Prime Minister Tony Abbott and Japanese Prime Minister Shinzo Abe have struck a bilateral trade agreement that will see tariffs cut on Australian agricultural exports. Under the agreement, Japan’s tariff on Australian beef will be cut from 38.5% to 19.5% and the duty-free quota for cheese will increase from 27,000 tonnes per year to 47,000. Exporters of fruit, vegetables, seafood, sugar and wine will also benefit from the agreement, although tariffs will remain on Australian rice exports to Japan. In return, Australian tariffs on consumer electronics and whitegoods will be lowered, while Japanese-made cars will be $1500 cheaper, on average, under the agreement. “This is the first time that Japan has negotiated a comprehensive economic partnership agreement or free trade agreement with a major economy, particularly a major economy with a strong agricultural sector,” Abbott said. Another seasonally adjusted boost to job ads There was a seasonally adjusted 1.4% increase in job ads during March, on top of a sharp 4.7% rise in February, according to the latest ANZ job ads series. The survey marks the fifth consecutive increase in job ads, which are seen as a good indicator of future movement in unemployment figures. “The trajectory of the pick-up in job advertising will be important for gauging the timing and pace of future interest rate rises,” ANZ's Australian chief economist Ivan Colhoun said. “ANZ continues to expect the cash rate will remain unchanged in 2014 and increase modestly by 1 percentage point to 3.5% over 2015.” Wesfarmers sells insurance business The parent company of supermarket giant Coles, Wesfarmers, has announced the $3 billion sale of its insurance business to global broking group Arthur J. Gallagher, following the sale of its insurance underwriting business in December. The company expects profits from the deal of between $310 million and $335 million, increasing the total profits from its insurance sell-off to over $1 billion. “It will either reduce debt or [we will] find a way of returning the proceeds to shareholders, or we'll find an investment. We're always looking at opportunities to invest, and we've got a track record of being very disciplined,” chief executive Richard Goyder said. “We're not going to sit on an undergeared balance sheet for too long either … we've got a track record of returning money to shareholders if we don't need it.” Overnight The Dow Jones Industrial Average is down to 16245.9. The Aussie dollar is down to US92.70 cents.
Competition watchdog the ACCC has secured a deal with supermarket giants Coles and Woolworths capping petrol discounts at 4¢ a litre. The deal will see large cross-subsidies for fuel, estimated at between $350 million to $509 million in 2013, reallocated to deeper discounts on grocery items. “I'm quite pleased with them giving discounts off groceries and discounts off petrol – it was the linkage we objected to,” ACCC chairman Rod Sims says. “[The major supermarket chains were] using their position and profits in one market to subsidise prices in another market – that was what was causing the problems. “Our evidence was it appeared when shopper dockets went above 4¢ a litre that petrol prices went up. People who didn't have shopper dockets were paying more for petrol when shopper dockets went above 4¢ a litre.” Jetstar Asia records a profit as Qantas nosedives Jetstar Asia, a joint venture partly owned by troubled airline Qantas, has reported a small full-year profit for the year to June. The airline, owned 49% by Qantas with the remainder held by Singaporean businessman Dennis Choo, posted a bottom-line profit of $S2.5 million ($A2.2 million) for the year to June, compared with $S2.1 million a year earlier. However, the carrier faces intensifying competition from other low-cost carriers in south-east Asia, including Malaysia's AirAsia and Singapore Airlines-backed Tiger Airways. Chinese shadow banking warnings Experts are warning China’s economy could be derailed by excessive borrowing through the shadow banking system, with the sector now accounting for the equivalent of 40% of China's gross domestic product (GDP). The growth of the sector has been caused by strict lending requirements to non-government entities, forcing many businesses to look elsewhere for finance. “Shadow banking is the financial activity that exists outside the formal banking sector,” says Peking University finance professor Michael Pettis. “So it includes things like wealth-management products, it includes pawn shops, it includes a wide variety of things – but basically it's the non-regulated part of the banking sector.” “There's been an increasing sense that a lot of [that] borrowing is simply going to protect existing borrowers from going bankrupt.” Overnight The Dow Jones Industrial Average closed up to 15882.2. The Aussie dollar is at US87.53 cents.
Dan Flynn, the founder of social enterprise Thankyou Group, has this week been named Young Victorian of the Year and will go on to represent the state for the title of Young Australian of the Year. Thankyou Group produces bottled water, food and body care products, with much of the funds going to development projects in Africa. Flynn told StartupSmart the award was recognition of broader Australia embracing innovation and new approaches. “It’s important every part of society embraces new models and innovation in every industry,” he says, adding it was especially important for social good as donations begin to drop off. “Social enterprise is bringing a new approach as people are pulling back from donating,” Flynn says. “There are benefits to being a social enterprise but charities have their own benefits too. It would be amazing to be just given money and do the work you want and the world needs. But we have to earn it and fight competitors for it.” In 2013, the Thankyou Group team achieved a major breakthrough, getting their products onto the shelves of Coles and Woolworths through a massive mobilization of their social media networks. In 2014, Flynn says his team will be focused on launching new products and pursuing further retail partnerships. “We’re really focused on making Thankyou a household name. It’s not for bragging rights, it’s to get millions of Australians on board and make a major impact in the development projects and communities,” he says, adding they’ll also be launching significant campaigns to boost awareness about their range and impact. “We want people to know they’re making a real impact. And through that, we want it to become weird if a retailer doesn’t stock us because the public is behind us.” Flynn shared their rocky start and three years of tears and challenges with StartupSmart earlier this year. Young Australian of the Year will be announced at the Australia Day Awards celebration this weekend.
Federal government ministers have been warned to expect deep budget cuts early next year, with deficits likely to surpass $120 billion over the next four years. The Australian reports that spending growth is running at almost twice the rate claimed as early as May. It says ministers have said that budget savings measures were being put off until the government’s razor gang could consider cuts proposed by its Commission of Audit. Wesfarmers sells insurance underwriting business for $1.85 billion Wesfarmers, the conglomerate that owns supermarket chain Coles, has sold off its insurance underwriting business to Insurance Australia Group for $1.85 billion. The deal, if approved by competition regulators, will make IAG the largest insurance provider in Australia and New Zealand. Wesfarmers chief executive Richard Goyder says exiting the insurance business will de-risk Wesfarmers’ portfolio of companies. Toyota seeks to cut worker entitlements Car maker Toyota is seeking to cut nearly 30 employee benefits at its Victorian plant to help pay for wage rises due next year. Toyota has been prevented by the Federal Court from holding a vote of workers on the proposed changes. The changes include cutting double-time-and-a-half pay on Sundays, extra payments for work considered “unusually dirty or offensive”, four-hour paid leave for employees who donate blood, and lowering the number of training days. The company has warned it faces “unprecedented pressure” to continue to make cars in Australia following the decision of GM Holden to stop making cars locally by 2017. The Dow Jones Industrial Average is up 0.8% at 15,886.46 points, while the Australian dollar is down at 89.5 US cents.
The Australian Competition and Consumer Commission is close to reaching a deal with Coles and Woolworths over fuel docket vouchers, which could place a cap on discounts. A deal would see the competition regulator continue to allow the retail giants to offer discounts, while preventing the offers spiking to 40 cents off per litre. It is hoped a deal, which could be announced by Christmas, will take the political heat out of the issue, after independent retail groups called on both sides of politics to outlaw the practice entirely prior to the last election. Retail sales figures beat forecasts Australian retail sales beat analysts’ forecasts during the month of October, according to new figures from the Australian Bureau of Statistics. The figures show a 0.5% increase for the month, following a rise of 0.9% in September, beating analysts’ forecasts of a 0.4% rise. The result marks the sixth consecutive month of increases in retail sales, with results up in all states and territories except South Australia. Dick Smith shares expected to trade strongly after listing Shares in electronics retailer Dick Smith are expected to trade strongly after listing today. The mid-cap retailer expected to reach a market capitalisation of $520 million just one year after being sold to private equity firm Anchorage Capital Partners for just $94 million by Woolworths. “We are opening a fair few stores in coming days,” Dick Smith chief executive Nick Abboud says. “Eight shops in basically four weeks, it's fairly significant. There wouldn't be many retailers opening eight shops in four weeks and this is where the excitement is for us, and more so for fiscal 2015 because you get a full year [of new stores].” Overnight The Dow Jones Industrial Average is down to 15903.6 The Aussie dollar is up to US91.42 cents.
Optus Innov8, a start-up accelerator program, has appointed Humphrey Laubscher to be a senior associate on their management team. Laubscher has worked as an IT business consultant for years and been actively involved in the Australian start-up scene for six years. He’s currently a mentor for the Newcastle-based Slingshot accelerator program. Laubscher steps into the team after the third principal, Rebecca Hay’s, departed the team. Laubscher joins principals Peter Huynh and Alfred Lo. Laubscher says he’s looking forward to helping address what he sees as a big gap in the Australian start-up ecosystem. “At the moment, there is a huge gap in terms of entrepreneurs wanting to get started in Australia. There are a lot of accelerators in Melbourne, Sydney and increasingly other cities. There are lots of places you can get $50,000 to launch an idea, but there is nothing to help start-ups bridge from there to a series A round of $2 to $3 million,” Laubscher says. Laubscher told Startupsmart he first met Huynh, Lo and Hay at a networking event in Melbourne. “I was surprised to see the principals of this program, run by such a big company brand at the grass roots,” Laubscher says. “I’m hoping to provide lots of people with the opportunity to give their dream a go.” Laubscher, who previously worked on projects for National Australia Bank and Coles, says he was attracted to the start-up scene because of the entrepreneurial spirit. “I was tapping into the entrepreneurial spirit of wanting to build something myself. In the beginning, I just wanted to go from managing and implementing products to actually building them, as that’s more fun,” Laubscher says, adding he always had a few start-up projects of his own on the go. “I quit my corporate consulting job to launch one a few years ago, but it didn’t work out. I didn’t have enough money and fell in love with NFC (near field communication), which still hasn’t quite taken off yet,” Laubscher says. He has previously worked at start-up incubator Pollenizer and interned at Australian data science competition start-up Kaggle, now based in the US.
Federal Agriculture Minister Joel Fitzgibbon has unveiled a new policy, dubbed “Fair Go for Farmers”, which it claims will see Coles and Woolworths sign contracts with producers that will provide farmers with better business protection. “This plan from federal Labor will help ensure farmers and consumers get a fair go and aren’t being ripped off,” Fitzgibbon says. “We will implement a set of common sense measures that support farmers and help them get on with what they do best – producing food for Australians and our export markets. “Farmers make a massive contribution to our economy and are caretakers of vast areas of the country. They should be able to focus on improving their farm efficiency and profitability, not be tied up with complex and protracted contract negotiations.” Figures show increase in company collapses as mining boom ends The Australian Securities and Investments Commission has revealed new figures showing the number of companies in administration reached 900 during June. The figures, analysed in a new report by FTI Consulting, show the end of the mining boom has created conditions in some sectors as difficult as those seen at the start of the GFC. “It is the first time 900 or more companies entered external administration over five consecutive months," FTI Consulting says. "So far in 2013, 5321 companies have entered external administration, a record for the first six months of a year.” Oil price jumps over the Syrian stand-off Oil prices have jumped to their highest levels in 18 months as a stand-off continued over the alleged use of chemical weapons by the Syrian government, raising concerns over Middle Eastern oil supplies. In New York, the benchmark contract WTI crude for October delivery jumped to $US109.01, the highest level since February 2012. Meanwhile in London, the price of Brent North Sea oil jumped to $US114.36. Overnight The Dow Jones Industrial Average is down to 14776.13. The Aussie dollar is up to US89.79 cents.
Supermarket giant Coles has agreed to stock products by social enterprise Thankyou after a social media campaign to demonstrate demand. The Thankyou group asked its social media followers and the general public to post comments and upload videos to the Coles and Woolworths Facebook pages and get in touch through Twitter. Founder Daniel Flynn told StartupSmart this morning that while he was surprised by how rapidly Coles agreed, it was a delayed dream come true. “When we first launched five years ago, we thought we’d be everywhere straight away. So that’s certainly not the case at all, and it was definitely a reality check. But that’s part of building any brand and business – it takes time,” he says. Flynn told StartupSmart on the campaign’s launch morning earlier this month that even he was surprised by the thousands of comments and likes appearing on the pages. The launch video has been watched over 70,000 times. Flynn met with executives at Coles last Friday and found out within hours Coles would stock muesli, oats, muesli bars and water from Thankyou. The Thankyou group goes into further meetings today about timelines and first orders. Flynn says they’re meeting with Woolworths tomorrow. “It’s all eyes on them now. It’s a win-win for everyone, and Coles saw that. We have the same opportunity for them, so we’re looking forward to seeing their response,” Flynn says. “It would be surprising if Woolies don’t listen to their customers as well.” Flynn says he’s aware he’s negotiating outside of the supermarket’s usual period for selecting its range. “It is out of normal ranging time. Everyone we spoke to in this industry said to get something on the shelves this side of Christmas is literally a dream,” Flynn says, adding that Coles mostly asked about the development projects rather than the product. The team is also in discussions for a new range of products with existing partners including 7-Eleven and South Australian supermarket chain Foodland. Flynn says while they’re not clear yet on exactly what level of growth will be, they’re ready. “It’s still anyone’s guess before we see the sales data. We’re focused on making sure we’ve got our supply side nailed. We need to hone the distribution model to make sure there is no breakdown,” Flynn says, adding all of its suppliers work with Coles and Woolworths for other clients, so have the understanding and capacity.
THE NEWS WRAP: Coles looks to extend “approved” field agent program to convenience stores and liquor7:36PM | Sunday, 7 July
Wesfarmers-owned supermarket giant Coles is examining the possibility of extending its proposed ‘licenced’ field agent plan to its Coles Express convenience stores and liquor store chains, including Liquorland, First Choice and Vintage Cellars. Under the proposal, independent “field agents”, who currently act as representatives of suppliers, would need to be “approved” by the supermarket giant in a move expected to reduce fees. “Most of our large and medium suppliers maintain a significant field force to visit our stores on a weekly basis. Up to 30 field reps visit our stores in a day,” a leaked Coles tender document states. “To resolve all these issues, Coles is exploring options for creating a panel of third-party field force companies that could be used by our suppliers.” Mining industry urges end to “green tape” duplication The mining industry is urging the federal government to cut “green tape”, claiming the duplication of approvals processes between the federal and state governments delays projects and adds costs for little environmental benefit. “A study by the Australian National University shows that in the first 10 years of the operation of the commonwealth's project approval laws under the EPBC Act, an extra $820 million had been added to the cost of approvals for no extra environmental protection," said Minerals Council of Australia chief executive Mitch Hooke. "There is ongoing demand for Australia's resources but unless we dramatically improve our approvals system and policy settings more generally, we risk missing the boat.” Greece looks to secure next $10.4 billion bailout tranche Greece is in talks with representatives from the European Union, European Central Bank and International Monetary Fund in order to secure the next $10.4 billion tranche of its bailout package. While it is likely the negotiations will succeed successfully over the coming days, the bailout is subject to commitments to economic reforms, including a further 12,500 public servants being placed in a “mobility scheme” from which they will either be transferred or made redundant within a year. “The ball is in the Greek court and it depends on whether Greece is able to deliver the remaining elements of the milestones that have been agreed,” EU Economic and Monetary Affairs Commissioner Olli Rehn said. Overnight The Dow Jones Industrial Average closed up 1% to 15135.8. The Aussie dollar is down to US90.51 cents.
Grocery wholesaler Metcash has blamed the long federal election campaign for consumer uncertainty and the market power of rivals Coles and Woolworths for a weak result at its grocery division. The grocery division, which supplies IGA-branded supermarkets, were down 2.3% to $9.1 billion, with the company reporting its net profit was up to $206 million after tax for the year to April off stronger liquor, automotive and hardware revenues. “There continues to be very strong marketing activity in the food and grocery sector . . . so there's a greater need for extra marketing and advertising expenditure, and I don't think that's going to change,” chief executive Andrew Reitzer said. “All our businesses face fairly tough trading conditions because the consumer is super-value conscious and continuously shops for bargains and has absolutely no confidence.” Coles in trouble over supplier contracts Supermarket giant Coles has come under fire in a Four Corners investigation of the Bangladeshi garment trade, following the Rana Plaza factory collapse in April, which claimed around 1100 lives. In the reprot, the retail giant is accused of not paying enough to suppliers to obtain stock from a factory with reasonable working conditions. “Actually, if they want to do the business, they’ll have to go to the non-compliant factories, like you know you have seen the Savar tragedy. So many people died,” Gous Fashion managing director Anwarul Azim said. Coles’ parent company, Wesfarmers, has signed an accord to improve safety conditions at factories in Bangladesh since the collapse. AMP issues profit warning AMP has warned its life insurance payouts will be around $32 million higher than expected for the first five months of the year and its dividend could be cut, as the insurance giant downgraded its half-year profit. The company told investors it now expects a half-year profit to fall year-on-year from $491 million to between $415 million and $435 million. Overnight The Dow Jones Industrial Average fell 0.94% to 14659.56. The Aussie dollar is up slightly to US92.56 cents.
More than one in four Australian workers are not being paid for their overtime, according to newly released figures. The Australian Bureau of Statistics data shows that one in three employees spend more time at work than they are contractually obliged to. However, 26% of the workforce, around 800,000 people, do so without compensation, with female employees more likely than their male counterparts to do unpaid overtime. Pacific Brands’ warning about major retailers Pacific Brands chief executive Peter Bush has warned about the growing market power of Coles and Woolworths, along with the potential damage they could inflict on smaller suppliers. "I am not a big believer in regulation. I am a big believer in self-regulation. But I am also someone who believes everyone should have a fair go. And I think the important thing in this process is that there needs to be a level playing field… I am certainly not convinced there is," Bush says. “If you are a small supplier and you want to have your product listed with the major chains – anywhere, whether it is in liquor, apparel or on the supermarket shelf – it’s going to cost a lot of money. It is pretty tough.” Abbott under pressure over paid parental leave scheme Tony Abbott is coming under increasing pressure from economic dries within his party and conservative think tanks to abandon his paid parental leave scheme, with Coalition MP Alex Hawke writing an essay attacking the proposal for the Institute of Public Affairs’ IPA Review. “As the Labor Party continues to expand the welfare state and re-regulate our labour market, the Liberal Party must be mindful not to join them in adding to the burdens on our businesses… At a potential cost of $4.3 billion, a parental leave scheme at full pay would be an unjustifiable impost on business at a crucial time in the economic cycle,” Hawke says. “Alex Hawke is saying what many Liberal MPs think and privately admit - Tony Abbott's paid parental leave scheme is unnecessary, unaffordable and unjustified," IPA Review editor James Paterson says. “It is a truly bizarre situation to have the Liberal Party going to the next election promising a higher rate of company tax than the Labor Party, particularly when Australia already has one of the highest rates of company tax in the world.” Overnight The Dow Jones Industrial Average is up 0.96% to 14,973.96. The Aussie dollar is up to US103.13 cents.
Transport Minister Anthony Albanese will today release the final report into a proposed high-speed rail project linking Melbourne, Canberra, Sydney and Brisbane. The report, initiated as part of the government’s balance of power arrangement with the Greens, states the high-speed rail project will take around 20 years to complete at a cost of around $114 billion, with trains travelling at speeds of between 200km/h and 250km/h. When completed, the train will also stop at the Gold Coast, Casino, Grafton, Coffs Harbour, Port Macquarie, Taree, Newcastle, the NSW Central Coast, the Southern Highlands, Wagga Wagga, Albury-Wodonga and Shepparton. Coles signs deals with farmers’ co-ops to cut out milk middlemen Coles has signed deals with major farmers’ co-operatives, including Norelco in Queensland and Devondale in Victoria, to supply the retail giant with private label milk over the next 10 years. The deal, estimated to be worth around $10 billion, will start from July next year and replace deals with privately-owned suppliers Lion Nathan and Parmalat. “We wanted to try and improve the farmers' lot, ensuring they have greater levels of (supply) tenure, whilst maintaining a position of great value for the consumer," Coles managing director Ian McLeod said. Simon says IMF economists surprised at low global inflation International Monetary Fund senior economist John Simon has admitted surprise at the low rates of inflation worldwide, despite trillions of dollars of stimulus being pumped into the world economy since the GFC, as he released the IMF’s World Economic Outlook. “The basic mystery is that during the Great Recession we've seen very large increases of unemployment and in the past when you've had something like that inflation has fallen quite a lot, really there's been very little movement in inflation and the question is why was this?” Simon said. “It really has been probably the great surprise in the post-GFC world that, despite the fact the growth is at trend and there's been record stimulus in the form of large fiscal deficits and near zero interest rates, I mean inflation does remain very well anchored.” Overnight The Dow Jones Industrial Average is up 0.94% to 14,811.95. The Aussie dollar is up to US105.40 cents.
Another new niche job site, SpotJobs, is preparing for its national media launch next month, having already received seed funding and office space from residential builder Simonds Homes.
Wholesale distribution company Metcash is ramping up its fight against supermarket giants Coles and Woolworths, after launching a new food franchise called Harvest Market.
Wesfarmers-owned retail giant Coles has recorded its 15th consecutive quarter of same-store sales growth, along with a 5% growth in second quarter sales to $7.71 billion.
Supermarket giant Woolworths says it will deliver some relief for small and medium grocery businesses with the announcement of a new plan to start sourcing products from SMEs to emphasise local produce.
Gumtree was the most searched for local brand in Australia this year, Google’s Brand Zeitgeist reveals, while Coles’ “Down, down” campaign was the most searched for advertisement.
Coles is in damage control mode after one of its contractors placed a racist job advertisement and the fallout serves as a warning for businesses engaging contractors.
Retail Food Group (RFG) is set to move its franchise brands out of major shopping centres and into standalone shopfronts and drive-through stores, in a bid to survive the tough retail climate.
As soon as one sector of the economy starts to boom, a procession of observers and industry experts start to queue up to label it as a bubble that will invariably burst.