1 00:00:03,660 --> 00:00:06,269 Sean Aylmer: Welcome to the Fear and Greed Daily Interview, I'm Sean 2 00:00:06,290 --> 00:00:09,820 Sean Aylmer: Aylmer. Ever since the pandemic began and the government started 3 00:00:09,820 --> 00:00:14,020 Sean Aylmer: spending billions of dollars supporting businesses, there's been an expectation 4 00:00:14,250 --> 00:00:17,650 Sean Aylmer: of an impending wave of insolvencies. It was predicted to 5 00:00:17,650 --> 00:00:20,169 Sean Aylmer: hit when the government support was withdrawn more than a 6 00:00:20,170 --> 00:00:22,630 Sean Aylmer: year ago, and companies that have been artificially propped up 7 00:00:22,630 --> 00:00:26,340 Sean Aylmer: began to collapse, but it didn't really happen. In fact, 8 00:00:26,340 --> 00:00:30,050 Sean Aylmer: the restructuring sector has been quieter than normal. But in 9 00:00:30,680 --> 00:00:33,370 Sean Aylmer: the last few months, there are signs that things are 10 00:00:33,370 --> 00:00:37,970 Sean Aylmer: changing. Already this year, two large construction companies, Probuild and Condev, 11 00:00:38,320 --> 00:00:41,620 Sean Aylmer: have appointed administrators with a huge impact on the many 12 00:00:41,620 --> 00:00:45,530 Sean Aylmer: subcontractors and other businesses linked to them. So, with global 13 00:00:45,530 --> 00:00:49,630 Sean Aylmer: supply chains choked up, businesses unable to function, with staff 14 00:00:49,630 --> 00:00:52,540 Sean Aylmer: in isolation and rising costs, could we be seeing the 15 00:00:52,540 --> 00:00:55,690 Sean Aylmer: beginning of a wave of companies going under? I'm joined 16 00:00:55,690 --> 00:00:59,990 Sean Aylmer: today by McGrathNicol chairman Jason Preston and McGrathNicol partner, Kathy 17 00:01:00,430 --> 00:01:03,400 Sean Aylmer: Sozou. McGrathNicol of course is a great supporter of this podcast, 18 00:01:03,400 --> 00:01:08,531 Sean Aylmer: Fear and Greed. Jason, Kathy, welcome to Fear and Greed. 19 00:01:08,531 --> 00:01:08,532 Kathy Sozou: Thanks for having us. 20 00:01:08,532 --> 00:01:08,533 Jason Preston: G'day, Sean. 21 00:01:08,533 --> 00:01:11,990 Sean Aylmer: Jason, I might kick off with you. We have expected 22 00:01:12,770 --> 00:01:15,560 Sean Aylmer: lots of insolvency and administrations and that over the last 23 00:01:15,560 --> 00:01:18,800 Sean Aylmer: couple of years, but we haven't seen it. Is it 24 00:01:18,800 --> 00:01:20,940 Sean Aylmer: coming? I mean, where are we in that cycle? 25 00:01:21,569 --> 00:01:23,230 Jason Preston: Sean, I think it is and we are starting to 26 00:01:23,230 --> 00:01:25,709 Jason Preston: see the beginning of that. As you mentioned, if we 27 00:01:26,150 --> 00:01:28,730 Jason Preston: look back on the last two years of the pandemic, 28 00:01:28,810 --> 00:01:31,860 Jason Preston: we saw a significant drop in insolvencies and with the 29 00:01:31,860 --> 00:01:35,210 Jason Preston: benefit of hindsight, that's probably unsurprising. I mean, we saw 30 00:01:35,280 --> 00:01:40,780 Jason Preston: very low interest rates, significant government handouts, landlords, banks, financiers, 31 00:01:40,780 --> 00:01:45,390 Jason Preston: the ATO, all supporting companies and an extended moratorium on 32 00:01:45,390 --> 00:01:48,190 Jason Preston: enforcing debts and we saw this huge drop in insolvency. 33 00:01:49,370 --> 00:01:51,410 Jason Preston: Many of those factors, but not all of them, have 34 00:01:51,410 --> 00:01:54,780 Jason Preston: now unwound, and of course we're all expecting to see 35 00:01:54,780 --> 00:01:58,310 Jason Preston: an increase in interest rates in the short term. We're 36 00:01:58,310 --> 00:02:02,030 Jason Preston: seeing real cost pressures in the economy. Government has wound 37 00:02:02,030 --> 00:02:04,740 Jason Preston: back its stimulus. Just in the last few days, the 38 00:02:05,350 --> 00:02:09,540 Jason Preston: ATO has talked about being more front foot in terms of following 39 00:02:09,540 --> 00:02:12,710 Jason Preston: up and pursuing some of the significant arrears that have 40 00:02:12,710 --> 00:02:16,160 Jason Preston: accrued over the last two years. So, we do expect 41 00:02:16,260 --> 00:02:18,989 Jason Preston: to see an increase in insolvency activity and we're just 42 00:02:19,419 --> 00:02:20,960 Jason Preston: starting to see that come through now. 43 00:02:21,310 --> 00:02:24,610 Sean Aylmer: Okay, so we've already seen some moves in the construction 44 00:02:24,800 --> 00:02:29,840 Sean Aylmer: sector, Jason. It's been really high profile. Is the sector 45 00:02:29,840 --> 00:02:32,580 Sean Aylmer: in trouble or is it just those that at the 46 00:02:32,660 --> 00:02:33,870 Sean Aylmer: edges are in trouble? 47 00:02:33,919 --> 00:02:36,630 Jason Preston: There are certainly some challenges in that sector right now. 48 00:02:36,840 --> 00:02:40,190 Jason Preston: Why this sector, why are we seeing it perhaps first 49 00:02:40,190 --> 00:02:42,780 Jason Preston: with some challenges? I think there are a couple of 50 00:02:42,790 --> 00:02:46,930 Jason Preston: reasons for that. Firstly, there's an inherent misalignment often in 51 00:02:46,930 --> 00:02:51,680 Jason Preston: construction, where construction companies are handing out fixed price contracts 52 00:02:52,050 --> 00:02:56,410 Jason Preston: to their customers, but then fulfilling those with variable price 53 00:02:56,410 --> 00:03:00,190 Jason Preston: subcontracts and because of the cost pressures in the economy, 54 00:03:00,480 --> 00:03:04,410 Jason Preston: because of delays that are coming from the lack of availability 55 00:03:04,410 --> 00:03:08,010 Jason Preston: of labor and materials, the timing difference if you like, 56 00:03:08,010 --> 00:03:11,820 Jason Preston: between contracting on the customer side versus the supply side 57 00:03:11,820 --> 00:03:14,600 Jason Preston: with subcontractors is extending and a lot of them are 58 00:03:14,600 --> 00:03:18,470 Jason Preston: getting caught out where they don't have significant balance sheets, 59 00:03:18,740 --> 00:03:23,109 Jason Preston: but they've got a misalignment where they're actually in unprofitable contracts. So, 60 00:03:23,110 --> 00:03:26,150 Jason Preston: it's often a sector that's susceptible early in an environment 61 00:03:26,470 --> 00:03:29,830 Jason Preston: where we see costs increasing. And that's what's starting to play 62 00:03:29,830 --> 00:03:30,770 Jason Preston: out a little at the moment. 63 00:03:31,510 --> 00:03:33,310 Sean Aylmer: Kathy, what's your take on the property sector? 64 00:03:35,250 --> 00:03:36,990 Kathy Sozou: Yeah, I think much like Jason was just saying, where 65 00:03:36,990 --> 00:03:40,160 Kathy Sozou: you have these industries where there's a mismatch at between 66 00:03:40,160 --> 00:03:42,280 Kathy Sozou: the way in which they sell to their customers and 67 00:03:42,280 --> 00:03:46,080 Kathy Sozou: their cost base, we see this pressure playing out. We've 68 00:03:46,080 --> 00:03:49,210 Kathy Sozou: seen on a large construction matter that we've been working 69 00:03:49,210 --> 00:03:51,559 Kathy Sozou: on for a number of years now, where we've actually 70 00:03:51,820 --> 00:03:55,060 Kathy Sozou: had to step in and take on the role effectively 71 00:03:55,060 --> 00:04:00,550 Kathy Sozou: as builder and complete large multi- story residential developments. In 72 00:04:00,550 --> 00:04:04,550 Kathy Sozou: our capacity, we've seen firsthand how difficult it is post- 73 00:04:04,550 --> 00:04:08,890 Kathy Sozou: pandemic and through the pandemic, to actually get trades. There was a 74 00:04:08,890 --> 00:04:12,140 Kathy Sozou: short shutdown period because of COVID on our projects and 75 00:04:12,140 --> 00:04:16,370 Kathy Sozou: we're only just coming through that. We've seen a particular 76 00:04:16,370 --> 00:04:19,500 Kathy Sozou: uptick in regulatory focus with the building commissioner off the 77 00:04:19,500 --> 00:04:23,380 Kathy Sozou: back of well publicized, whether it be Mascot Towers or 78 00:04:23,380 --> 00:04:27,040 Kathy Sozou: Opal pre- pandemic, but the impact of that really flowing 79 00:04:27,040 --> 00:04:30,270 Kathy Sozou: through and with the uptick in the regulatory focus and 80 00:04:30,830 --> 00:04:33,390 Kathy Sozou: really the building commissioner being on the front foot, that 81 00:04:33,390 --> 00:04:37,170 Kathy Sozou: added pressure where there's already cost pressures, there's already delays, 82 00:04:37,380 --> 00:04:41,589 Kathy Sozou: it really is a sector under pressure. Most recently in 83 00:04:41,589 --> 00:04:44,540 Kathy Sozou: New South Wales in particular, you see the weather event 84 00:04:44,589 --> 00:04:48,860 Kathy Sozou: and that has a real practical impact on construction, where 85 00:04:48,860 --> 00:04:52,130 Kathy Sozou: it adds to additional delays, so I certainly ... We have 86 00:04:52,130 --> 00:04:55,230 Kathy Sozou: seen firsthand the pressures in that industry and I think 87 00:04:55,230 --> 00:05:00,279 Kathy Sozou: they will continue to play out. Even just speaking to 88 00:05:00,279 --> 00:05:05,480 Kathy Sozou: a CEO in the industry quite recently in that new 89 00:05:05,480 --> 00:05:09,020 Kathy Sozou: home development space where we've seen government support to new 90 00:05:09,020 --> 00:05:14,390 Kathy Sozou: homeowners, and we've seen demand uptick in circumstances where builders 91 00:05:14,500 --> 00:05:17,210 Kathy Sozou: may not have anticipated that and so signing up all 92 00:05:17,210 --> 00:05:20,920 Kathy Sozou: this new work, but there's a mismatch in pricing. So 93 00:05:21,770 --> 00:05:24,779 Kathy Sozou: again, I'm not sure that those developers are making money. 94 00:05:24,779 --> 00:05:28,290 Kathy Sozou: I think it's cost recovery and I think it's working 95 00:05:28,290 --> 00:05:30,810 Kathy Sozou: through a period where working capital is actually quite tight, 96 00:05:31,550 --> 00:05:34,250 Kathy Sozou: to see if they can make it through this disconnect 97 00:05:34,250 --> 00:05:36,770 Kathy Sozou: over the last couple of years. 98 00:05:36,770 --> 00:05:39,770 Sean Aylmer: Of course, Kathy, it's an industry built on a network 99 00:05:39,770 --> 00:05:44,560 Sean Aylmer: of subcontractors and other SMEs. So, whilst there's high demand 100 00:05:44,560 --> 00:05:49,300 Sean Aylmer: for them, if a large company goes into administration, or 101 00:05:49,300 --> 00:05:52,419 Sean Aylmer: certainly if it becomes insolvent, that has big flow- on effects. 102 00:05:53,480 --> 00:05:57,109 Kathy Sozou: Yeah, absolutely. I think what we've seen, I think you 103 00:05:57,110 --> 00:06:01,030 Kathy Sozou: mentioned Probuild, in some respects, no doubt there's a structural impact in the 104 00:06:01,660 --> 00:06:03,549 Kathy Sozou: industry from a collapse of that size, but there's been 105 00:06:04,540 --> 00:06:07,810 Kathy Sozou: some good outcomes there, within particular I think in Victoria, 106 00:06:07,810 --> 00:06:09,890 Kathy Sozou: a lot of the developments have now found a new 107 00:06:09,890 --> 00:06:13,750 Kathy Sozou: home with Roberts and Co. So, to the extent there's 108 00:06:13,750 --> 00:06:16,610 Kathy Sozou: a large collapse that doesn't necessarily have to mean a 109 00:06:16,610 --> 00:06:19,539 Kathy Sozou: terminal flow on effect to all the subcontractors, if there's 110 00:06:19,540 --> 00:06:22,060 Kathy Sozou: a good outcome, but certainly it is an industry I 111 00:06:22,060 --> 00:06:25,750 Kathy Sozou: think, where we will see more pressure and it may not 112 00:06:25,750 --> 00:06:30,299 Kathy Sozou: always lead to an outcome that supports the subbies in 113 00:06:30,300 --> 00:06:31,580 Kathy Sozou: the extended network. 114 00:06:32,430 --> 00:06:34,370 Sean Aylmer: Stay with me, Jason and Kathy, we'll be back in 115 00:06:34,370 --> 00:06:43,980 Sean Aylmer: a minute. My guess this morning is McGrathNicol chairman, Jason Preston, 116 00:06:44,290 --> 00:06:48,310 Sean Aylmer: and McGrathNicol partner, Kathy Sozou. So, what other sectors are 117 00:06:48,310 --> 00:06:54,140 Sean Aylmer: facing difficulties in coming months. Construction obviously, but outside that, 118 00:06:54,140 --> 00:06:57,089 Sean Aylmer: what other areas do you expect to see more work 119 00:06:57,089 --> 00:06:57,560 Sean Aylmer: in, really? 120 00:06:58,680 --> 00:07:00,229 Kathy Sozou: I might jump in with one. I think retail's an 121 00:07:00,920 --> 00:07:06,400 Kathy Sozou: interesting one. No doubt throughout the pandemic, retail was certainly 122 00:07:06,400 --> 00:07:09,380 Kathy Sozou: an industry where we saw some extreme winners and some 123 00:07:09,380 --> 00:07:14,530 Kathy Sozou: losers. So, people that could quickly switch to online, all 124 00:07:14,530 --> 00:07:17,070 Kathy Sozou: of us working from home, it's no surprise all those 125 00:07:17,070 --> 00:07:20,350 Kathy Sozou: home services, desk supplies, chairs. There was a real uptick 126 00:07:20,350 --> 00:07:23,320 Kathy Sozou: for some retailers, but then all the bricks and mortar 127 00:07:23,320 --> 00:07:27,490 Kathy Sozou: retailers really struggled. So, I think that's yet to play 128 00:07:27,630 --> 00:07:29,840 Kathy Sozou: out fully. I think we will start to see the 129 00:07:29,840 --> 00:07:32,980 Kathy Sozou: pressure, we've seen the winners, but I think the losers will start 130 00:07:32,980 --> 00:07:37,350 Kathy Sozou: to flush through. It's an industry that's impacted, I think 131 00:07:37,350 --> 00:07:40,110 Kathy Sozou: you touched on supply chain in your intro, Sean, and 132 00:07:40,110 --> 00:07:43,320 Kathy Sozou: I think that's, that can be significant on the retail 133 00:07:43,320 --> 00:07:47,540 Kathy Sozou: sector, and labor pressure. Just that ongoing cost pressure when 134 00:07:47,540 --> 00:07:50,420 Kathy Sozou: margins are already tight. So, I think we'll see some more 135 00:07:50,420 --> 00:07:52,190 Kathy Sozou: activity on the retail front. 136 00:07:53,040 --> 00:07:53,470 Sean Aylmer: Jason? 137 00:07:54,090 --> 00:07:57,560 Jason Preston: Yeah, Sean. I think, I mean, what we often see is regardless 138 00:07:57,560 --> 00:08:00,240 Jason Preston: of where the economy's at in its cycle, there's often just 139 00:08:00,240 --> 00:08:03,770 Jason Preston: areas of structural change happening in the economy. One of 140 00:08:03,770 --> 00:08:05,970 Jason Preston: course, that we've seen over the last few years and 141 00:08:05,970 --> 00:08:10,390 Jason Preston: it's accelerating, is the whole decarbonization thing. So, we saw 142 00:08:10,720 --> 00:08:13,750 Jason Preston: 12 months or so ago, some significant fallout in the 143 00:08:13,750 --> 00:08:17,060 Jason Preston: coal sector, in the mining services sector. Now, that's paused 144 00:08:17,060 --> 00:08:19,810 Jason Preston: at the moment because commodity prices are strong, but thee 145 00:08:19,810 --> 00:08:22,330 Jason Preston: reality is in the medium term, I think we'll see that 146 00:08:23,040 --> 00:08:25,970 Jason Preston: come back and continue as part of a structural change. 147 00:08:26,290 --> 00:08:29,930 Jason Preston: We saw a number of renewable projects that had difficulties 148 00:08:29,930 --> 00:08:33,300 Jason Preston: again, just because so much capital has flown in and there's been 149 00:08:33,300 --> 00:08:35,880 Jason Preston: regulatory issues and supply chain issues. So, I think we'll 150 00:08:35,880 --> 00:08:40,160 Jason Preston: still see some structural fallout in the energy, broader energy 151 00:08:40,160 --> 00:08:45,750 Jason Preston: sector. Tourism is an interesting one, obviously significantly impacted during 152 00:08:45,750 --> 00:08:48,460 Jason Preston: lockdown, but also one of the beneficiaries of a lot 153 00:08:48,550 --> 00:08:51,270 Jason Preston: of the government support. We then had this period of 154 00:08:51,270 --> 00:08:54,569 Jason Preston: time where we're all locked into Australia and so we've 155 00:08:54,570 --> 00:08:57,770 Jason Preston: seen a growth in domestic tourism, but we're not really 156 00:08:57,770 --> 00:09:02,350 Jason Preston: seeing international tourism, and particularly that China market, come back 157 00:09:02,390 --> 00:09:05,700 Jason Preston: anywhere near to where it was. So, I think, tourism's 158 00:09:05,700 --> 00:09:09,870 Jason Preston: definitely one to watch, particularly those that were particularly geared 159 00:09:10,110 --> 00:09:14,160 Jason Preston: to that inbound China market. Education's another one where we 160 00:09:14,160 --> 00:09:16,770 Jason Preston: already have seen some fallout. Again, that part of the 161 00:09:16,770 --> 00:09:23,620 Jason Preston: market that's orientated towards inbound students, that have been significantly impacted in the short term. 162 00:09:24,080 --> 00:09:26,120 Kathy Sozou: I was just going to add one more, which is 163 00:09:26,120 --> 00:09:29,150 Kathy Sozou: I think, residential aged care. So, that was a sector 164 00:09:29,150 --> 00:09:33,110 Kathy Sozou: that we saw under pressure, even pre- pandemic. We obviously 165 00:09:33,110 --> 00:09:35,429 Kathy Sozou: had a Royal Commission into aged care. There were some 166 00:09:35,429 --> 00:09:39,240 Kathy Sozou: structural changes in that sector around pricing and the way 167 00:09:39,240 --> 00:09:43,449 Kathy Sozou: the homes operate. It was a sector that was under pressure pre- 168 00:09:43,450 --> 00:09:46,929 Kathy Sozou: pandemic with a lot (inaudible) operators, just the cost 169 00:09:46,929 --> 00:09:51,910 Kathy Sozou: base not really supporting standalone homes and aged care facilities, 170 00:09:52,050 --> 00:09:55,510 Kathy Sozou: and there's a government push towards in- home care. So, it 171 00:09:55,510 --> 00:09:59,410 Kathy Sozou: was a sector under pressure pre pandemic. I think obviously 172 00:09:59,410 --> 00:10:03,510 Kathy Sozou: you then overlay two years of the pandemic in residential 173 00:10:03,510 --> 00:10:07,470 Kathy Sozou: aged care facilities, where there's incredible cost pressures, there's incredible 174 00:10:07,850 --> 00:10:13,729 Kathy Sozou: regulatory quality issues. You've got staff shortages. I think really, 175 00:10:13,940 --> 00:10:16,199 Kathy Sozou: we've not seen any of that really go to its 176 00:10:16,200 --> 00:10:19,350 Kathy Sozou: natural end in that sector. I just wonder whether that 177 00:10:19,350 --> 00:10:22,390 Kathy Sozou: will start to unlock in the coming year or so, 178 00:10:22,390 --> 00:10:24,590 Kathy Sozou: as we get back to whatever this new normal is 179 00:10:25,040 --> 00:10:27,360 Kathy Sozou: and some of those pressures come to play. 180 00:10:28,520 --> 00:10:31,520 Sean Aylmer: Yeah, it's really interesting. I mean, I'm wondering Jason, are there any areas 181 00:10:31,990 --> 00:10:35,280 Sean Aylmer: which, I'm not sure they benefit, but certainly are a 182 00:10:35,280 --> 00:10:39,420 Sean Aylmer: bit safer than some of these things like tourism, education, 183 00:10:39,420 --> 00:10:43,880 Sean Aylmer: aged care, construction? Are there other sectors that you may 184 00:10:43,880 --> 00:10:49,210 Sean Aylmer: have a slow down in work because of the cycle itself? 185 00:10:49,650 --> 00:10:52,190 Jason Preston: Yeah look, I think, I mean, sectors that are able 186 00:10:52,190 --> 00:10:56,270 Jason Preston: to pass on cost increases. So, sectors that have some level 187 00:10:56,270 --> 00:11:02,660 Jason Preston: of monopoly pricing, or unique product or service, should do 188 00:11:02,660 --> 00:11:07,260 Jason Preston: well because they'll be able to effectively maintain growth despite 189 00:11:07,520 --> 00:11:11,370 Jason Preston: cost going up. But I think, if we look back 190 00:11:11,370 --> 00:11:13,780 Jason Preston: on the last two years, that a lot of the 191 00:11:13,780 --> 00:11:17,570 Jason Preston: things that have supported the economy more broadly, those low entry risk 192 00:11:17,920 --> 00:11:22,179 Jason Preston: rates, government support, as they wheel back, I think it's 193 00:11:22,179 --> 00:11:26,610 Jason Preston: going to be challenging for most sectors. It's unlikely that 194 00:11:26,710 --> 00:11:31,190 Jason Preston: the underlying conditions will improve for them, and add to 195 00:11:31,190 --> 00:11:34,960 Jason Preston: that, there's a lot of sectors at the moment really are feeling the 196 00:11:34,960 --> 00:11:38,170 Jason Preston: pinch from the supply chain issues that are out there 197 00:11:38,170 --> 00:11:42,290 Jason Preston: and just struggling to get product to market. So, I 198 00:11:42,290 --> 00:11:44,660 Jason Preston: think those that will go well, are those that really have 199 00:11:44,660 --> 00:11:47,130 Jason Preston: a unique position in the market and can pass on 200 00:11:47,130 --> 00:11:49,890 Jason Preston: some of these issues that are coming through with cost pressure. 201 00:11:51,050 --> 00:11:53,140 Sean Aylmer: Jason, how long does this take? I mean, right at 202 00:11:53,140 --> 00:11:56,020 Sean Aylmer: the front, you said that things are getting back to 203 00:11:56,020 --> 00:11:57,710 Sean Aylmer: normal in a sense, so we don't have all the 204 00:11:57,710 --> 00:12:01,410 Sean Aylmer: government support packages. Is this something that plays out over 205 00:12:01,410 --> 00:12:03,990 Sean Aylmer: the next two, three, four, five years until we get 206 00:12:03,990 --> 00:12:06,730 Sean Aylmer: back to a normal pre- COVID position? 207 00:12:08,190 --> 00:12:10,610 Jason Preston: Yeah, it's a great question. I think, if I reflect 208 00:12:10,610 --> 00:12:16,429 Jason Preston: back on 2007 and '08 and the GFC, there were lots of indicators around pressure 209 00:12:16,429 --> 00:12:19,440 Jason Preston: building and then it wasn't really until it all happened 210 00:12:19,460 --> 00:12:22,190 Jason Preston: and the credit squeeze occurred that we saw really a 211 00:12:22,190 --> 00:12:25,010 Jason Preston: very significant and quick fallout. I think as we sit 212 00:12:25,010 --> 00:12:28,020 Jason Preston: here today, there are certainly indicators that the pressure is 213 00:12:28,020 --> 00:12:30,650 Jason Preston: building in the economy, but it's very hard to see at 214 00:12:30,650 --> 00:12:33,300 Jason Preston: this point, any particular event that's going to make all that 215 00:12:33,300 --> 00:12:35,880 Jason Preston: happen quite quickly and for there to be fallout as 216 00:12:35,880 --> 00:12:40,080 Jason Preston: a result. So, I think we'll continue to see a 217 00:12:40,080 --> 00:12:44,319 Jason Preston: steady increase in the level of stress and following on 218 00:12:44,320 --> 00:12:46,970 Jason Preston: from that insolvency, I don't think ... It's very hard to sit here at the moment 219 00:12:47,670 --> 00:12:50,020 Jason Preston: and say, " Here's one particular event that's going to occur 220 00:12:50,610 --> 00:12:52,809 Jason Preston: that's going to bring all that forward and make it occur quickly." 221 00:12:52,820 --> 00:12:58,750 Sean Aylmer: Okay, just to finish off, if companies think they might be 222 00:12:58,750 --> 00:13:00,370 Sean Aylmer: in trouble, what should they be doing? 223 00:13:01,250 --> 00:13:04,859 Kathy Sozou: I mean, what we would always say is just get 224 00:13:04,860 --> 00:13:08,370 Kathy Sozou: some help, speak to advisors. I think the worst thing 225 00:13:08,370 --> 00:13:12,870 Kathy Sozou: that companies can do is not have a plan or 226 00:13:12,870 --> 00:13:16,620 Kathy Sozou: hope for the best. But I think, there's someone in 227 00:13:16,620 --> 00:13:18,830 Kathy Sozou: our organization always says, hope is not a strategy. 228 00:13:19,179 --> 00:13:19,309 Sean Aylmer: Oh, I don't know. I don't know. 229 00:13:21,770 --> 00:13:25,660 Kathy Sozou: Can make you feel better. But I think this acknowledgement, 230 00:13:25,870 --> 00:13:27,800 Kathy Sozou: and I think you have to have a plan and 231 00:13:27,800 --> 00:13:32,100 Kathy Sozou: engage stakeholders early. I think, in some respects over the 232 00:13:32,100 --> 00:13:34,459 Kathy Sozou: last two years, what we have seen is a willingness 233 00:13:34,460 --> 00:13:37,720 Kathy Sozou: of all stakeholders across the board to be more supportive 234 00:13:37,720 --> 00:13:41,550 Kathy Sozou: than I would say is in the ordinary course or 235 00:13:41,550 --> 00:13:44,720 Kathy Sozou: business as usual. We've seen financiers being supported. We've seen 236 00:13:44,720 --> 00:13:46,990 Kathy Sozou: the government, we've seen the ATO. I think to the 237 00:13:46,990 --> 00:13:50,940 Kathy Sozou: extent that you engage early in a structured conversation, if 238 00:13:50,940 --> 00:13:54,760 Kathy Sozou: you see the headwinds coming and talk through those and 239 00:13:54,760 --> 00:13:58,069 Kathy Sozou: get some advice, then you actually are well placed to 240 00:13:58,070 --> 00:14:00,970 Kathy Sozou: trade through a difficult period. Because I think there is 241 00:14:00,970 --> 00:14:05,410 Kathy Sozou: a willingness to support through. I think if it's head 242 00:14:05,410 --> 00:14:07,460 Kathy Sozou: in the sand and it'll come good and we just hope 243 00:14:08,160 --> 00:14:10,020 Kathy Sozou: it all plays out, that's where it becomes a more 244 00:14:10,020 --> 00:14:11,150 Kathy Sozou: difficult proposition. 245 00:14:12,730 --> 00:14:15,610 Sean Aylmer: Jason, Kathy, thank you both for talking to Fear and Greed. 246 00:14:16,440 --> 00:14:16,760 Jason Preston: Thanks, Sean. 247 00:14:17,550 --> 00:14:17,770 Kathy Sozou: Thank you. 248 00:14:17,770 --> 00:14:22,810 Sean Aylmer: That was McGrathNicol chairman, Jason Preston and McGrathNicol partner, Kathy 249 00:14:22,810 --> 00:14:25,640 Sean Aylmer: Sozou. This is the Fear and Greed daily interview. Join 250 00:14:25,640 --> 00:14:27,690 Sean Aylmer: us every morning for the full episode of Fear and 251 00:14:27,690 --> 00:14:31,880 Sean Aylmer: Greed, Australia's most popular business podcast. I'm Sean Aylmer, enjoy 252 00:14:31,880 --> 00:14:32,230 Sean Aylmer: your day.