly interesting given Gillard remains Prime Minister and thus her agreements with Oakeshott and Windsor remain in place. Wilkie has indicated he will only vote no confidence in the case of a major scandal. The Prime Minister’s speech in response to Tony Abbott’s motion to suspend remarks contain little of her usual back-against-the-wall fire, but relied on outlining her achievements and warning that she had more left to do. Meantime the counting game is on in earnest, with attention focusing on how many numbers Simon Crean can bring over to the Rudd camp, estimated to be no more than 35-40 MPs. The problem for Gillard is that a victory will do nothing to address Simon Crean’s defection or the persistence of a core of Rudd supporters of around a third of the caucus. 2.42pm: Julia Gillard has shut down question time after Abbott’s move to have a no-confidence motion in her failed. 2.25pm: Tony Abbott, in question time, tells Gillard: “I say to the current Prime Minister, for your party’s good you should go. For your country’s good, you should go.” Gillard is now firing back at Abbott. Note that Kevin Rudd is in the chamber, as is Simon Crean; but Crean has gone to the backbench after precipitating today’s dramatic events. Remember the last time this happened, when Rudd and Gillard faced off in February 2012? Key Rudd supporters were Anthony Albanese, Martin Ferguson, Chris Bowen and Kim Carr. Penny Wong, Tanya Plibersek, Wayne Swan, Stephen Conroy and Simon Crean all backed Gillard. Crean has now shifted — and who else? 2.17pm: We’re in question time. Tony Abbott has moved a no-confidence motion in the PM, and is listing what he says is a litany of Labor failures. Meanwhile, Labor MPs have started to tweet how they’ll vote. Here’s ACT Senator Kate Lundy: 2.04pm: News Limited journalist Phillip Hudson tweets: 2.01pm: Prime Minister Julia Gillard tells question time there will be a ballot for the leadership at 4.30pm today. 1.45pm: Labor frontbencher and former leader Simon Crean has pulled the trigger on the Labor leadership crisis, calling for Prime Minister Julia Gillard to spill all leadership positions and backing Kevin Rudd with himself as deputy leader. Crean’s intervention comes as the climax for an extended leadership dilemma for Labor, with Rudd’s camp unable to muster the numbers to defeat Gillard despite a dreadful start to the year in the polls. However, there are important process issues to be addressed. Crean has indicated he doesn’t expect the Prime Minister to accept his plea to spill leadership positions, in which case it will be up to her opponents to muster the 35 votes to successfully call a spill in caucus via the caucus chairman before MPs leave tonight (prospects of Parliament sitting tomorrow have evaporated with the withdrawal of the media reform bills). Crean, who has been a strong supporter of the Prime Minister, said he wanted a circuitbreaker for the continuing destabilisation and that Labor’s problems would not be solved by simply swapping leaders. Labor needed to demonstrate it believed in something, he said. The move by the former leader (and persistent critic of Rudd) breaks the impasse Labor found itself in with the Rudd camp unable to muster anywhere near sufficient numbers to defeat Gillard and Rudd himself repeatedly, in private and in public, saying he would not challenge under any circumstances. With a leadership spill initiated by Crean, Rudd now has the chance to stand; indeed, there is no way Rudd can avoid standing. Crean also portrayed himself as a deputy capable of ensuring Rudd, whose wretched management style was one of the key reasons for his downfall in June 2010, would be a more inclusive leader if he takes over again as prime minister. That has been a persistent problem for Rudd backers, with the memory of Rudd’s behaviour as leader still strong in many backbench minds, as well as being a reason why a number of cabinet ministers indicated either publicly or privately they could not work with him again. Crean also ruled out seeking the treasurership, which has long been rumoured to be promised to the New South Wales Right’s Chris Bowen, who backed Rudd last February and is his highest-profile ministerial backer. There are disputed media reports that the NSW Right will back Rudd, which combined with Crean’s support would make Rudd very difficult to stop in a leadership contest. Crean has said he wishes to retain his ministerial position pending the outcome of the current contest. This story originally appeared on Crikey.com.au.
Prime Minister Julia Gillard is fighting to keep proposed media reforms alive, following an interview on the ABC’s Lateline program where independent Tony Windsor expressed concerns about the package. "I don't think the numbers are there for a great portion of this to get through," Windsor said. Meanwhile, Fairfax media reports that the Minister for Mental Health and Ageing, Mark Butler, and Foreign Affairs Minister Bob Carr have shifted their support away from Prime Minister Julia Gillard towards leadership rival Kevin Rudd. Cyprus crisis shakes Australian markets The government of Cyprus has postponed a vote on a controversial tax on savings, which forms part of its austerity package, leading to more than 2% being wiped off the value of Australian shares. The vote would have ratified a deal struck between Cyprus, the IMF, the European Central Bank and other lenders to levy a once-off tax on all bank deposits of 6.75% for amounts up to €100,000 ($A124,000) and 9.9% for deposits above €100,000 as part of a bailout package. ASIC report says high speed trading risk is overstated The Australian Securities and Investments Commission has released its report into computerised high speed trading. While the report from the corporate regulator recommends some reforms, it also finds that the impact of the practice in Australia has largely been overstated. “There is a belief by some that high-frequency trading is manipulative in a legal sense, or at least predatory in nature, and there is a perception that high-frequency traders uniformly have less regard for market integrity. That perception is not supported by our study,” the report states. Overnight In New York, the S&P500 is down 0.64% to 1550.65. The Aussie dollar is up to US1.0391 cents.
The Australian Securities and Investments Commission will today release a report into high speed trading and will reveal whether it intends to join Germany, France and the European Union in regulating the practice. The report examines whether “dark pools” – where high volume, high speed trades are placed electronically through computer algorithms without human intervention – could in some cases constitute a form of market manipulation. ALP vice president backs 457 visa crackdown, slams Mark Latham ALP vice president and Transport Workers Union secretary Tony Sheldon has backed Julia Gillard’s 457 visa crackdown and launched a stinging attack on former leader Mark Latham’s Quarterly Essay, in an address to the ALP national organisers forum in Canberra over the weekend. "It's simply a way for unscrupulous employers to bypass the local job market and escape their responsibilities to employ and train our children. And it is made worse by the fact that the 457 visa was leaving people highly vulnerable to exploitation," Mr Sheldon said. "When it comes to our philosophy and our story, we've been fitted-up by our opponents in the conservative side of politics and by some of our former friends too, including a certain former leader who has just published a Quarterly Essay.” A run on the banks in Cyprus Cyprus has experienced a run on the banks following the introduction of a new tax on savings, after the European Union decided part of a new €10 billion ($A12.49b) would have to be paid for by a tax on savings. The once-off tax will see Cypriots pay 6.75% of their bank deposits under €100,000 and 9.9% of savings over €100,000, with the government claiming the move will avert the need for a Greek-style austerity package. Despite most major banks placing a €400 limit on withdrawals, most ATMs had run out of cash by the early evening. Overnight The Dow Jones Industrial Average closed down 0.17% to 14514.11. The Aussie dollar is down to US103.45 cents.
Irate business groups across Australia have slammed Prime Minister Julia Gillard's announcement yesterday confirming penalty rates are here to stay.