QR National rides rails to 22pc rise. Coalition’s radical new federalism. Federal Coalition finance and deregulation spokesman Andrew Robb said much of the bureaucracy that had grown up in recent years was designed to do no more than “leave a paper trail, to cover backsides”. Photo: Arsineh Houspian Laura Tingle Political editor The Coalition plans to “outsource” administration of a vast swath of federal policy – including health and education – to state government bureaucracies, potentially saving billions of dollars. Federal Coalition finance and deregulation spokesman Andrew Robb said the opposition was looking to use its planned handover of administration of environmental laws to the states as a model for other areas, both to reduce red tape and to cut thousands of federal public servants from the payroll.
The federal government would not abandon its own policies under the plan, Mr Robb told The Australian Financial Review, but states would act as agents for the commonwealth in administering federal policies. “That is the difference. Buffett and the rest of us. Why Australian technology start-ups don’t need to go to Silicon Valley.
Poster girl ... 21-year-old Sydney entrepreneur Nikki Durkin spent six months in Silicon Valley wooing prospective investors in her 99dresses online fashion market place, but she’s moved back to Australia to enjoy a lower cost of doing business. Photo: Hugh Hamilton Nikki Durkin was the poster girl for the “brain drain”. In May, the ambitious 21 year old was the face of a front page article in the Sydney Morning Herald, that blamed risk-averse Australia financiers for driving technology entrepreneurs overseas. Durkin was moving to Silicon Valley in the United States and taking her online fashion marketplace, 99dresses, with her.
But now she’s back. Durkin says she found Silicon Valley an expensive place for a start-up that is still tweaking its business model. All up, Durkin spent six months in the Valley, including three months at start-up king maker, the accelerator Y Combinator, where she wooed US financiers. For start-ups that want to stay locally-based, their idol is Atlassian. Put down the razor and give your staff a chance. It seems as if Australian businesses have given up on alternatives to job cuts as, day after day, there are announcements of more large-scale retrenchments. Like a patient who gives up on the alternative therapies and decides to not delay surgery any more, CEOs and company boards are amputating arms of their businesses they deem no longer viable. But a world expert on responsible restructuring, Wayne Cascio, says we may be getting a distorted view of what is really going on. Cascio, a professor of management at the University of Colorado Denver who is due to speak at the 14th World Human Resource Congress at the Melbourne Convention and Exhibition Centre on September 26-27, says he is often asked if we have learned anything over the years about over-hiring and over-firing.
“Actually, there are a lot of reasons to be optimistic,” he says on the phone from the US. “A lot of companies didn’t do any downsizing ... but we don’t hear about those,” he says. Retrenchment is not cheap. InShare0. Suncorp to pay special dividend as profit surges. Suncorp transformation delivers premium return. Suncorp Rewards Shareholders Yet Misses Forecasts. Suncorp Group will pay a bonus dividend to its shareholders after posting a 60 per cent rise in full year profit. But while the Australian insurer and bank reported a 45.6 per cent rise in second-half net profit on a sharp fall in claims, it missed forecasts as the banking division underperformed. Suncorp shares gained as much as 15 cents, or 1.7 per cent, to $8.97 in early trade. The results come after global insurers were devastated in 2011 by an unprecedented levels of claims arising from storms, floods, tsunami, tornadoes and earthquakes from Australia to the United States, and low bond yields that battered their profits and shares.
Advertisement Suncorp posted a second-half net profit of $335 million compared with $230 million reported a year ago and $378 expected by analysts, based on Reuters calculation. It announced a dividend of 20 cents and a special dividend of 15 cents, compared with consensus for 20 cents. Rival Insurance Australia Group reports earnings tomorrow. AAP, Reuters. Suncorp ponders ClearView tilt.
Suncorp rules out ‘fire sale’ of non-core bank assets. Suncorp bid to win back faith of its investors. Subdued lending growth has hit the banking arm. Photo: Bloomberg SUNCORP Group has tried to win back the faith of investors with a $200 million capital return, as chief executive Patrick Snowball said the bancassurer had finally changed gears since its comeback from the financial crisis.
He also said corporate Australia could no longer blame the choppy global environment for problems. Rather, businesses needed to adapt to issues such as stresses in Europe or slowing growth. ''The economic factors are here to stay,''Mr Snowball told BusinessDay. Suncorp yesterday reported a 60 per cent lift in full-year net profit to $724 million, buoyed by a rebound in insurance earnings.
Advertisement The latest annual result - the third for Mr Snowball - marks something of a turning point for the financial services house, which sells insurance under brands such as GIO and AAMI, as well as overseeing a regional bank. Suncorp's banking arm took a hit in late 2008 when global funding markets froze. Snowball warns of low bond yields. Lifting the lid on QBE’s black box. Resources projects ‘envy of world’ Il faut en finir avec la gabegie alimentaire. Cet été, il a fait très chaud et sec aux Etats-Unis ; une sécheresse historique qui a touché 60 % du pays, et le Mexique.
Les récoltes de maïs, de soja et de blé de l'un des plus grands greniers du monde seront mauvaises… Malheureusement, simultanément, un deuxième grenier du monde souffre de la sécheresse : la Russie, l'Ukraine et le Kazakhstan, tandis que la mousson s'est fait attendre en Inde, et que les récoltes européennes ont parfois été affaiblies par excès de pluie. Sans parler de l'absence de récoltes, pour la troisième année consécutive, en Afrique de l'Est. Une nouvelle année de déficit en grain se profile sur la planète.
Et espérons que, cette année, l'hémisphère Sud soit sans sécheresse ni inondation en Australie, au Brésil ou en Argentine… Cet hiver, que va-t-il se passer si le cours des céréales et du soja continue à flamber ? Une bonne partie des 920 millions de mal-nourris, en tout cas ceux qui habitent dans les grands bidonvilles du monde, vont avoir encore plus faim. Too much of a good thing. Brian Toohey Although Australia is only the world’s 13th biggest economy, thanks largely to compulsory superannuation it has the fourth-biggest funds management industry but this could now be hurting productivity. BIS economists Stephen Cecchetti and Enisse Kharroubi say in a study published in July that they have found “unambiguous” evidence that a large finance sector has an adverse impact on productivity. “As is the case with many things in life, with finance you can have too much of a good thing,” they say.
“There comes a point where the additional lending and a bigger financial system become a drag on growth.” This study and earlier work by Cecchetti show that growth can suffer after a nation’s finance sector accounts for more than 6.5 per cent of gross domestic product. The BIS research does not examine the detailed components of financial sector growth. BHP’s $US20bn dam buster. Marius Kloppers in London after delivering a 35 per cent drop in BHP’s profit. Photo: Bloomberg Jamie Freed and Mathew Dunckley BHP Billiton has blamed rising capital costs and lower commodity prices for its decision to shelve the $US20 billion-plus Olympic Dam copper-uranium expansion indefinitely, a move that has sparked a political row over tax and Australia’s competitiveness. As net profit at the world’s largest mining company tumbled 35 per cent to $US15.4 billion – the first fall since the global financial crisis – BHP chief executive Marius Kloppers said the economics of Olympic Dam in South Australia no longer stacked up. ■ Rio Tinto’s Tom Albanese and Fortescue’s Andrew Forrest discuss the future of the mining industry, live from 2.30pm AEST Thursday.
Register to watch online. There has been a cloud over the project for months as the economic outlook weakened and the cost of building projects in Australia continued to rise. BHP’s Olympic Dam decision a damn shame for a sorry state. Wilkie’s plan to fine and pillory bad banks. Local banks still great innovators. Citi and CBA: a tale of two banks. Battered Bendigo chops executive bonuses. Big four accountants slash partner appointments. Agnes King New partner appointments at the nation’s biggest accountancy firms have fallen 25 per cent, due to tough trading conditions and a poor global economic outlook. But hectic consolidation in the mid-market has boosted the overall partner pool by 9 per cent to 3251, at the 20 largest accounting firms.
The lack of mergers and acquisitions and initial public offerings, coupled with a sharp contraction in the financial services sector, is starting to bite at the big four firms. PwC, Ernst & Young, KPMG and Deloitte appointed 53 fewer partners at the start of this financial year than fiscal 2010-11. “We cut back on internal partner promotions based on our assessment of business activity and what that would be in the coming year,” said Keith Skinner, chief operating officer at Deloitte, which registered the sharpest decline in new partner appointments.
EY was the only big four firm to increase new partner appointments, with a surprisingly large number (17) promoted in its tax team. Qantas cancels $US8.5bn aircraft orders. Telstra cuts 651 call centre positions. John McDuling Telstra is planning to shed 651 call centre jobs and has admitted more positions could be at risk as customer service inquiries are increasingly handled online. The carrier said yesterday it would close contact centres in Townsville, Queensland and Lismore, NSW, and cut back house-testing positions in Sydney and Melbourne, citing contractual changes with FOXTEL management over “after sales service” and greater internet use for customer queries. The redundancies, which form part of a broader productivity drive, push total job cuts at the telco above 1000 this year. Telstra has more than 30,000 domestic full-time employees. Increased customer interaction through online channels had resulted in a 20 per cent drop in call volumes over the past year, the telco said.
As more customers shifted to online and used self-service options, fewer call centre jobs were likely to be needed in the years ahead, the company said. “We operate in a fast-moving, highly competitive market. Woolies posts first net profit fall since 1999. Yes, bonds are a risky investment too. Kevin Davis Christopher Joye argues that the investment strategies of Australian super funds, with their heavy weighting towards equity, have been built on shaky foundations. In particular, he takes aim at the conventional wisdom that the expected return on equities provides a significant premium over the risk-free rate on bonds. If that is not the case, the higher risk of equities (volatility of returns) has been taken by super funds without sufficient benefits in the form of higher expected returns. And if that is the case, members should (if they could) be voting out the trustees and management of their super funds for implementing bad strategies. With the benefit of hindsight, that wonderful analytical tool, we would all have adopted different investment strategies over recent years.
Shifting from equities to bonds could have given a double-whammy to overall returns under some trading strategies. That does not necessarily provide good information on a suitable investment strategy. Strategists urge caution in yield focus. Snowball warns of low bond yields. Don’t get tripped up chasing dividends. David Potts There are good dividend pickings to be had despite the prospect of a subdued reporting season. The trouble is, with interest rates so low, everybody has the same idea. “The market is focused on yield this year, which is not the usual case,” says Johan Carlberg, lead portfolio manager of Alphinity Investment Management. “With lower interest rates it looks like it’ll be the case for some time.” But selecting a stock for its dividend yield – the payout divided by the purchase price – is not enough. The dividend darling of DIY super funds is Telstra (TLS), returning 10 per cent after franking credits at a share price of about $4, but the company does not have strong profit growth prospects.
“You want a company trying to grow its dividend. High yield, high risk also applies. “I wouldn’t buy Telstra because of its operational risk. Rival telco Macquarie Telecom (MAQ) starts with a lower yield but is likely to see faster profit and so dividend growth. “Its result was excellent. Low bond yields pressure IAG income. Interest Rate Risk In 2012: With Low Rates Persisting, Insurance Companies Try To Muddle Through. Dividend Stocks May Be Next Bubble as Retirees Search for Higher Yields. Dividend-paying stocks have been on a tear, and if you believe the experts it has all gone much too far.
We are now in yet another bubble, this one comprising just about any stock with a yield. Look out below. Certainly, there is reason to take notice. In the last three months, traditional dividend-paying industries including telecom (13.7%) and utilities (7.5%) have far outperformed the broad S&P 500 (-1.2%) and individual sectors like materials (-3.4%) and financials (-5.4%). (MORE: Subprime Private Student Loans: No Way Out) And the money keeps rolling in. “Investors have plowed a net $16 billion into U.S. dividend equity funds since the beginning of the year, with inflows picking up in recent weeks.
So something is afoot. Bubbleologists may be misreading the dividend frenzy. (MORE: U.S. Yet this defensive shift is but a small part of the story. To Wall Street, these unsophisticated yield chasers make it feel like a bubble. That is, of course, a possibility. German Insurers Buy Junk Corporate Loans to Overcome Low Rates. German insurers, which came through the subprime mortgage crisis largely unscathed, are seeking to boost investment returns by buying junk loans to corporate borrowers. Senior secured loans, which are repaid first in a default, are originated by banks for borrowers considered high yield or high risk as they usually have a significant level of debt relative to equity. The loans are then are sold on to investors. Those loans, with interest margins of as much as 700 basis points above benchmark lending rates, are attracting German insurers struggling to improve investment returns amid the low interest-rate environment.
For Gothaer Finanzholding AG and Versicherungskammer Bayern, the risks are outweighed by the interest paid by borrowers typically rated below investment grade by Moody’s Investors Service and Standard & Poor’s. Default Rates Further Investment Investment Alternatives BaFin Approved To contact the reporter on this story: Oliver Suess in Munich at osuess@bloomberg.net. Turnbull defends broadband investment. Malcolm Turnbull was drawn into a debate about his belief in FTTH broadband after he invested in France Telecom Louie Douvis Paul Smith The government has attacked the Coalition’s support for a British-style high-speed broadband scheme by invoking a former BT executive’s claims that the UK system was “one of the biggest mistakes humanity has made”.
Infrastructure Minister Anthony Albanese cited former British Telecom chief technology officer Peter Corcoran in decrying the opposition’s planned fibre to the node proposal, outlined in The Australian Financial Review on Tuesday. “After 22 failed broadband plans when they were in government, the latest thought bubble is to model their policy on British Telecom’s fibre to the node,” Mr Albanese told Parliament.
“But even the Tory Minister for Communications in the UK describes this as “a temporary stepping stone to fibre to the home”. Mr Turnbull told Lateline that this would not be an impossible task. Sacre bleu! French FTTP costs compared to Australia. Turnbull defends broadband investment. $1bn price tag put on super reforms. APRA apprehensive about life insurers. Big super funds unite to attack reform plan. BT revamps to focus on super. Economic growth set to improve: Westpac. US drought will ignite inflation, warns HSBC.
ANZ chief calls for end to anti-foreign sentiment.