Industry News

The Federal Government has introduced a package of bills that will aim to reform the way in which the country regulates all commercial vessels within territorial waters. The legislation will replace the seven existing Federal, state and territory bureaucracies and the fifty separate pieces of legislation they administer with a single national regulator and one set of nationwide laws.

The legislation now before the Parliament will eliminate the artificial sea borders which have existed between the states since Federation.  From 1 January 2013, the Australian Maritime Safety Authority (AMSA) will become the national regulator of all commercial vessels, not just those involved in international trade.

The $10.2 million funding requirement was provided in the Federal Budget and forms part of the government’s amove to reverse the decline of Australia’s domestic shipping industry. 

The Federal Government has announced a one-off $20 million funding boost to assist Tasmania’s exporters reach international markets.

The Government has confirmed the spending after it flagged the package in March in response to Tasmania’s sole international sipping container AAA ceasing operations.

The funding measures contain three key measures:

• Direct and immediate assistance to Tasmanian exporters through a one-off payment to help them stay competitive in the new shipping environment.
• Investing in infrastructure improvements at the Port of Burnie to increase container handling capacity and enhance the efficiency of movements within the port.
• Establish a freight logistics coordination team with an industry leadership.

“These infrastructure improvements at the Port of Burnie are crucial, and recognise its importance as the major freight port in Tasmania,” Parliamentary Secretary for Agriculture, Fisheries and Forestry Sid Sidebottom said.

“The port will receive $4 million in Federal infrastructure funding to increase container handling capacity and improve the movement of goods within the port, boosting efficiency and helping to lower costs for Tasmanian exporters.”

Two hundred IT workers at Westpac bank’s Kogarah site have won a reprieve after the bank backed down on plans to outsource their jobs.

The workers come from an area of the St George Bank that has been part the Westpac group since the merger between the two banks in 2009.

 Geoff Derrick of the Finance Sector Union said the result “demonstrates that you can do business and be successful in the finance sector without outsourcing work, slashing positions and offshoring jobs.”

“FSU members, through their collective action, have saved 200 jobs at Westpac. I congratulate union members at Kogarah for standing firm,” he said.

The jobs were at risk when Westpac revealed the bank was in advanced discussions with IBM about outsourcing those jobs.

“The workers at risk of having their jobs outsourced stood together to get straight answers from Westpac and collectively raised genuine concerns about the outsourcing plan. Staff believed that they had the skills and expertise to provide outstanding service to customers and the business in regards to their technology functions. And that the proposed outsourcing was not in the best interest of all involved.”

Last week, Westpac advised employees and the union that the IBM proposal had been rejected and that the jobs would not be outsourced.

Australian cancer treatment company,  Prima Biomed,  has announced its CEO Martin Rogers, will step down from August 31, but will remain on the board as a non-executive director. Mr Rogers has been in the position for four and a half years.

Matthew Lehman, the Company’s Chief Operating Officer, will assume the CEO role and will join the Prima board of directors. He will relocate from Germany to the San Francisco Bay Area, where Prima plans to concentrate its longer-term operational expansion.

Prima Chairman Lucy Turnbull said Mr Rogers had  consolidated Prima’s research activities to focus on development of CVac, brought together a strong management team and board of directors, and overseen the globalization of Prima’s development activities with key operations in the USA and Germany.

The company also announced that Dr. Neil Frazer has stepped down from his position as an executive director on the board, but will continue his senior management role as Chief Medical Officer.

In other changes to senior management, Dr. Sharron Gargosky has been promoted to Chief Technical Officer. Dr. Gargosky, based on the West Coast of the US, is charged with leading the scientific and technical development of CVac globally. Marc Voigt has been promoted to General Manager of the German subsidiary and Chief Business Officer of the Company. Mr. Voigt will be globally responsible for coordinating investor relations and driving business development.

The House of Representatives Standing Committee on Infrastructure and Communications has announced it will conduct an inquiry into the pricing of IT software and hardware in Australia compared to overseas markets.

“Australians are often forced to pay more for IT hardware and software than consumers in overseas markets. The Committee’s inquiry aims to determine the extent of these IT price differences and examine the possibility of limiting their impact on Australian consumers, businesses and governments,” Committee chair Nick Champion said.

The committee will look into the cost of computer hardware and software, including video games, downloaded music, e-books and professional software.

“The Committee is looking forward to hearing from the companies who set these prices and the consumers and businesses that purchase their products,” Mr Champion said. 

The Queensland Government has announced it has withdrawn financial support for the Cloncurry Solar Farm as part of the state’s ongoing cost cutting.

Pulling support from the farm, which is in its early stages, is expected to save the Queensland up to $5.6 million.

“These are savings which will benefit all Queenslanders rather than localised climate initiatives,”  State Minister for Energy Mark McArdle said.

“Large-scale solar farms are proven technology and it is up to the private sector to decide whether to invest in, build and operate such projects in Queensland.”

Mr McArdle said the government had informed Ingenero Pty Ltd, which was named preferred tenderer in December 2011 to design, build and operate the 2.128 megawatt solar farm, and the Cloncurry Shire Council.

“The Queensland Government had an option in its contract with Ingenero to cancel the contract at any time for any reason. The government has chosen to exercise this option to save money for Queensland taxpayers.”

The farm was set to produce 3,700MW hours of power per year, enough energy to power approximately 500 households upon completion. It would have offset approximately 76,770 tonnes of greenhouse gas emissions over its lifetime.

Cougar Energy has announced that its CEO, Dr Len Walker, will step down from his position, but will remain as the company’s Executive Director.

The company announced Dr Walker’s decision following a build-up of its executive base, and will now commence a recruitment process for the new CEO.

“The past few years have been extremely challenging, particularly given the political motivation evident in the shut-down of our Kingaroy plant,” Dr Walker said.

“Pressing forward from this experience has only been possible because of the dedication of all our existing staff. The appointment of a new CEO will inject new energy into the Company as it expands and develops its project options in the Asian region.”

The announcement comes as the company continues its preparations for a legal dispute in the Queensland courts after it accused the State Government of shutting down its Kingaroy plant with no evidence of any real or potential environmental risk. 

Australian non-major lenders have significantly increased their share of the first home buyer and refinancing markets according to a recent report conducted by mortgage broker AFG.

AFG’s Competition Index found that non-major lenders had expanded their market share from between 22 per cent to 29 per cent of the first home buyer market.

According to the report, Suncorp emerged with the biggest increase, from 10.1 per cent to 14.8 per cent over a period of a year.

This figure is well above the market share of three of the 'Big Four' banking brands for April 2012 - 8.9% (ANZ), 8.0% (Westpac) and 1.5% (NAB). This approach is likely to have placed pressure on the risk profile of their book and it has been noticeable of late that Suncorp have taken steps to address this by focusing heavily on their offer for sub 80% LVR lending.

CBA, consistently strong in the first home buyers market, had a 22.9% market share last month. ING is another non major lender strong in the first home buyers market with a market share in April of 4.5%.

“First home buyers are a very important part of the overall market, both because they create momentum up the property chain and also because their attitudes signal future trends. Today's generation of first home buyers are very willing to look outside the majors for their mortgage needs. This is good news for competition going forward,” Mark Hewitt, General Manager of Sales and Operations at AFG said.

The full report can be found here (PDF) 

The Federal Government has continued the roll out of its National School Chaplaincy and Student Welfare Program after Minister for School Education Peter Garrett announced 1000 new schools to take part in the program.

"The chaplaincy program has been very popular among schools and the changes we introduced mean that not only are more schools now benefiting from the scheme, but school communities have more choice over how they wish to take part,” Mr Garrett said.

“Of the 1000 new schools taking part, 65 per cent applied for the services of a chaplain, and 35 per cent for a student welfare worker.”

Mr Garrett also announced that the 2,555 schools with existing chaplains or welfare workers will be able to continue accessing the program.

More information on the program can be found here

Customer satisfaction with the country’s big four banks are declining according to a recent poll conducted by Roy Morgan Research.

Despite an overall decline, Westpac is the clear leader of the big four at 66.8 per cent, ahead of the NAB at 64.9 per cent, ANZ at 63.9 per cent and the Commonwealth Bank at 61.7 per cent.

Despite the drop in the latest month, the satisfaction level of bank business customers is still 3.6% points higher than at this time last year (61.5%), with all of the major banks exhibiting an increase over this period.  NAB showed the largest improvement over the last 12 months at 6.3% points closely followed by Westpac at 6.2% points, whilst the leading major bank Suncorp has improved just 0.1% points compared to April 2011.

“The decline in satisfaction among the banks’ business customers in April 2012 has further increased the gap between consumer and business satisfaction, which now sits at 13.6% points in April 2012. The banks are clearly not delivering on the expectations of business customers who are facing difficult trading conditions and economic uncertainty,” Norman Morris, Industry Communications Director, Roy Morgan Research said.

The report can be purchased here

Global commercial information specialist D&B has published recent findings of its Global Risk Indicator (GRI), finding that Australia is considered one of the safest countries in which to invest.

Due to its relatively mild economic slowdown and projected economic growth, Australia placed in the two countries, sharing the highest investment ranking of this season (DB1d) with Canada, Norway and Switzerland.

The GRI assesses economic, commercial, external and political risk to assess 131 countries around the world, with the highest rating a DB1a.

Australia was the only country in the Asia Pacific region to secure the DB1d, ranking higher than Japan (DB2b), Hong Kong (DB2c) and New Zealand (DB2c).

According to Christine Christian, D&B's CEO, the latest rankings provide some very important reminders for Australian policy makers and the business community.

"The world is continuing to change at a rapid pace and although Australia is faring well compared to other nations we cannot afford to stand still," said Ms Christian.

"The latest GRI rankings show that Australia is a low risk environment for business investment. However to maintain strong trading relationships and attract foreign investment to our shores, we must at the very minimum, maintain our current rating.

"When the rest of the developed world recovers and returns to economic growth, global competition will intensify. To keep our position in the top four safest countries, Australia's regulators will need to ensure that their focus on reform and strong economic management continue.”

The Australian Competition and Consumer Commission has announced it will not oppose the proposed acquisition by AGL Energy Limited (AGL) of Great Energy Alliance Corporation Pty Limited (GEAC), which owns Loy Yang Power (LYP) (owner of the Loy Yang A power station).

"The ACCC concluded that the proposed acquisition is not likely to have the effect of substantially lessening competition in the relevant markets," ACCC chairman Rod Sims said.

"The ACCC carried out a comprehensive review, involving extensive inquiries with a range of interested parties, including competing retailers, generators and prospective new entrants and formed the view that the proposed acquisition was unlikely to result in a substantial lessening of competition," Mr Sims said.

The ACCC considered whether the aggregation of AGL and LYP's generation assets would be likely to result in a substantial lessening of competition in markets for the wholesale supply of electricity. The ACCC concluded that the strong competition provided by all the remaining generators as well as some potential for investment in new generation would be likely to preserve competitive tension in relevant markets.

The ACCC considered whether the removal of LYP as a standalone generator and its vertical integration with AGL's existing retail base would be likely to raise barriers to entry and expansion for prospective and existing generators and retailers. The ACCC concluded that this vertical integration would not be likely to have the effect of substantially lessening competition in relevant markets, having regard to existing levels of competition in generation and retailing in Victoria and the potential for new entry and expansion following the proposed acquisition.

AGL currently owns a 32.54 per cent interest in GEAC, but is not involved in the contracting, marketing and dispatch of electricity from the Loy Yang A power station, which is currently managed by Loy Yang Marketing Management Company Pty Ltd (LYMMCo).

AGL is not involved in LYMMCo's operations in accordance with undertakings previously given to the Federal Court limiting AGL's economic interest in LYP to 35 per cent and AGL's involvement in, and knowledge of, the dispatch and marketing activities of LYP.

To proceed with the proposed acquisition of the remaining 67.46 per cent of issued share capital in GEAC (which would result in AGL owning all the issued share capital in GEAC), AGL will need to seek an order from the Federal Court to have these undertakings discharged.

The ACCC will not object to AGL seeking such an order. In the event of the court making this order, undertakings previously given to the ACCC to enable it to monitor compliance with the court undertakings will also cease to operate.

A Public Competition Assessment outlining the ACCC's reasons for its decision will be available on the ACCC's website, www.accc.gov.au, in due course.

Credit specialist Veda has found that around 750,000 Australians are at risk of falling into an uncontrollable debt spiral if the country experiences an economic downturn.

In the company’s Australian Debt Study, Veda found that 21 per cent of Australians are struggling to pay current credit commitments. Despite this, nearly a quarter of those surveyed said they will apply for more credit to help them cope with an economic downturn.

Veda's analysis of consumer behaviours if there is a period of economic stress shows:

• Most (66%) Australians would draw on household savings;
• One in four (25%) would increase their credit card limit, mortgage or loan;
• One in three, or almost 5.5 million, would borrow from family;
• Over 3.6 million (21%) would draw on their superannuation.

"Credit reports do not show a person's credit limit, or if they are failing to make the minimum payment on their credit cards or loans. It makes it easier for someone already in trouble to get yet more credit - pushing further into a downward debt spiral,” Veda’s Matthew Strassberg said.

The survey found that few who struggle to manage their credit seek professional advice, with black marked debtors staying on a credit report for five years.

Veda’s findings come as the Federal Government prepares to introduce long awaited legislation that will allow for better information on consumer credit reports.

The Federal Government has released the 2011-12 Regional Telecommunications review Committee report, concluding that the National Broadband Network (NBN) is crucial for the development of regional telecommunications.

Established in 2006, the Committee publishes regular reports into the state of telecommunications services in regional, rural and remote Australia.

The review found that:

• There is a "genuine desire across regional Australia" for the fast, affordable and reliable broadband services that the Government's National Broadband Network (NBN) provides.
• The NBN will be a critical platform for the future growth and prosperity of rural and regional Australian communities.
• The government's commitment to uniform wholesale prices for the NBN is "essential" and its importance "cannot be overstated."
• There is growing recognition in regional Australia that better broadband will support regional economic development, improving health and education outcomes as well as helping small businesses.

“From isolated and remote cattle stations to major regional centres, there is a genuine desire across regional Australia for access to faster, more affordable and more reliable broadband services,” the report found.

“The NBN is regarded as an opportunity to bridge the existing digital divide in regional Australia and allow individuals, businesses and communities to more fully participate in the digital economy."

The full report can be found here

The City of Fremantle has become the first council in Western Australia to amend its planning regulations to allow non–family members to occupy and rent secondary dwellings or ‘granny flats’.

In the past, planning regulations have restricted their occupancy to family members only and open space provisions have limited them to occur only on certain sized lots.

The City of Fremantle has recently changed the planning regulations in the City of Fremantle Local Planning Scheme No. 4, so that such developments do not have occupancy restrictions, the open space requirements are no longer applicable and, in some cases, small secondary dwellings can be built without the need to gain planning approval.

The aim of the regulation changes is to promote greater diversity and affordability of housing within Fremantle.

More information about the regulations is here.

http://www.fremantle.wa.gov.au/cityservices/Planning/Small_Secondary_Dwellings

The International Energy Agency (IEA) has praised the Federal Government’s Energy Efficiency Opportunities (EEIO Program, describing it as a successful example of how government policy can work with industry to reduce energy use.

The IEA’s  Energy Management Programmes for Industry: Gaining through Savings report identifies the policy framework as global best practice in reduce energy consumption.

“The IEA considers energy efficiency as the most cost effective option in the short to medium term to reduce global emissions,” IAE Executive Director, Maria van der Hoeven said.

“Australia’s EEO Program provides a leading-edge example of how best to reduce energy use and improve energy management systems.”

The IEA estimated that the program reduced the country’s total greenhouse-gas emissions by an estimated 11.2 Mt/year, or 2 per cent, per year. The scheme is estimated to save an estimated $1.2 billion per year for the involved companies.

The full report can be found here

Committed investment to increase the capacity of Australia’s mining industry at the end of April 2012 was a record $260.8 billion, an increase of 12 per cent from October 2011 according to the Mining Industry Major Projects - April 2012, released by the Bureau of Resources and Energy Economics (BREE).

“The continued growth in committed capital expenditure will result in significant increases in Australia's supply capacity of LNG, iron ore and coal” said Professor Quentin Grafton, BREE Executive Director and Chief Economist. 

The $260.8 billion consists of a 98 projects at an advanced stage of development (committed or under construction) including 39 minerals projects, 38 energy projects, 19 infrastructure projects and two mineral processing projects.  

Oil and gas, iron ore and coal and associated infrastructure accounted for around 95 per cent of the total committed capital expenditure.  

Of the $260.8 billion of committed capital expenditure, over 60 per cent is accounted for by seven LNG projects. When the seven projects are complete and operating at full capacity, in the second half of this decade, Australia will be one of the world’s leading exporters of LNG. 

"The majority of the investment to expand the world's LNG supply capacity is taking place in Australia because of our relatively large gas reserves and proximity to the Asian markets" said Professor Grafton.  

In the six months to April 2012 there were 25 projects completed at a record value of $23.6 billion, almost double the previous record value when $12.5 billion worth of projects was completed in the six months to April 2008.  

The record value of completed projects was underpinned by the completion of the Pluto LNG project at a capital cost of almost $15 billion, as well as the $3.4 billion expansion to the Worsley alumina refinery.  

The report is available here.

The Federal Government has warned against the ‘savage’ cuts announced in Victoria’s State Budget. Federal Minister for Skills, Senator Chris Evans, convened an emergency meeting with the state’s TAFE directors to discuss the cuts.

Senator Evans told the meeting at William Angliss Institute in Melbourne that the Federal Government had serious concerns that the cuts would eat away at the training effort by jeopardising the viability of TAFE courses and campuses.

"TAFE directors have confirmed today that the Victorian Government's budget cuts will see $300 million ripped out of the TAFE system in Victoria - that decision means campuses will close, they will be unable to operate a whole range of critical courses and a number of jobs will be cut," Senator Evans said.

"TAFEs are a quality training provider and play an important role, particularly in regional, rural and suburban Victoria, with 263,000 student enrolments across the State last year alone.

"We have a skills shortage in Australia - we need to be providing training to more Victorians so they have the opportunity to access the high-skilled jobs of the future, and making severe cuts to the TAFE sector, the biggest training provider in the State, undermines that effort.

Senator Evans wrote to his Victorian counterpart, Peter Hall, asking him to explain how the cuts will effect the state’s COAG obligations. Under the COAG agreement reached with the States in April, the Commonwealth has offered Victoria $435 million to support reforms to the VET system to improve quality and transparency.

ASIC has issued its first annual report into its supervision of registered liquidators using it to highlight its areas of focus.

ASIC Deputy Chairman Belinda Gibson said, if a company experiences financial difficulty and goes into external administration, creditors are entitled to expect the business is wound up in an orderly and fair way so they can secure the maximum return of their money possible.

‘The role of registered liquidators in this process cannot be overstated,’ Ms Gibson said. ‘Liquidators are entrusted with creditors’ funds and have considerable discretionary power over assets earmarked for creditors.’

ASIC has undertaken significant work in recent years to sharpen its focus on the insolvency industry in order to promote confidence in the market. This includes ensuring creditors have confidence in the administration of insolvent companies and in ASIC’s supervision of the insolvency practitioner industry. ‘Creditors need to believe that they will get the maximum return possible,’ Ms Gibson said. ‘Clearly, there will be costs in winding up a business but the charges need to be reasonable and reported in a way which allows creditors to make an informed decision to approve or not approve.’

Ms Gibson said the community expects liquidators to execute their professional duties with honesty and integrity, and in accordance with the law. ‘Registered liquidators must be competent and efficient. They cannot use the opportunity to put their interests ahead of their creditors’ interests. They must bring an independent mind to their task,’ Ms Gibson said.

ASIC will continue to draw on its insolvency practitioner dedicated staff, supported by expert resources in other parts of ASIC, with the aim of better regulating practitioners and providing greater communication and monitoring power to creditors.

‘Moving forward, ASIC will focus on lifting our surveillance intensity as we have the extra resources to do so; enforcement outcomes where surveillance identifies unacceptable conduct; providing guidance to the industry about our expectations; and directing creditors toward more “self-help” assistance to ensure they understand and exercise their rights and powers to oversee the liquidation process to best protect their own interests,’ Ms Gibson said.

‘These principles underpin ASIC’s supervision of the sector.’

Ms Gibson’s comments follow ASIC releasing its first annual report into its supervision of the registered liquidators insolvency industry, detailing surveillance and enforcement outcomes in 2011. Issues of competence, independence and inappropriate self gain underpinned ASIC’s supervisory activity.

For the calendar year 2011, ASIC opened eight new formal investigations into registered liquidators, resulting in ASIC cancelling the registration as an official liquidator of John Lord (refer: 11-184MR) and reaching agreement with Peter Ngan that he would not practice as a registered liquidator for two-and-a-half years (refer: 12-04MR). Further, ASIC obtained an undertaking from Atle Crowe-Maxwell (refer: 11-184MR) to ensure compliance with independence requirements when consenting to act as official liquidator.

In June 2011, the Companies Auditors and Liquidators Disciplinary Board (CALDB) cancelled the registration of David Mark Anderson for failing to lodge annual returns with ASIC.

Also, the case against Stuart Ariff concluded in 2011, with the former liquidator jailed for six years following his conviction on 19 criminal charges brought by ASIC (refer: 11-308MR).

Ms Gibson said: ‘Deterrence is one regulatory tool available to ASIC in pursuing our priorities and holding gatekeepers to account.'

At the end of 2011, ASIC was conducting 10 investigations into registered liquidators.

Report 287 ASIC regulation of registered liquidators: January to December 2011 ( REP 287) also shows ASIC completed more than 200 reviews examining issues including practitioner independence, competence and remuneration.

ASIC has a program of compliance visits for registered liquidators based on risk assessment and market intelligence. This includes complaints and information from the public and the profession itself.

ASIC also conducted project work, including checking compliance with independence declarations, remuneration disclosure and insurance requirements.

‘We have built resources in our insolvency practitioners group allowing us to increase surveillance of practitioners,’ Ms Gibson said.

‘Where practitioners do not meet their obligations, we will not hesitate to take action.’

In 2011, ASIC received 426 reports of alleged misconduct concerning registered liquidators, in some instances about the same external administration. Many of these reports (51%) required educative outcomes for the complainants due to, for example, creditors not fully appreciating a liquidator's duties and obligations or the insolvency process.

Key statistics from REP 287:

• ASIC opened eight formal investigations into registered liquidators. At year end it had 10 open investigations.
• ASIC received and analysed 426 reports of alleged misconduct concerning registered liquidators.
• Reports of alleged misconduct and enquiries against registered liquidators average 3.5% of the total 75,951 reports and enquiries ASIC received across all its areas over the five and a half years to 31 December 2011.
• ASIC completed more than 200 reviews examining issues including practitioner independence, competence and remuneration.

The Treasurer Wayne Swan has welcomed the OECD Economic Outlook which predicts that the Australian economy will significantly outperform OECD economies as a whole over this year and next.

In a statement Mr Swan said that Australia’s economic fundamentals remain strong, with the economy expected to grow more strongly than every other major advanced economy over the next two years.  The OECD forecasts our growth to be 3.1 per cent in 2012 and 3.7 per cent in 2013.

“By contrast the OECD expects a muted and fragile recovery in many other advanced economies, largely due to the lingering effects of past global turmoil and very challenging economic conditions facing Europe.

“The European sovereign debt crisis continues to be the most significant risk to the global outlook, with recent political developments in Greece resulting in greater financial market volatility.

“Against this backdrop, the OECD expects growth across OECD economies to remain at 1.6 per cent in 2012 before picking up to 2.2 per cent in 2013.

“However, the OECD expects that emerging economies particularly in our own region will continue to grow strongly.

“The OECD expects that China’s economy will grow at 8.2 per cent in 2012, before picking up to 9.3 per cent in 2013. India’s economy is expected to grow at 7.1 per cent in 2012 and 7.7 per cent in 2013.

“The OECD also expects that Australia’s unemployment rate will remain substantially lower than the 7.9 per cent unemployment rate expected for the OECD as a whole in 2013, and around half of the 11.1 per cent forecast for the euro area in that year.

“The OECD has applauded the Government’s commitment to return to surplus, stating that:

restoring fiscal leeway while macroeconomic conditions are still favourable, and the terms of trade high, is welcome.

“Despite the structural transitions underway in the Australian economy, our economic fundamentals remain strong, with solid economic growth, low unemployment, contained inflation, strong public finances and a record pipeline of business investment.”

Mr Swan said that the 2012-13 Budget ensures that the Australian economy remains amongst the strongest in the developed world, by delivering four years of surpluses and delivering financial relief for millions of low and middle income households and businesses which aren’t in the fast lane of the mining boom.