Industry News

The Australian Industry Group (AI Group) has released its Australian Industry Group Performance of Construction Index, recording a slump in construction during April.

Released in conjunction with the Housing Industry Association, the index found that the construction sector has fallen 1.3 points weaker, ending at 34.9 in April.

The index found that apartment building was the weakest of the four sub-sectors, with the index recording a slump fall to 22.9 basis points. The index of house building (33.3) and commercial construction (35.2) activity also remained well below the expansion-contraction threshold of 50.

"The fall in construction activity in April is further evidence of the widespread nature of the current slowdown in the broader economy. The ongoing weakness in the residential and commercial construction sub-sectors was exacerbated by the slowing in engineering construction activity that has now been in train since the start of the year. Last week's reduction in interest rates will help counter the existing headwinds while the construction industry will have a close eye on tomorrow's Budget and the impacts it may have on business, household and public sector demand over the year ahead," Australian Industry Group Director Public Policy, Peter Burn, said.

The key findings for the month are:

• The national construction sector contracted again in April with particular weakness in apartment building, housing and commercial construction.
• The latest Australian Industry Group Australian Performance of Construction Index (Australian PCI®) in conjunction with the Housing Industry Association, dropped 1.3 points to 34.9 in April (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
• The Australian PCI® has now been in negative territory for almost two years.
• While resource-related projects are giving some support to the engineering construction sector, weak demand and difficulties securing funding for work continue to hamper the apartment building (22.9), house building (33.3) and commercial construction (35.2) sub-sectors.
• New orders sub-index contracted for the 23rd straight month in April - recording 32.3.
• Employment continued to contract at a broadly unchanged rate in April (39.6).

Minister for Broadband, Communications and the Digital Economy Senator Stephen Conroy has hit out at Federal Opposition communications spokesman Malcolm Turnbull, describing him as “either lazy, financially illiterate or both.”

Senator Conroy’s accusations come after Mr Turnbull described the National Broadband Network (NBN) as being "centre of Labor’s 2012-13 Budget cooked books.” Saying that the surplus relies on shifting expenses forward from the 2012-13.

“According to the 2011-12 DBCDE portfolio Budget statement, spending on broadband by the Department was forecast to be $57 million this year.  But in Tuesday’s 2012-13 portfolio Budget, this figure is revealed as having exploded to $484 million because inducements provided to Telstra for its deal with NBN Co have been brought forward as lump sums totalling $421 million to be paid out before June 30,” Mr Turnbull said in a statement.

“As a former merchant banker, Mr Turnbull presumably knows that you pay your bills when they fall due. The $450 million additional Departmental expenditure in 2011-12 is the payments made to Telstra under the terms of the Definitive Agreements.

“Similarly the claim of a $400M blowout in equity is false. Mr Turnbull’s assertion that there has been an increase in equity of $400M simply reflects that equity funding of $350M was deferred from 2011-12 to 2012-13. This was detailed in the 2011-12 Departmental Portfolio Additional Estimate Statement on page 39.”

Telstra CEO, David Thodey, has announced Robert Nason, Telstra’s Group Managing Director, Business Service and Improvement, will replace retiring FOXTEL chairman Bruch Akhurst.

Mr Thodey said Telstra’s Group Managing Director for Innovation, Products and Marketing, Kate McKenzie would also be appointed by Telstra to the FOXTEL Board. Ms McKenzie will take the board seat currently held by Mr Nason.  The changes are effective 1 June 2012.

“Robert and Kate each will bring tremendous experience and leadership ability to the FOXTEL Board at what is an important time for FOXTEL as it consolidates its acquisition of AUSTAR and continues to compete in a challenging market,” Mr Thodey said.

The Federal Government has announced that a further 11 councils are now eligible to apply for funding under the Australian Government’s Digital Local Government Program, aimed at assisting local governments make the most of the rollout of the National Broadband Network.

The program makes up to $375,000 available to assist the rollout of NBN enabled programs, including council services, to homes and businesses.

“The eleven eligible councils are located right around Australia – from Mandurah in Western Australia to Aspley in Queensland and Bellerive in Tasmania. I encourage all of them to take up the opportunity to use the NBN to improve delivery of essential council services to their communities,” Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy said.

More information on the program can be found here

City of Perth Chief Executive Officer Frank Edwards has announced his retirement effective on 21 September.

Mr Edwards has held the position since April 2002.

Lord Mayor Lisa Scaffidi said that Mr Edwards had served the City with great distinction during a period of rapid growth in the City. She paid tribute to his managerial and leadership skills and expertise.
 

She said his departure date will allow the process of seeking a replacement Chief Executive Officer to be completed and a smooth transition to occur. 

The Federal Government has announced plans to expedite assistance for unpaid entitlements for workers who have lost their jobs at transport company First Fleet and car parts manufacturer CMI Industrial.

“This means that workers can access their unpaid entitlements sooner and not have to wait until the companies go into liquidation later this month,” Workplace Relations Minister Shorten said.

"The collapse of these companies represents exceptional circumstances. I am satisfied that my decision today is consistent with the intention of the scheme and is not being used to facilitate business restructuring.

“After receiving clear advice from administrators today that CMI and First Fleet will go into liquidation, we can now move to ensure workers can access GEERS assistance faster.

At least 450 people have lost their jobs in New South Wales, Victorian and Queensland through the collapse of First Fleet, and almost 50 workers have been made redundant at CMI Industrial in Victoria.

The Government has announced it will limit the availability of the employment termination payment (ETP) tax offset.

 From 1 July 2012, only that part of an affected ETP, such as a golden handshake, that takes a person's total annual taxable income (including the ETP) to no more than $180,000 will receive the ETP tax offset.

Amounts above this whole‑of‑income cap will be taxed at marginal rates. The whole‑of‑income cap will complement the existing ETP cap ($175,000 in 2012‑13, indexed) which ensures that the tax offset only applies to amounts up to the ETP cap.

The ETP tax offset ensures that ETPs up to the ETP cap are taxed at a maximum tax rate of 15 per cent for those over preservation age and 30 per cent for those under preservation age.

Existing arrangements will be retained for certain ETPs relating to genuine redundancy (including to those aged 65 and over), invalidity, compensation due to an employment‑related dispute and death.

The measure provides savings to the Budget of $196.4 million over the forward estimates period.

The Federal Government has passed its Schoolkids Bonus through Senate, despite the Federal Opposition voting against the move.

The bonus will see the 1.3 million families with children in school receive financial bonuses from January next year.

Eligible families will receive:

• $410 a year for each child in primary school
• $820 for each child in secondary school.

The Schoolkids Bonus will be automatically paid to eligible families in two separate installments each year – before the start of Term 1 and Term 3.

This new payment will replace the Education Tax Refund from 1 January 2013. Under the current system, about one million families aren’t getting the full amount back at tax time.

Australia’s natural capital or environment assets are worth $4,574 billion and accounted for more than half of Australia’s total economic wealth in 2009-10 found the Australian Bureau of Statistics (ABS). The value of our natural capital in current price terms, trebled between 2000-01 and 2009-10, driven by rises in mineral commodities and land values.

Some of the key data included in the publication are:

• Water consumption in Australia fell by 43% between 1996-97 and 2010-11;
• The biggest net energy users within Australia in 2008-09 were the manufacturing industry at 1,034 Petajoules and households at 1,015 Petajoules, each representing about 26% of net use by industry and households in Australia (excluding exports and conversion losses); and
• Greenhouse gas emissions (excluding LULUCF) for Australia increased by 33% between 1989-90 and 2008-09.

The new ABS publication Completing the Picture: Environmental Accounting in Practice explores the relationships between economic activity and the environment, and which help to address concerns over sustainability, climate change, the Murray-Darling Basin and green growth. This publication follows the adoption of the System of Environmental and Economic Accounting (SEEA) as an international statistical standard by the United Nations Statistical Commission in March this year.

The adoption of the SEEA provides an opportunity to inform government decision-makers, policy analysts, scientists, industry and other groups about how SEEA style environmental accounts could be used and further developed in Australia. The ABS will be hosting a conference next week in Melbourne(14-15 May) to examine how environmental accounts can be developed and used in Australia.

The National Broadband Network Company (NBN Co) has announced the town of Bourke, in far north-west NSW, will host a new facility to help deliver high speed broadband to remote communities across the country.

The satellite ground station gateway forms part of the NBN’s Long Term Satellite Service, designed to deliver broadband speeds of up to 12 Mbps to homes, farms and business in remote parts of Australia.

The satellite service will deliver broadband speeds to the 7 per cent of the Australian population who cannot be serviced by the rollout of the fibre-to-the-home (FTTH) service currently being rolled out.

Following extensive consultation with Bourke Shire Council, the new facility is planned to be constructed on an existing industrial development, approximately eight kilometres north of the town centre.

Once built, the ground station will comprise a single storey building with up to three 13-metre-in-diametre satellite dishes. Construction is expected to begin next year with the facility scheduled to be up and running by 2015.

"We chose Bourke because it was an ideal location with an ideal climate. The town is also located close to reliable power and other infrastructure including the NBN's core fibre transit network - the main fibre transmission lines linking towns and our exchanges,” NBN Co’s Program Director, Satelittes, Matt Dawson said.

The Australian Securities and Investments Commission (ASIC) has been allocated $10.7 million over four years to develop and maintain an on‑line registration system for auditors of self managed superannuation funds (SMSFs).

As part of the registration process, ASIC will develop a competency exam for SMSF auditors. ASIC will also be responsible for the deregistration of non‑compliant auditors. Auditors may begin to register with ASIC from 31 January 2013.

The Government will also provide $10.6 million over five years (including $1.5 million in capital funding in 2011‑12) to the Australian Taxation Office to police registered auditors, check their compliance with competency standards set by ASIC and refer auditors to ASIC, for enforcement action.

The cost of this measure will be offset by increases in the SMSF levy and fees charged by ASIC for sitting the competency exam.

The Australian Prudential Regulation Authority (APRA) has released a discussion paper on proposed arrangements for the authorisation of MySuper products.

Accompanying the discussion paper is a draft authorisation application form together with instructions, as well as draft Prudential Standard SPS 410 MySuper Transition (SPS 410) which sets out requirements for trustees moving member balances into a MySuper product.

On 3 November 2011, the Federal Government introduced the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 into Parliament under which a registrable superannuation entity (RSE) licensee intending to offer a MySuper product must seek authorisation from APRA.

The MySuper authorisation package released today builds on APRA’s release on 27 April 2012 of draft prudential standards for superannuation. A number of elements in the draft authorisation application form request the submission of documents that will be required under the prudential standards.

APRA Deputy Chairman Ross Jones said the proposed authorisation requirements have been carefully aligned with the legislative requirements. 

‘We encourage RSE licensees considering offering a MySuper product to use the draft application form and instructions in discussions with their Board on their plans, and to open discussions with APRA supervisors on the issue as soon as possible.’

The authorisation process for RSE licensees wishing to offer MySuper products will commence from 1 January 2013. Once authorised, RSE licensees can offer these products from 1 July 2013 onwards.

Draft SPS 410 outlines requirements for all RSE licensees during the transition period from 1 July 2013 to 1 July 2017, by which date all accrued default amounts must be in a MySuper product except in limited circumstances.

The consultation package can be found on the APRA website at: www.apra.gov.au/Super/Pages/Superannuation-reforms-2011-2013.aspx

The Australian Competition and Consumer Commission (ACCC) has announced it has agreed to grant Viterra more time to further develop its port terminal services access undertaking.

The announcement will allow Viterra more time to work with industry to improve the proposed auction system for port terminal services in South Australia for the export of bulk wheat.

Viterra, the port terminal operator, is required by the undertaking to introduce an auction system in South Australia. Viterra has applied for more time to develop an auction system that addresses the problems that were highlighted by recent auctions in Western Australia.

ACCC chairman Rod Sims said the extended timeframe will provide Viterra and the industry with the opportunity to thoroughly consider and address complex problems that may have arisen with the proposed auction system.

"The South Australian wheat industry needs time to develop an auction system in order to avoid the inefficient outcomes experienced in WA.

"The introduction of an effective auction system will promote competition across the South Australian wheat industry to the benefit of Australian wheat farmers," Mr Sims said.

The variations to the access undertaking provide that in the event that an auction system is not ready by August, then Viterra will accept bookings on a first-in, first served basis for shipping capacity between 1 October 2012 and 31 January 2013.  The variation allows for an auction to be held in November for shipping capacity from 1 February 2013, unless further extended by agreement.

The Federal Budget has provided $467.1 million over seven years (including $41.2 million in 2016-17 and $40.9 million in 2017-18) to implement the SuperStream reforms that are part of the package of Stronger Super reforms.

The cost of implementing the SuperStream reforms will be recovered through a temporary levy on Australian Prudential Regulatory Authority regulated funds from 2012-13.

The additional SuperStream levy will be AU$121.5 million in 2012-13, AU$111.1 million in 2013-14, AU$83.1 million in 2014-15, AU$69.3 million in 2015-16, AU$41.2 million in 2016-17 and AU$40.9 million in 2017-18.

The changes implement the recommendations of the Cooper Super System Review of superannuation and are designed to improve the  superannuation system through better use of technology and by standardising data and payment requirements for member-related superannuation transactions such as contributions and rollovers.

The funding will be invested in information technology systems for agencies such as the Australian Taxation Office (ATO).

Initial funding of $14.6 million was provided to the ATO in the 2011-12 Budget to develop a business case and undertake initial expenditure on the SuperStream project.

Further information can be found in the Government Response to the Super System Review at http://strongersuper.treasury.gov.au.

The Australian Curriculum, Assessment and Reporting Authority (ACARA) has released the draft of the Senior Secondary Curriculum, marking the first national curriculum for all Year 11 and 12 students for English, Mathematics, Science and History.

The draft has been released for consultation before a final curriculum is agreed by all education minister at the end of this year.

ACARA has released draft curriculum for the senior secondary subjects of English, Literature, Essential English, English as an Additional Language/Dialect, Essential Mathematics, General Mathematics, Mathematical Methods, Specialist Mathematics, Physics, Chemistry, Biology, Earth and Environmental Science, Ancient History and Modern History. 

ACARA has assured all ministers that the content will attempt ot align as much as possible with current content being taught in senior high schools, with state and territory authorities continuing to hold responsibility for certification, assessment and examination.

Consultation for the draft senior secondary Australian Curriculum closes on 20 July.

The draft curriculum can be found here

Changes to the Australian superannuation system has sparked anger from the financial services industry.

The Government announced in the Budget it  will achieve a savings of $1,459.5 million over the forward estimates period by deferring the start date of the 2010-11 Budget measure Stronger, fairer, simpler tax reform — increasing concessional contribution caps for individuals over 50 with low superannuation balances by two years, from 1 July 2012 to 1 July 2014.

Under the higher concessional contributions cap measure, individuals aged 50 and over with superannuation balances below $500,000 will be able to make up to $25,000 more in concessional contributions than allowed under the general concessional contributions cap.

The two-year deferral means that for 2012-13 and 2013-14, all individuals will be able to make concessional contributions of up to $25,000 per year as permitted under the general concessional contributions cap. In 2014-15, the general cap is likely to increase to $30,000 through indexation, and the higher cap would then commence at $55,000.

The Financial Services Council (FSC) has said that the move to take funding out of the retirement savings system will significantly undermine trust in the super system.

“This Budget hits every saver aged over 50 years. Cutting the concessional contribution caps from $50,000 to $25,000 for two years undermines all Australians planning for retirement,” Martin Codina, Director of Policy at the FSC said.

“The Government has again confirmed that it is willing to use retirement savings to pay for other political objectives. This is the 9^th time since 2008 the Government hsa changed the rules, equating to $7.8 billion less in retirement savings.”

The Chairman of AMP Peter Mason has  called for the government to stop ‘tinkering’ with the Australian superannuation system, and criticized the budget decision to delay reinstating the $50,000 superannuation concessional tax cap for those over 50.

Speaking at AMP’s Annual General Meeting, Mr Mason said continual changes to the super system had undermined people’s confidence in it for their long-term planning.

“Constant changes to Australia's superannuation system, as we saw again in Tuesday's budget, undermine people’s comfort in saving within this system.

“We know from experience that any change, even when it doesn’t impact them directly, unsettles people, and makes them anxious about the future. The greatest contribution that the Government can make right now is to provide the certainty and security Australians need so they can save with confidence in the future,” he said.

Mr Mason said the delay in reinstating the $50,000 superannuation concessional tax cap for those over 50 would act as a disincentive for people to save for their retirement at the very time they were in a position to do so.

“Ironically, this constant tinkering by the Government risks undermining the very system Labor established, and which is now so widely admired around the world.

“Superannuation is a long-term response to a long-term demographic and economic challenge. It needs to be managed for the long-term, not continually modified to meet short-term budgetary objectives.

“It also needs to be a system that manages equitably the intergenerational challenges created by an aging population, without transferring an unfair burden to future generations of taxpayers – our children and grandchildren.

“That way, Australia will remain the envy of the world, with our people enjoying the retirements they deserve, and our nation capable of funding the infrastructure we need to provide an attractive standard of living for everyone.”

The Federal Governmenthas announced in the Budget it will increase the application fee to obtain an Australian financial services (AFS) licence to cover the costs of implementing the Future of Financial Advice reforms.

AFS Licence fees will increase from either $287 or $575 (depending on method of application) to $1,485 for a body corporate and from either $159 or $351 (depending on method of application) to $825 for a natural person, and the annual lodgement fee for an AFS licence holder will increase from $351 to $549 for a body corporate and from $144 to $225 for a natural person.

The fee increases will provide $23.9 million over four years to the Australian Securities and Investments Commission to facilitate the implementation of the Future of Financial Advice reforms.

Global professional services specialist KPMG has published a review of the country’s major banks, find they continue to perform well on the global stage, despite some negative effects in the global funding markets and ongoing structural change.

KPMG’s Major Australian Banks Half Year 2012 report found that the major banks have posted a healthy profit in the 2011-12 half year, with a combined cash profit of $12.6 billion after tax, an increase of 2.4 per cent from the second half of last year.

“The major banks’ profit clearly shows we have a strong banking system, however it must be viewed in light of the increased capital that the banks now need to hold. Return on equity (ROE) remains around 16% for most banks and shareholders will need to accept that this level of return is all they can expect for the foreseeable future,” said KPMG’s head of banking, Andrew Dickinson.

The banks posted a statutory profit before tax of $16.8 billion before tax, compared to $16.3 billion in the same period last year.

The banks’ biggest challenge is adapting their business model to cope with the competing strains of constrained lending growth, ongoing funding pressure, ever higher regulatory hurdles, and a transition to new mobile delivery channels and competitors,” Mr Dickinson said.

KPMG identified the high cost of funding as a major challenge for the major banks, which narrowed from an average of 229 basis points in the second half of 2011, to 221 basis points in the first half of 2012.

 “Sustainable cost reduction remains a challenge for the major banks. While they are implementing a number of cost reduction measures, the full impacts are yet to flow through to the results. They need to make structural, long term changes that will sustain a lower cost base,” said Michelle Hinchliffe, KPMG’s Head of Financial Services.

The ROE for the majors is an average of 16.3 percent compared with 16.6 percent half year 2011. “Increased capital requirements from Basel III will continue, and while managing margin pressure remains important, containing costs while improving customer relationships will also feature highly in the majors’ strategy,” Ms Hinchliffe added.

Cost of funding continues to serve as the biggest hurdle for the country’s major banks, with uncertainty in global markets contributing to an overall tough market condition.

“The global crisis in access to funding has forced the majors ‘back to the past’ where they are wooing domestic deposits to boost their funding. This means deposit competition is intense, and depositors are now being paid 2% more (relative to RBA rates) than before the GFC. It is these increased deposit rates which are now having the strongest impact on bank funding costs.” Mr Dickinson said.

The University of Western Australia has opened the State's first laboratory to translate new scientific discoveries based on the latest research in cancer biology into new advanced pathology tests.

The $1.2 million Translational Cancer Pathology Laboratory based at the QEII Medical Centre will be used to "bridge the gap" between pure science and patient care.

Work in the laboratory will translate cancer cell biology into clinically applicable tests for "personalised pathology" to enable patient-specific cancer therapies.  As such, it will be of direct benefit to people with cancer and health care delivery in Western Australia.

Head of UWA's School of Pathology and Laboratory Medicine Winthrop Professor Wendy Erber said the laboratory will dramatically improve treatment for many Western Australians.

"Because each person's cancer is different, the work in this laboratory will enable us to further refine the drug treatment for individual cancer patients to provide better outcomes with fewer side-effects and more effective use of expensive chemotherapy drugs," Professor Erber said.

Major funding for the project has been provided by Lotterywest, the Cancer Council of WA and the State Government as well as additional support from the Peel region Zonta Club and Mr Chris Perrott of Nedlands, who has worked to raise funds for Myeloma research.