Industry News

The Federal Government has released the final report of the Council of Financial Regulators (CFR), outlining the proposed next steps towards fully implementing Australia's G20 commitment to improve risk management and reduce systemic risk in the 'over-the-counter' (OTC) markets for financial derivative products.

The Government has also published a consultation paper seeking  stakeholder input over the coming months on legislative amendments of the Corporations Act to build a framework for complying with G20 obligations in the area.

"The global financial crisis highlighted the massive build-up of systemic risk in some advanced countries through the rapid growth of highly complex, leveraged derivative products which were traded outside appropriately regulated and transparent markets. In September 2009 the G20 endorsed a global transition of derivatives products," Parliamentary Secretary to the Treasurer Bernie Ripoll said in a statement.

"The Council has engaged extensively with domestic market participants since 2009 to identify the most appropriate policy settings for Australia in meeting our G20 commitments, including the release of a discussion paper in June 2011."

A copy of the Council's recommendations, the consultation paper and details on consultation are available on the Treasury website.

The Federal Government has announced the release of the final Caring for our Country report into natural resource management.

The report found that Caring for our Country is on track to meet all of its major goals in supporting the broader community, including increasing the uptake of sustainable land management practices and environmental conservation.

Caring for our Country commenced on 1 July 2008 and is investing more than $2 billion over its first five years to achieve an environment that is healthier, better protected and supports sustainable production in a changing climate.

The Australian Government initiated the review in late 2010 to consult widely with the community on what was working well under Caring for our Country and what could be improved in the future.

The full report can be found here

Focus Minerals Ltd., a leading Australian gold producer and explorer, has announced the appointment of Paul Fromson as the Company’s new Chief Financial Officer and Company Secretary following the resignation of current CFO Jon Grygorcewicz.

Mr Fromson has more than 30 years industry experience, including 18 years with ASX listed resource companies. His most recent role was CFO and Company Secretary for Bauxite Resources Limited where he played a key role in two large joint ventures with Chinese partners.

“Paul brings a very strong skillset to the Focus Minerals team at an important time in our growth,” said Focus Minerals Chief Executive Officer Campbell Baird.

“In addition to his direct mining industry experience, Paul has also accumulated a wide range of finance, accounting, taxation and commercial experience which he will bring to bear as we consolidate the Laverton and Coolgardie operations,” said Mr Baird.

Mr Fromson has worked for a number of resource companies and was first involved in the gold industry in 1987 through Kobe Alumina, one of the then part owners of the Boddington Gold Mine. Since this time he has held senior finance positions in exploration and mining companies.

He has also been a director of the Makit Hardware Cooperative and ran his own successful tax practice for six years. Mr Fromson is a member of the Australian Institute of Company Directors, a Certified Practising Accountant and a Chartered Company Secretary.

Verve Energy have announced the appointment of Jason Waters as CEO of Verve Energy, WA’s leading electricity generator.

Mr Waters, currently Verve Energy’s General Manager of Trading & Fuel, succeeds Ms Shirley In’t Veld who leaves Verve Energy after five years as Managing Director.

Energy Minister Peter Collier said State Cabinet had endorsed the Verve Energy Board decision to appoint Mr Waters.

“Mr Waters has extensive experience in the electricity industry and is an excellent choice,” the Minister said.

Verve Energy Chairman David Eiszele said the Verve Energy Board was comfortable making an internal appointment to the position because of the quality of the candidates available from within the organisation.

“Jason is very well credentialed to continue the revitalisation of Verve Energy after the organisations difficult early years following the separation of the old Western Power,” he said.

“He will focus on ensuring Verve Energy has the right and reliable plant, secure fuel supplies and the right people to manage the challenges ahead.”

Mr Waters has been appointed for a two-year term.

Mr Eiszele complimented Ms In’t Veld on her achievements during her term as Managing Director, when Verve Energy overcame the initial challenges of disaggregation to consolidate its position as the leading supplier of reliable electricity in Western Australia.

The Stockland Board announced the key outcomes of a comprehensive review of the group’s executive remuneration policies.

The Board commenced a review last year to more closely align executive remuneration with the interests of securityholders and to ensure Stockland’s policies reflect best practice.

The key outcomes of the review, which are applicable to all Key Management Personnel (KMP), are:

• Maximum potential Short Term Incentive (STI) reduced from 200% to 125% of Target STI
• At least one-third of any STI awarded will be in Stockland securities with deferred vesting

– 100% of any STI awarded above Target performance will be deferred

– 50% of any deferred STI awarded will vest at the end of year two and 50% will vest at the end of year three

– to facilitate the introduction of STI deferral, the total reward mix for KMP (not the Managing Director) will be realigned by increasing Target STI by 10% of Fixed Pay and decreasing the Long Term Incentive (LTI) by 10% of Fixed Pay

• For new LTI awards, vesting of 50% of LTI awarded will be extended from three to four years (with hurdles based on a three year performance period)
• Three year EPS growth hurdle applicable for all employee LTIs will be set by the Board and communicated in advance in the Remuneration Report
• New and broadly-framed clawback provisions will apply to all future unvested deferred STI and LTI awards

The total STI pool available for all employees will not exceed 5% of Underlying Profit and will be set by the Board based on its assessment of Company performance against a corporate balanced scorecard which will be set out in the company’s Remuneration Report.

All STI changes for KMP, including STI deferral, will be effective in FY12 with other changes effective in FY13.

Furthermore, subject to securityholder approval at the AGM in October, the Board and Managing Director have agreed the following changes to the Managing Director’s employment arrangements

• No increase in Fixed Pay for FY13
• No change in total reward mix of 34.5% Fixed Pay and 65.5% variable pay (STI and LTI)
• Maximum possible STI reduced from 200% to 125% of Fixed Pay
• Payment in the event of company-initiated termination reduced to 12 months Fixed Pay plus STI for his six month notice period (currently 1.5 times fixed pay plus 1.5 times STI)
• Unvested deferred STI and LTI continue to original vesting dates post employment, subject to forfeiture in the event of clawback, compliance with new non-compete provisions and achieving applicable LTI performance hurdles

Stockland Chairman Graham Bradley said: “The changes we are announcing today represent a comprehensive restructure of our remuneration policies and practices. They demonstrate our commitment to ensuring Stockland’s executive pay is fair and competitive and properly reflects management’s achievements to create value for securityholders.”

The Federal Government has released draft legislation aimed at helping protect worker's superannuation entitlements.

Announced by Assistant Treasurer David Bradbury, the legislation will strengthen existing legal frameworks regarding director's obligations to ensure their companies meet  Pay As You Go (PAYG) withholding and superannuation obligations, the measure will also help counter phoenix behaviour.

"This legislation makes it clear that directors have an obligation to ensure that provision is made for the ongoing payment of workers' superannuation," Mr Bradbury said.

"It also ensures that fraudulent directors who use phoenix companies to try and avoid their debts will be held personally liable for their PAYG withholding and superannuation obligations."

The Government held further consultation with industry after withdrawing an earlier version of the legislation in November. Following this consultation, the Government has made amendments to the draft Bill, including to ensure that new directors have time to familiarise themselves with corporate accounts before being held personally liable for corporate debts and requiring the ATO to serve director penalty notices on directors in all cases before commencing action.

The draft legislation, explanatory memorandum, and a summary of the policy changes can be found on the Treasury website.

Public submissions close on 2 May 2012 to allow for the introduction and passage of the legislation in the Winter 2012 sittings of Parliament.

Professor S. Bruce Dowton has been appointed the next Vice-Chancellor and President of Macquarie University, the Chancellor, The Hon. Michael Egan, announced.

Professor Dowton is currently Clinical Professor in Pediatrics at Harvard Medical School and until recently was Vice President and Chief Operating Officer of Partners Harvard Medical International.

Professor Dowton is also an Emeritus Professor at the University of New South Wales where he was Dean of the School of Medicine between 1998 and 2005. During that time, he was a member of the Board of St. Vincent’s and Mater Health Sydney, Chair of the Deans of Australian Medical Schools, and Chair of the Medical Training and Education Council of New South Wales.

Mr Egan said Prof. Dowton had been chosen from an exceptionally strong field of applicants from Australia and overseas for his capacity to continue Macquarie’s rise. He will build upon a successful strategy of leveraging the University’s significant land holdings in order to invest heavily in research, learning and teaching, new facilities and in developing mutually beneficial relationships with industry.

“He will be taking over from Professor Steven Schwartz who, after more than six years at the helm, will be leaving Macquarie University in excellent shape, both academically and financially. It is now one of the world’s great universities.”

Mr Egan said Professor Dowton had a stellar international reputation.

“In the past few years he has led or overseen project teams in more than thirty countries advising on diverse aspects of healthcare and higher education.”

“His academic and professional appointments and work have spanned the globe, including Australia, USA, Norway, China, Scotland, Hong Kong, India, Malaysia, Singapore, UAE, Oman, Kazakhstan, Greece, Libya, Saudi Arabia, Dominican Republic, Brazil, Sweden, Switzerland, and United Kingdom.”

“He is a passionate and visionary leader, who is committed to ‘the pursuit of knowledge and learning as a key to improving the human condition’.”

Professor Dowton will take up his position later this year, becoming only the fifth Vice-Chancellor in Macquarie University’s 48-year history. 

The Local Government Association of Queensland (LGAQ) has a red tape reduction task force in the wake of the recent state election.

The taskforce, due to hold its first meeting in May, will publish a report in July into burdensome bureaucratic practices and other areas where savings should be made.

LGAQ Greg Hallam said the taskforce won't be pulling any punches when it publishes the report, saying that it will investigate both local and council matters.

The taskforce is made up of both local government professionals and planning, building, licensing and environmental health experts. 

The Bank of Queensland has released its official results for the first half of the financial year, with the company posting a $90.6 million loss.

The bank blames a sharp rise in bad loans after the company slipped from a net profit of $48 million in the same period last year. To offset the losses, the bank announced a $450 million share sale to boost its bottom line in late March.

The bank has struggled to return to form after the 2011 Queensland floods, which caused heavy falls in property valuations and resulted in a 30 per cent increase in non-performing loans.

However, the bank posted a normalised underlying profit before tax of $222 million, up from  3 per cent from the same time last year.

In announcing the result, BOQ Managing Director and CEO Stuart Grimshaw said the foundations had now been set for promising organic growth for BOQ.  

“Our prudent and robust approach to collective loan provisioning will enhance protection against any further deterioration in the Queensland economy; and the recent $450m capital raising is on track to position BOQ as one of the strongest Core Tier 1 banks in Australia today,” Mr Grimshaw said. 

“We’ve maintained discipline in expenditure, bucked the industry trend with improved NIM performance in a tough funding environment and taken a responsible and conservative approach to management of our loan book. 

“With a new executive team at the helm, we look forward to getting on with the job of delivering our strategy for growth,” he said  

Specialist rural products and services provider FarmWorks has announced that its CEO, Rick Moody, has resigned effective immediately.

The company offered no reason behind Mr Moody’s resignation in its brief statement, but announced that Malcolm Dann, the company’s COO, will take the role of acting CEO after Mr Moody departs. 

The Australian Local Government Association (ALGA) and the Department of Climate Change and Energy Efficiency will convene the inaugural Carbon Price and Landfill National Forum on the 23 – 24^th April, to help local government bodies better understand and meet their obligations under the Federal Government’s Carbon Price Mechanism.

Key note addresses will be provided by Parliamentary Secretary for Climate Change and Energy Efficiency Mark Dreyfus and Chloe Munro, Chief Executive Officer of the Australian Clean Energy Regulator.  The Clean Energy Regulator is part of the Climate Change portfolio and administers the carbon pricing mechanism; the National Greenhouse and Energy Reporting (NGER) scheme; the Carbon Farming Initiative; and the Renewable Energy Target.

Concurrent sessions will provide participants with the opportunity to talk to Ross Carter, First Assistance Secretary at the Department of Climate Change and Energy Efficiency, and staff of the Australian Clean Energy Regulator, about emissions measurement and the National Greenhouse Energy Reporting Scheme (NGERS).  Representatives from financial services organisation Ernst and Young and legal firm Norton Rose will also be available to discuss the management of carbon liabilities and legal issues.

More information can be found here

The Western Australian Government has introduced legislation that aims to allow local communities to have a greater say in neighbourhood development and long term strategic planning.

The integrated strategic planning framework, including community strategic plans, has been introduced as a legislative requirement with Local Governments.

Western Australian Local Government Association President Mayor Troy Pickard said Local Governments fully supported the planning framework, with its genesis in the sector’s own reform process through their Systemic Sustainability Study.

“Councils’ integrated strategic planning includes a thorough community engagement process to establish a community strategic plan for a 10 to 20 year horizon,” Mayor Pickard said.

“It lays out the needs and priorities of the community, from which shorter-term corporate business plans are constructed; articulating asset management, financial and workforce plans for the organisation including resourcing requirements.

“This process is constructed around a deep community engagement process that seeks genuine input from the community and the long range planning will assist Councils in their annual budgeting and day-to day operations.”

Mayor Pickard said many Local Governments were already advanced in introducing the process, and were using a number of methods to gather input from local communities.

“From conducting surveys and public meetings to communicating through social media, newsletters, local newspapers and direct with Elected Members, Local Governments are getting in touch with their communities and engaging with them in meaningful and purposeful way as they prepare their long term strategic plans,” Mayor Pickard said.

“This demonstrates how Local Governments are driving sector reform in a practical manner and engaging communities in local decision making. 

“I’m not aware of any other sphere of government or agency that is undertaking similar long term strategic planning or engaging with the Western Australian community to such an extent.”

The Western Australian Local Government Association (WALGA) has praised the rapid turnaround in the quality of the state’s planning approvals systems, saying it has gone from one of the country’s worst to one of the best in a matter of years.

WALGA President Mayor Troy Pickard said the turnaround was the result of councils assisting and implementing State Government reforms.

“Local Governments have been actively working with the State to deliver on key strategies such as the Directions 2031 framework, the preparation of new R-Codes for multiple dwellings and through engagement on the new waterfront development,” Mayor Pickard said.

“There are, however a number of areas in which they continue to be impacted by delays and inefficiencies from external agencies.”

Mayor Pickard said many Local Governments were already achieving greater efficiencies in planning and development processes, with these gains to be shared with the entire sector through the preparation of a Local Government Planning Improvement Program.

The New South Wales Government has announced the three members of the independent expert panel that will be responsible for examining the structural arrangements of councils in the context of improving the financial sustainability and future viability of the NSW local government sector.

State Local Government Minister Don Page announced that the panel will be chaired by Professor Graham Sansom, who will be joined by panel members Jude Munro and Glenn Inglis.

“I am pleased to announce that Professor Graham Sansom, whom I announced as the chair of the Panel last month, will be joined by fellow local government experts Jude Munro AO and Glenn Inglis,” Mr Page said.

“Both Jude and Glenn will offer invaluable experience and insight into the Panel process, which ultimately is seeking to improve the future prosperity of the NSW local government sector.

“It is a big job, but I am confident we have the right people for that job.”

Mr Page said the Panel is the first initiative to be announced out of the Destination 2036 Action Plan, which is nearing completion.

“The Panel was created after the presidents of the Local Government and Shires Associations, Keith Rhoades and Ray Donald, wrote to me requesting the NSW Government explore ways to review certain aspects of the local government sector,” Mr Page said.

“The Review Panel will take into consideration councils’ ability to support the needs of their communities, ability to deliver services and infrastructure efficiently, ability to provide local representation and decision making, the financial sustainability of each council area, and any barriers that inhibit, or incentives that could encourage, voluntary boundary changes.”

The New South Wales Government has passed legislation through Parliament that will ban the holding of dual roles of State MPs and local mayors and local councillors.

State Local Government Minister Don Page said the Local Government Amendment (Members of Parliament) Act 2012 brings NSW into line with other mainland states.

“This legislation ensures that one person serves in one elected position in State or local government, dedicating their effort to one role in the NSW political system,” Mr Page said.

“It eliminates the problem of elected MPs who are also councillors or mayors trying to be in two places at once.

“This issue was raised here in NSW after last year’s election, when it became known that 29 MPs in the new NSW Parliament were serving as councillors or mayors on a council – and once it was discovered that that practice was prohibited in all other mainland States, which have clear separation between State and local government.

Monash University has announced new research that could possibly change the way health professionals treat Alzheimer’s disease, which affects over 35.6 million people worldwide.

Published in Nature Genetics, the research report details the discovery of new genes that may play a role in adding to the risk of the dieseas in older people up to 20 years before clinical symptoms become apparent.

Associate Professor Velandai Srikanth from the Stroke and Ageing Research Group of Monash University’s Southern Clinical School led a team of Australian researchers from the Menzies Research Institute and the University of Queensland in collaboration with the Cohorts for Heart and Aging Research in Genomic Epidemiology consortium, affiliated with Boston University. Australian researchers analysed data from the Tasmanian Study of Cognition and Gait.

The researchers looked at the genes that contribute to the size of the part of the brain known as the hippocampus, which is important for memory. This invariably shrinks during the course of ageing but the shrinkage is believed to become more pronounced during the progression of Alzheimer’s disease.

Associate Professor Srikanth said analysing data from more than 9000 people using advanced brain imaging and genetic analysis led to the breakthrough.

“Our study makes a major contribution to the body of knowledge available and will stimulate further work in identifying disease mechanisms and potentially new treatments for the widespread disease,” Associate Professor Srikanth said.

“We investigated what new genetic markers there might be to explain why the hippocampus shrinks and have discovered a set of new genes that are likely to be responsible.

“The functions related to these genes may indicate pathways that underlie the development of Alzheimer’s disease in people up to 20 years before symptoms actually surface.

“Results suggest that the effect of having one copy of these ‘risk’ genes was that the hippocampus, on average, was as small as that of a person four to five years older.”

The IMF's World Economic Outlook (WEO) confirms that our economic fundamentals are strong with the Australian economy expected to outperform every major advanced economy over the next two years.

Following a period of acute instability last year, the IMF believes global prospects are improving although downside risks remain. The euro area is still projected to enter a mild recession, and fundamental weaknesses in many European economies continue to pose a clear risk.

While global challenges remain, there have been encouraging signs of stabilisation since the start of the year. The improved outlook has been driven by an increase in activity in the United States and better policy responses to the European sovereign debt crisis.

Despite the impact of ongoing global uncertainty and uneven conditions across sectors, the IMF expects that the Australian economy will outpace all major advanced economies over the next two years, with forecast growth of 3.0 per cent in 2012 and 3.5 per cent in 2013.

These forecasts are broadly consistent with the outlook in the Mid Year Economic and Fiscal Outlook which has the Budget returning to surplus in 2012-13.

The IMF also forecasts Australia's unemployment rate to remain low at 5.2 per cent in both 2012 and 2013.

With solid growth, low unemployment, contained inflation, strong public finances and a record pipeline of business investment, the Australian economy is the standout performer of the developed world.

The National Water Commission (NWC) has released a report into water trading in the southern Murray-Darling Basin, finding that water markets helped the region remain productive, even during severe drought periods.

“Australia’s water markets have allowed water to be reallocated to where the need is greatest and reduced the impact of the drought on regional production. Water trade is playing a major role in achieving the National Water Initiative (NWI) objective of maximising the economic, social and environmental values of scarce water resources,” NWC Commissioner Laurie Arthur said.

“It is increasingly valued as a business tool and is now supported by the majority of the irrigators surveyed by the Australian Bureau of Agricultural and Resource Economics and Sciences for this report.”

The report confirms that the main drivers of hardship in the communities in the southern Murray-Darling Basin include drought, commodity prices and exchange rates, while water trading offsets these difficulties.

But water markets can deliver even more. Continuing reform will ensure that market structures provide greater efficiency, that participants have sufficient information to avoid uncertainty, and most importantly, that the remaining restrictions on trade are removed,” Mr Arthur said.

The report also assesses the impacts of Government policies in the area over the four year period ending in min-2011.

 ‘The millennium drought has had significant impacts on regional production and the proceeds from water trading sales have supported local economies and allowed many irrigators to reduce debt during that difficult time. Water purchased by the Australian Government is part of this trade and will benefit the environment,” Mr Arthur said.

The report can be found here

The Federal Government has announced that the Edith Cowan University has joined forces with nine other Australian universities to bolster research into the management of chronic diseases, mental health in young people and the protection of coastal environments.

Federal Minister for Science and Research, Senator Chris Evans, launched the $5.6 million project that will see collaborations in research excellence.

"This is a tremendous opportunity for ECU to team up with other institutions in areas of common interest to make a significant contribution to the nation's research and innovation priorities," Senator Evans said.

"ECU will be involved in research that delivers real outcomes-research that drives innovation and boosts productivity.

ECU will partner with the University of Western Australia, University of Adelaide, University of South Australia, Flinders University, Queensland University of Technology, University of Queensland, Deakin University, University of Melbourne and University of Sydney.

The 'Growing research excellence at Edith Cowan University through partnership and engagement' project is part of the Government's innovative Collaborative Research Networks (CRN) program.

Speaking on ABC’s AM radio show, Garry Weaven calls on the Federal Government to rewrite the Reserve Bank’s charter so to start healing a damaged economy.

Mr Weaven believes the Reserve Bank focuses too strongly on inflation and attetudes imposed when Peter Costello was Treasurer in 1996 is now “totally inappropriate."

"It seems to be still unduly influencing the Reserve in its policies. I know it's very hard to get the balance right, but I think consistently for many years now the Reserve has had far too much focus on inflation only and not enough on full employment and economic prosperity generally, which is their requirement under the Act," Mr Weaven said.

"It's hard to see that the current arrangements are properly co-ordinated. And I think there seems to be little point in having a situation where the Reserve is locked into a sort of single blunt instrument approach and the Government is locked into a political set of parameters."

“Notwithstanding the mining boom, we do have signs of real weakness in retail and manufacturing. But more importantly in a way, we have very high interest rates by international standards. And high interest rates push the currency high and that's very, very bad for manufacturers, tourism and some other industries," said Mr Weaven.

Garry Weaven is a former ACTU assistant secretary and currently oversees $120 billion worth of superannuation investments including AustralianSuper, Cbus and Hesta.

You can listen to the full transcript of Garry Weaven's interview with the ABC here