Speaker 1: This is Business Now with Ross Greenwood.
Speaker 2: Hi there, It's great to have your company here on
Speaker 2: Business Now on this Thursday.
Speaker 1: I'm Ross Greenwood. Coming up on the program.
Speaker 2: As America rethinks to three hundred billion dollar UCUST defense
Speaker 2: joint venture, it raises questions for our local defense contractors
Speaker 2: who are gearing up. We speak with local defense funder
Speaker 2: Steve Baxter, Queensland's former chief entrepreneur. And the question over
Speaker 2: UCUS comes as one of our biggest data center companies,
Speaker 2: next DC launches a two billion dollar data center in
Speaker 2: Melbourne built for sovereign intelligence.
Speaker 1: In other words, it's ideal for UCUS.
Speaker 2: We'll speak with its chief executive, Craig Scroggie, and Westpac
Speaker 2: chief economist Lucy Ellis, the former assistant governor of the
Speaker 2: Reserve Bank, is now predicting more RBA rate cuts from
Speaker 2: early next year. We'll tell you when she thinks they'll happen.
Speaker 2: So all that and plenty more coming up on today's program. Now,
Speaker 2: the story is we think you should know about today? Well,
Speaker 2: we told you yesterday about monash I vf's second accident
Speaker 2: in three months when it inserted the wrong embryo into
Speaker 2: the wrong patient. Today monash ivf's Chief executive, Michael Knapp,
Speaker 2: did the inevitable thing and resigned. The board immediately accepted
Speaker 2: his resignation. Chief financial Officer Malik Janudine will become the
Speaker 2: acting chief executive. The first accident occurred when a woman
Speaker 2: gave birth to someone else's baby after she mistakenly received
Speaker 2: the wrong embryo. That prompted, as you can see here,
Speaker 2: a sixty four percent fall in monash ivf's share price.
Speaker 2: The second incident, reported yesterday, happened when a female donor
Speaker 2: had her own embryo reinserted back into her instead of
Speaker 2: into her partner as was expected. The company said it
Speaker 2: doesn't expect the latest incident will affect profit this year.
Speaker 2: For the share price still felt twenty five percent yesterday. Today,
Speaker 2: though on news on the CEO departure, monashe IVF was
Speaker 2: one of the best performers on the market, up by
Speaker 2: nine percent, and the head of Australia's corporate watchdog ASSEX,
Speaker 2: Joe Longo, says he retains confidence in Australia's public capital
Speaker 2: markets despite an ongoing investigation into the stock market operator
Speaker 2: of the ASX seek in the Reserve Bank's investigation relates
Speaker 2: to the asx's clearance system called Chess, which was due
Speaker 2: to be replaced by blockchain technology, but that project failed
Speaker 2: spectacularly and last year there were embarrassing stock exchange outages
Speaker 2: which sparked the official investigation. Speaking to Sky News for
Speaker 2: Business Weekend this Sunday, Longo says, the same disciplines apply
Speaker 2: to the AX as they apply to the banks and
Speaker 2: to big superannuation funds.
Speaker 3: We all have an interest in a healthy public market,
Speaker 3: our superannuation system, our saving system. All sorts of things
Speaker 3: turn on our markets functioning well. But where an entity
Speaker 3: like the AX is not meeting our standards or our
Speaker 3: operational resilience around cybersecurity, around a whole range of other issues,
Speaker 3: then it's our job to hold them accountable.
Speaker 2: And ahead of its relisting on the stock exchange. The
Speaker 2: airline Virgin Australia today recommenced international flying in conjunction with
Speaker 2: its new major shareholder, Qatar Airways.
Speaker 1: The Sydney Doha flight.
Speaker 2: Which departed this afternoon, is the beginning of more flights
Speaker 2: from Perth and Brisbane later this month and from Melbourne
Speaker 2: in December. Katar bought twenty five percent of Virgin for
Speaker 2: eight hundred and twenty five million dollars and will benefit
Speaker 2: from the upcoming stock market flight, which is set to
Speaker 2: start trading in less than two weeks time. It will
Speaker 2: be valued around two point three billion dollars.
Speaker 4: It's not only good for our customers and for Virgin,
Speaker 4: it's also great for the Australian economy. These new flights
Speaker 4: are going to generate more than three billion dollars of
Speaker 4: international of economic impact for Australia and create hundreds of
Speaker 4: new jobs across tourism, hospitality and the travel sactor.
Speaker 2: Katsar was earlier thwarted by the Federal government from expanding
Speaker 2: its Australian operations, but these planned flights will boost those
Speaker 2: to seventy flights a week into the country. The first
Speaker 2: flights they were accompanied by an international.
Speaker 1: Ticket price sale.
Speaker 2: Lucy Ellis, the chief economist at Westpac and the former
Speaker 2: Reserve Bank Assistant Governor, today said RBA interest rate cuts
Speaker 2: will keep going into next year. Ellis says along with
Speaker 2: expected cuts in August and November this year, she now
Speaker 2: expects further rate cuts in February and May next year,
Speaker 2: but says these could be brought forward depending on the
Speaker 2: economic data at the time.
Speaker 5: So what we've done is we've added two more cuts,
Speaker 5: but not till next year. Now, maybe the timing's different,
Speaker 5: maybe things turn out differently, but we think based on
Speaker 5: what we're now seeing and what we now think will
Speaker 5: happen to inflation, once the RBA gets to the end
Speaker 5: of the year, they will be saying, oh, Krochie, actually
Speaker 5: inflation is lower than what we thought. That means we
Speaker 5: need to do a little bit more.
Speaker 2: That full interview with Lucy Ellis on this Sunday's Business
Speaker 2: weekend eleven am Eastern Time. Let's get across today's markets
Speaker 2: with Edward Boyd eight. Oil prices they had their biggest
Speaker 2: one day jump since October last year.
Speaker 1: They sure did.
Speaker 6: Ross oil prices rallied on reports the United States is
Speaker 6: preparing to partially evacuate the Iraq embassy due to rising
Speaker 6: tensions with Iran. Trump's also expressed doubt on a nuclear
Speaker 6: deal with Iran. So that's increased uncertainty and volatility in
Speaker 6: the area, which obviously produces a lot of oil. So
Speaker 6: here's a look at the price of Brent crude over
Speaker 6: the past week. It's up seven percent. It's up five
Speaker 6: percent in the past day. That's the biggest one day
Speaker 6: jump since October the third last year. The other commodity
Speaker 6: that's been doing well is gold. Obviously, in times of crisis,
Speaker 6: investors shift to the safe haven, and that's what we've
Speaker 6: seen overnight thanks to these Middle East tensions pushing up
Speaker 6: the price of gold. The spot price three three hundred
Speaker 6: and seventy US and ounce energy stocks were the top
Speaker 6: performers on the ASX long with tech companies in healthcare,
Speaker 6: consumer discretion retailer slumped. The market finished the day down
Speaker 6: point three percent. There was a sharp sell off at
Speaker 6: the very close of the market to this afternoon. Now,
Speaker 6: the whole gold sector, it's soared, led by Saint Barbara
Speaker 6: Perseus and Resolute medicine maker Mesa Blasts lifted after saying
Speaker 6: it was maintaining momentum with the US Food and Drug
Speaker 6: Administration over the approvals process for one of its heart
Speaker 6: disease drugs. A mining contractor, NRW Holdings was up about
Speaker 6: three percent. Now, we wanted to show you the oil producers.
Speaker 6: They lifted sharply during the middle of the day. There
Speaker 6: has been a little sell off in the afternoon, particularly
Speaker 6: from Woodside Energy down point two one percent. There, but
Speaker 6: it was all due to those rising commodity prices. Quantitus
Speaker 6: surged after dropping pretty sharply yesterday, not sure why, it
Speaker 6: lifted by two percent today, and the Ausie shipbuilder Ostil
Speaker 6: that makes fairies and warships, finished the day up about
Speaker 6: two percent. And look, this is the worst performance here.
Speaker 6: Luxury online fashion retail Satire got absolutely hammered by investors,
Speaker 6: down more than thirty one percent after a CEO warned
Speaker 6: of weaker demand in the US, and that's due to
Speaker 6: tariff uncertainty. It reported at one point seven percent increase
Speaker 6: in sales revenue to almost seven hundred million dollars in
Speaker 6: the full year, but investors weren't happy and it was
Speaker 6: sold off sharply. The iron Ore minus slump led by
Speaker 6: min Reds and Champion Nine, Domino's, Pizzan Corporate Travel. They
Speaker 6: were the worst performing discretionary retailers and Ross's That's Markets.
Speaker 1: Thanks so much ed pretty big moves there well.
Speaker 2: The news overnight that the Pentagon will review the August
Speaker 2: defense tie up between the US, the UK and Australia
Speaker 2: will send a shockwave through Australia's defense forces and contractors
Speaker 2: who supply it. The news came from the US Under
Speaker 2: Secretary of Defense for Policy Elbridge Colby, who previously raised
Speaker 2: doubts about the project with a reported three hundred billion dollars.
Speaker 7: I think UCAS is really important, it's really valuable. I
Speaker 7: think that the question will be in the implementation. I
Speaker 7: mean there's a lot of moving parts. Because it would
Speaker 7: be great if they're more American submarines, more Australian submarines,
Speaker 7: they are more highly capable. That is a win win,
Speaker 7: But we can't sort of take it for granted and
Speaker 7: pocket the gains like we've already achieved that.
Speaker 2: But this review of AUCUS raises doubts for local defense
Speaker 2: contractors who already are gearing up. Steve Baxter is a
Speaker 2: former Queensland chief entrepreneur who's launched a defense technology fund
Speaker 2: called Beaten Zone Venture Partners that he joins. Been Ow Steve,
Speaker 2: many thanks for your time. Many of those that you
Speaker 2: have investigated, many of those that you have invested in
Speaker 2: quite clearly could be affected if August changes in any
Speaker 2: considerable way.
Speaker 8: Yeah, thanks very much.
Speaker 1: Ross.
Speaker 8: The news overy night was obviously something we weren't expecting.
Speaker 8: There's been a lot of lately regarding the relative levels
Speaker 8: of spending between austral and the US, and one part
Speaker 8: of me thinks it could be part of that negotiation.
Speaker 8: Needless to say that aucust pillar one is what we're
Speaker 8: talking about here. Most of the businesses that we deal
Speaker 8: with in Australia are solely in sort of aucust pillar two,
Speaker 8: which is more about hi tech warfare, which is generally
Speaker 8: not submarine warfare, so mostly unaffected. I'm hoping this is
Speaker 8: part of a larger negotiations over the Australian defense budget
Speaker 8: that would that would be a lot nicer than obviously
Speaker 8: the sort of the more black armband view, to say
Speaker 8: the least.
Speaker 2: I was talking to somebody in the defense industry last
Speaker 2: week who told me that nobody ever lost their job
Speaker 2: by investing in US military hardware in our defense forces.
Speaker 2: In other words, it's the safest bet is simply the
Speaker 2: buy American, no matter what cost. The question is whether
Speaker 2: that discriminates against Australian defense contractors who might struggle to
Speaker 2: otherwise get contracts here in Australia.
Speaker 8: Yeah, Look, the difference between the market's interesting. The US
Speaker 8: is a bigger market. They spend roughly one trillion dollars
Speaker 8: US every year on defense. We spend thirty five billion
Speaker 8: dollars the US year on defense. There's a lot of
Speaker 8: debate at the moment whether that should be the two
Speaker 8: percent or three percent or three and a half. We
Speaker 8: do need to spend more if we are to be
Speaker 8: a good ally to the US. All this is about
Speaker 8: US acquiring reasonaly large capital assets, being submarines, which I
Speaker 8: think is a great idea. The time frames are aad issued.
Speaker 8: We've seen demonstrations in the last couple of weeks that
Speaker 8: large capital assets are a highly risky thing to own
Speaker 8: or referring here to the Ukrainian attacks on the Russian
Speaker 8: strategic bomb of force. Given that, and given I suppose
Speaker 8: the challenges and security being placed coming up, there was
Speaker 8: a US Navy Admiral Paro has talked about the defense
Speaker 8: of Taiwan as being turned the Taiwan Straits being turned
Speaker 8: into an unmanned healthscape. This is the reference to smaller
Speaker 8: systems such as drones, the drones, naval drones and the
Speaker 8: light being used to defend that island. So as an
Speaker 8: introm if there are issues here, and something that's far
Speaker 8: more pertinent to this trained defense industrial base would be
Speaker 8: why don't we replace this capability gap if it exists,
Speaker 8: and if it comes off with something like a drone capability,
Speaker 8: in this case, an audical drone, something a little more innovative,
Speaker 8: a little more towards the way that the future direction
Speaker 8: of warfare seems to be going.
Speaker 1: But I get that.
Speaker 2: But the issue that I hear from defense contractors is
Speaker 2: we have the technology here. I mean, you look at
Speaker 2: some of the attacks, some of the drone attacks in
Speaker 2: Ukraine for example, that can be powered by Australian software,
Speaker 2: and indeed we have significant drone technology here in Australia.
Speaker 2: The real issue is the reluctance of the Australian Defense
Speaker 2: forces to buy that technology unless it goes to America
Speaker 2: and literally comes back here to Australia. What I wonder
Speaker 2: is whether all the smarts we have in this space
Speaker 2: that you're backing actually has a chance of being picked
Speaker 2: up by the Australian Defense forces.
Speaker 8: The Australian Defense Forces are very, very small budget. We
Speaker 8: don't rate Australian Defense Forces as a big customer. The
Speaker 8: businesses that we invest in and beaten the adventure partners
Speaker 8: attack large customers. We take on the US, we take
Speaker 8: on Europe. US spends the truerion dollars. The Europeans are
Speaker 8: about to spend five hundred billion dollars. Those systems are
Speaker 8: also easier to sell into They're not easy, they're just easier.
Speaker 8: So the Australian Defense Force is a difficult customer to
Speaker 8: be honest, and we do have amazing capability here. There
Speaker 8: is one sticking with the submarine theme, there's one system
Speaker 8: out of Melbourne ll C too, Robotics. They make an
Speaker 8: amazing underwater drone. You should have them on your show
Speaker 8: ros They are fantastic. These I'm unaware of how much
Speaker 8: they have been picked up by this trade Defense Force,
Speaker 8: but I think it would be a really good case
Speaker 8: studied to understand why aren't we using this local developed
Speaker 8: technology for our own problems here?
Speaker 2: Because to your point, given the fact that if UCUS
Speaker 2: is under review, then Australia needs to become more self reliant.
Speaker 1: Potentially into the future.
Speaker 2: If that's really where Donald Trump goes to with the
Speaker 2: US supplies around the world, then our sense that Australia
Speaker 2: has got the start to look inwards to the technology
Speaker 2: we already have rather than consistently looking to the United
Speaker 2: States very much.
Speaker 8: So we have amazing technology I've been on the road
Speaker 8: on this journey of investing in sovereign defense business now
Speaker 8: for two years and the absolute pleasure that I've had
Speaker 8: in this journey is to discover how much great stuff
Speaker 8: is here. We have amazing capability here. We need the
Speaker 8: business courage inside this train defense force to acquire it.
Speaker 8: Knowing that and acquire it getting our soldier, salers and
Speaker 8: air crew to use it. So we have it here
Speaker 8: we could fill if we are talking about gaps and
Speaker 8: defense budgets, we could rapidly fill a gap in defense
Speaker 8: budget by incentivizing sovereign purchases of equipment.
Speaker 1: So it is here.
Speaker 8: It does require courage and it does require a defense
Speaker 8: budget to move. I mean, we're not going to do
Speaker 8: this on two point something of defense unless defense budget
Speaker 8: starts with a three. Will constantly have these arguments.
Speaker 2: I'll tell you what it is always good to have
Speaker 2: in the program. Steve, really appreciate it today. No doubt
Speaker 2: we'll be in touch very shortly. Thanks for your time.
Speaker 1: Thank Coross Well.
Speaker 2: Coming up after the break, speaking of this, one of
Speaker 2: Australia's biggest data center companies next to you see today
Speaker 2: launched a two billion dollar facility at Fisherman's Bend at Melbourne,
Speaker 2: which is suited especially for national security and artificial intelligence.
Speaker 2: It's great to have your company here on business now.
Speaker 2: The data center builder and operator next DC today said
Speaker 2: it will develop a new two billion dollar facility in
Speaker 2: Melbourne on the side of the old Herald and Weekly
Speaker 2: Times printing presses at Fisherman's Been. The facility, called M four,
Speaker 2: will eventually maintain sovereign artificial intelligence an advanced manufacturing data
Speaker 2: ann Boyd caught up with the next DC chief executive
Speaker 2: Craig Scroggy, who says these data centers will support Australia's
Speaker 2: future defense capability.
Speaker 9: This is our new announcement of a two billion dollar
Speaker 9: development for new digital infrastructure that will house artificial intelligence
Speaker 9: and hypersco cloud computing in Victoria at the Fisherman's Bend
Speaker 9: precinct in Port Melbourne. So we're hoping we appreciate the
Speaker 9: support from the Victorian government. Working closely with them. We'd
Speaker 9: like to finalize our development approvals by early next year
Speaker 9: and hopefully start construction pretty soon after that for that
Speaker 9: two bidin dollar new piece of digital infrastructure that is
Speaker 9: the essentially anchor tenant of the Fishermen's Band knowledge precinct.
Speaker 6: Yes, so you're saying this is built for the AI era,
Speaker 6: So just give us a sense of the capabilities of
Speaker 6: this new facility once it's up and running.
Speaker 9: Yeah, Australia has a unique position to be a global
Speaker 9: leader in artificial intelligence given the most recent changes in
Speaker 9: the US they introduced the AI diffusion rule, and that
Speaker 9: means that many of Nvidia's advanced chips can't go to
Speaker 9: all countries and Australia is really uniquely positioned given its
Speaker 9: five EY status, infrastructure availability, it's talented workforce, stable political
Speaker 9: environment to be a global leader in AI infrastructure. So
Speaker 9: this opportunity here for the development of this new site
Speaker 9: will develop or create thousands of new jobs in AI.
Speaker 9: But we're also working closely with precinct partners like the
Speaker 9: University of Melbourne, r MIT and the defense contractors to
Speaker 9: support advanced manufacturing, defense industries and essentially the production of intelligence.
Speaker 6: Yeah, that positioning of Fisherman's Bend on the old News
Speaker 6: Corp printing press site. What are some of the big
Speaker 6: advantages of there being in close proximity to some of
Speaker 6: those groups that you just mentioned in defense and aerospace
Speaker 6: and manufacturing.
Speaker 9: Yeah, look at this. It's a great story when you
Speaker 9: think about the history of the Herald and Weekly Time site.
Speaker 9: It produced many of Australia's leading newspapers for years. So
Speaker 9: for us, this story is sort of going from ink
Speaker 9: to intelligence. The defining future really is as we move
Speaker 9: from the history of computing, which was largely driven by CPUs,
Speaker 9: we're moving into the era of accelerated computing. So the
Speaker 9: manufacturing of knowledge or the manufacturing of tokens essentially that
Speaker 9: drive artificial intelligence. So the precinct actually really matters where
Speaker 9: we put data centers, plan and invest in digital infrastructure.
Speaker 9: In a lot of cases, it's latency sensitive. It needs
Speaker 9: to be close to the researchers and the users that
Speaker 9: are engaged directly with the computing infrastructure. So the precinct
Speaker 9: is unique. It's obviously already has a very significant investment
Speaker 9: from defense and other defense contractors and space and advanced
Speaker 9: manufacturing industries, and really this piece of digital infrastructure will
Speaker 9: allow the world's AI infrastructure to be deployed there that
Speaker 9: can help drive the development of new technology for those industries.
Speaker 6: Well, you mentioned defense. Today the United States says it's
Speaker 6: reviewing our orchast deal. I mean, how important are facilities
Speaker 6: like the M four for Australia's own defense capabilities.
Speaker 9: The key part here is, obviously, as we enter the
Speaker 9: Fourth Industrial Revolution, we've gone from roads and rail and
Speaker 9: port being defining infrastructure for economic advantage to moving into
Speaker 9: digital infrastructure being the defining component of what the future
Speaker 9: of the region is going to look like. Australias five
Speaker 9: ICE status obviously, the relationship with the US is extremely important.
Speaker 9: We don't have any limitations. We're not exposed to the
Speaker 9: chip export bands or the control mechanisms that many other
Speaker 9: countries have in place, and that's one of the key
Speaker 9: reasons why Australia can be a global leader in the
Speaker 9: development of digital infrastructure and artificial intelligence because of our
Speaker 9: unique defense standards and status.
Speaker 6: All right, and men's security wise, I mean, how do
Speaker 6: you protect a valuable facility like this from not only
Speaker 6: from hackers but from actual on the ground attacks.
Speaker 1: Well.
Speaker 9: Physical infrastructure obviously is where it all starts.
Speaker 1: Today.
Speaker 9: Our data centers are classified under the Sokki Act. They're
Speaker 9: defined as Systems of National Significance STAT means that their
Speaker 9: critical infrastructure that drives and support not only our communications infrastructure,
Speaker 9: subse cables, satellite, but they also support hospitals, they support enterprises,
Speaker 9: banking and finance transactions. So there are literally thousands of
Speaker 9: customers that operate their mission critical infrastructure inside our ecosystems
Speaker 9: and facilities, and our facilities must be certified to the
Speaker 9: highest standard for government and the Department of Defense to
Speaker 9: ensure that we protect our customer's physical infrastructure and their
Speaker 9: information and Craig.
Speaker 6: Obviously, there's a lot of computing power that's going to
Speaker 6: be in that building. It's going to get really hot,
Speaker 6: but it's going to use a lot of electricity. Just
Speaker 6: talk us through your strategy for sourcing the electricity to
Speaker 6: keep this thing going.
Speaker 9: Look a decade ago, a data center used to be
Speaker 9: ten megawatts. You think of that in size and scale.
Speaker 9: A rack of computers used to consume four or five
Speaker 9: killer watts, the equivalent of what an ordinary home would. Today,
Speaker 9: data centers consume more than one hundred and thirty killer
Speaker 9: watts per rack. You've got Nvidia's GPU infrastructure, and those
Speaker 9: racks can consume one hundred and thirty killer watts of power.
Speaker 9: In the future, in the next generation of AI GPU chips,
Speaker 9: we'll move to six hundred kilowats i raq and not
Speaker 9: too long after that more than one thousand. So we've
Speaker 9: had an order of magnitude shift in the density of
Speaker 9: computing that will drive the production of knowledge in the
Speaker 9: Fourth Industrial Revolution.
Speaker 1: That means that we need to move.
Speaker 9: From air cooling to liquid cooling. So one of the
Speaker 9: defining features of the future of digital infrastructure is it
Speaker 9: will be liquid cooled rather than air cooled, and that
Speaker 9: allows us to produce a significantly amount larger amount of
Speaker 9: knowledge in the same amount of space. But that is
Speaker 9: a key factor that the resources we require, power, water,
Speaker 9: for cooling, sustainability. They're all very important infrastructure planning components,
Speaker 9: and on the size and scale that we're building facilities
Speaker 9: today billions of dollars, hundreds of millions of megawatts, they
Speaker 9: require that the relationships with government from a planning point
Speaker 9: of view are critically important, more important they've ever been
Speaker 9: at any other point in time in history.
Speaker 6: Great Scroggy, Chief Executive next DC, thanks for coming on
Speaker 6: the show.
Speaker 2: Thank you, and that interview about the power, about the electricity,
Speaker 2: about the water, about the necessity for that for artificial
Speaker 2: intelligence is the absolute challenge for government anyway. That is
Speaker 2: it for today's program. Thanks for your company. We'll see
Speaker 2: you tomorrow.