Speaker 1: This is Business Now with Edward Boyd.
Speaker 2: Hi and welcome to Business Now. Thanks for your company today.
Speaker 2: I'm Edward Boyd coming up on the program. The Fair
Speaker 2: Work Commission has granted millions of workers one of the
Speaker 2: largest above inflation pay increases. Ever at three and a
Speaker 2: half percent, Unions wanted more, business groups wanted less. AI
Speaker 2: Chief executive inn As Willis is up shortly. The GDP
Speaker 2: partials release today paint a subdued picture for Australia's economic
Speaker 2: growth in the first quarter, which included all that trade
Speaker 2: and tariff uncertainty. Economist Stephen haw Marrek will explain the details.
Speaker 2: Plus International Student Placement Company IDP Education shares were absolutely
Speaker 2: hammered today after warning its profit might be cut in
Speaker 2: half due to changing immigration policies in its major markets.
Speaker 1: All that and more on today's show.
Speaker 2: Other stories today you shouldn't about the Corporate Regulator As
Speaker 2: six crackdown on financial comparison websites continues as it launched
Speaker 2: federal court proceedings against the popular site choosey Assek alleges
Speaker 2: Choosey made false and misleading representations to customers by claiming
Speaker 2: it compares products from a range of funeral and life insurers,
Speaker 2: but it alleges Choosey only compared products from a single
Speaker 2: insurance company with one exception, and that all products were
Speaker 2: distributed by Greenstone Financial Services, which is associated with Choosey.
Speaker 2: Assex says, from July one, twenty nineteen, more than four
Speaker 2: thousand funeral policies and almost nine and a half thousand
Speaker 2: life insurance policies were sold. It says Choosey received sixty
Speaker 2: one million dollars in commissions. Today we check the Choosey
Speaker 2: comparison site for life insurance and its terms and conditions
Speaker 2: show products continue to be distributed by Greenstone, for which
Speaker 2: it will receive commission. Life insurance comparisons seem to be
Speaker 2: now limited to four insurers, Assex move follows recent actions
Speaker 2: against other loan and insurance comparison groups, including Snaffle RESIMAC
Speaker 2: and Hollard Insurance. The Fairwak Commission has awarded roughly two
Speaker 2: point six million award and minimum wage workers a pay
Speaker 2: rise of three and a half percent, one of the
Speaker 2: largest above inflation increases on record.
Speaker 1: From the first July.
Speaker 2: The minimum wage will be lifted to twenty four dollars
Speaker 2: ninety five per hour, roughly nine hundred and forty eight
Speaker 2: dollars per week inflations currently tracking at an annually to
Speaker 2: two point four percent, which means that these workers in
Speaker 2: real terms, have.
Speaker 1: Received a pay rise of about one point one percent.
Speaker 2: This comes after several years where wages and real terms
Speaker 2: were going backwards. The Farework Commission's president said if Australia's
Speaker 2: workforce were more productive, then the pay increase would have
Speaker 2: been higher.
Speaker 3: Australia's continuing poor performance in labor productivity growth has operated
Speaker 3: as a restraining factor on the size of the increase.
Speaker 3: We have determined certainly the productivity problem which Australia faces
Speaker 3: will not be resolved by indefinite continuation of the reduction
Speaker 3: in real wages which has occurred over the last four years.
Speaker 2: Business groups were hoping for a pay rise of about
Speaker 2: two and a half percent, while the unions were aiming
Speaker 2: for about four and a half. He's the leader of
Speaker 2: the ACTU, selling MacManus Welcoming the decision.
Speaker 4: The Fair Work Commission accepted the arguments made by unions
Speaker 4: that it was time for low wage workers award workers
Speaker 4: to start catching up for what was lost during the
Speaker 4: inflation spike, So three point five percent means they're starting
Speaker 4: to catch up again and that makes an enormous amount
Speaker 4: of difference in terms of people's bills, people's ability to
Speaker 4: pay for the basics.
Speaker 2: Well, joining me now for the business reaction is in
Speaker 2: is Willi's, Chief executive of Australian Industry Group. It is
Speaker 2: thanks so much for your time. Wages up three and
Speaker 2: a half percent. Will employers be able to sustainably cover
Speaker 2: these increased costs?
Speaker 5: Hi Edward, Well, the short answer is for many of
Speaker 5: them know it's above where inflation is at at the
Speaker 5: moment quite substantially. We argued for two point six and
Speaker 5: the Commission came in about halfway between where we were
Speaker 5: in the union. So there's an element of catch up here.
Speaker 5: And what the Commission has really said when you delve
Speaker 5: into its findings is that it is now pretty much
Speaker 5: finished the catch up, the catch up that it said
Speaker 5: whatever that meant from times earlier. So now we would
Speaker 5: say going forward, where inflation is at, where CPI is at,
Speaker 5: is where the Fair Work Commission should be aiming at.
Speaker 5: It's also sort of contorted itself today over productivity and
Speaker 5: Australia's amnemic productivity, multi factor productivity in the market sector
Speaker 5: went up last year zero point zero seven percent, which
Speaker 5: is virtually nothing. So we're seeing really no productivity of
Speaker 5: any sort of importance around our economy at the moment.
Speaker 5: But the Commission decided to excise a healthcare and the
Speaker 5: mining sector from any calculations around productivity, which is a
Speaker 5: quarter of the economy, to try to create the circumstances
Speaker 5: where it can justify an increase. What it means for
Speaker 5: business is, as you said, about two point six million
Speaker 5: employees get that increase. What that means is that means
Speaker 5: there's less money for investment in the business. It probably
Speaker 5: starts to mean that again once again, jobs have to
Speaker 5: be considered and the future of businesses have to be considered,
Speaker 5: particularly at the smaller business end, retail, hospitality, accommodation, manufacturing,
Speaker 5: those sort of sectors.
Speaker 2: Yeah, these numbers obviously directly affect two point six million
Speaker 2: roughly Aussies, but just explain why they have wider implications
Speaker 2: for the jobs market and for enterprise bargaining as well.
Speaker 5: Absolutely, so this now becomes the flaw or the talking
Speaker 5: point now that unions will push and employers will have
Speaker 5: to look at in terms of broader enterprise bargaineering agreements
Speaker 5: as they come up through this year. Of course, enterprise
Speaker 5: bargaineer agreements last for usually around three years, so a
Speaker 5: third of those will come up this year, and that
Speaker 5: three point five percent figure will be the number that
Speaker 5: everyone will look at. So it does have real flow
Speaker 5: on effects for the broader economy, well beyond those who
Speaker 5: are on the minimum wage or minimum award classifications. It
Speaker 5: becomes the central sort of talking point when it comes
Speaker 5: to future wage negotiation. So again that is above where
Speaker 5: inflation is added, is above where a lot of business
Speaker 5: can businesses can sustainably afford to increase wages. That's the
Speaker 5: difficulty of today's decision. We would have preferred it was
Speaker 5: slightly less, So I think if you took a book
Speaker 5: between unions, government and employers, we would have all said,
Speaker 5: you know, they would have probably come in at about
Speaker 5: three point two five percent. So this is probably on
Speaker 5: the high side. That's the worrying thing, without much justification
Speaker 5: around productivity which everyone is now talking about.
Speaker 2: And of course the other costs that businesses will need
Speaker 2: to wear from the first of July is that increase
Speaker 2: in superannuation. So could this possibly result in a further
Speaker 2: drop in private investment, and we know GDP growth is
Speaker 2: pretty weak at the moment.
Speaker 5: Well, of course this doesn't include the superannuation guarantee which
Speaker 5: goes up again on July the first by half percent.
Speaker 5: Employers have to fund that that money doesn't come out
Speaker 5: of thin air, just as this wage increased for a
Speaker 5: lot of employers doesn't come out of thin air, So
Speaker 5: employees are going to have to factor that in. So
Speaker 5: it obviously has an impact around what businesses can do
Speaker 5: to improve their businesses investments in businesses, be it in
Speaker 5: planned equipment, machinery, or people. It has a big knock
Speaker 5: on effect.
Speaker 1: And you saw the.
Speaker 5: Data today around sale, around wages, around profits, none of
Speaker 5: which we're good for GDP. It's led to a revising
Speaker 5: down of estimates around tomorrow's GDP numbers. So we're going
Speaker 5: to see continued weak growth. So we've got different elements
Speaker 5: of the economy and economic leavers pushing against each other.
Speaker 5: And while wages remain quite clearly above where CPI inflation
Speaker 5: is at, it makes it very hard for theess for
Speaker 5: businesses to become more productive, and that's what we need
Speaker 5: to allow for sustainable wage increases. So it's a little
Speaker 5: bit nonsensical if I can put it that way in
Speaker 5: economic terms, to keep pushing wage increases up beyond where
Speaker 5: the economy can really sustain them in the current economic
Speaker 5: environment we have.
Speaker 2: And the big problem you've mentioned it briefly here that
Speaker 2: the Fairweb president said today was the weak level of
Speaker 2: productivity growth in our economy. The RVA governor's spoken about
Speaker 2: it as well, and so is the treasurer.
Speaker 1: How do we get productivity back contrac.
Speaker 5: Well, First of all, we have to stop making policies
Speaker 5: and implementing policies which are anti productivity and forcing upon
Speaker 5: business's outcomes which are anti productivity. Businesses now is less
Speaker 5: and less being able to focus on the business and
Speaker 5: more and more on compliance.
Speaker 1: We have a tax regime.
Speaker 5: Which is not competitive. We have real concerns around skills
Speaker 5: and training which we have to address. We have to
Speaker 5: make the settings for business and the enablers for business
Speaker 5: much more competitive and productivity focused. At the moment, we're
Speaker 5: sort of holding ourselves back and we see that in
Speaker 5: the outcomes, and that's why our conversations are more and
Speaker 5: more unfortunately edward, around how we are managing a decline
Speaker 5: in living standards and business investment and prosperity.
Speaker 2: It is well, Loox, thanks so much for coming on
Speaker 2: the show. Appreciate it. Take care, Edward.
Speaker 1: Thanks thanks.
Speaker 2: Look, the GDP partials released today by the ABS paint
Speaker 2: a pretty somber picture of our economy during the first
Speaker 2: three months of this year. Public demand and public investment
Speaker 2: well lower than expected. It's probably going to result in
Speaker 2: a weaker than expected quarter. It joined me now with
Speaker 2: Stephen hal Maarek the principle at Economics unchained.
Speaker 1: Stephen, thanks for your time.
Speaker 2: We've just seen CBA and NAB have sort of downgraded
Speaker 2: their forecasts for the first quarter, expecting it to be
Speaker 2: pretty weak economically.
Speaker 6: Yeah, unfortunately, it looks like the first quarter of GDP
Speaker 6: numbers are going to be pretty soft, maybe aroundzero point
Speaker 6: three percent point two point three percent for the quarter.
Speaker 6: That's slower than the fourth quarter of last year, which
Speaker 6: was point six So, you know, continues this very subdued
Speaker 6: economic environment that we've had for a number of years now.
Speaker 6: Perhaps more importantly, the GDP per capita number is likely
Speaker 6: to fall again. So we've seen this big decline in
Speaker 6: GDP per capita over the last two or two or
Speaker 6: two or so years, so an environment where economic growth
Speaker 6: continues to be pretty modest.
Speaker 1: Yeah.
Speaker 2: Well, obviously these are backwards looking numbers GDP from the
Speaker 2: first three months this year, But do you think this
Speaker 2: quarter is faring any better than the previous one.
Speaker 6: Well, the big change, of course, is the Viserve Bank
Speaker 6: start cutting interest rate. So I have started cutting rates.
Speaker 6: So we had the first rate cut in February. Now
Speaker 6: that's unlife gets who affected the first quarter GDP numbers
Speaker 6: that come out tomorrow already had the second cut, and
Speaker 6: we expect them, well, I expect them more cuts in
Speaker 6: the months ahead. So those interest rate cuts are going
Speaker 6: to be a really important part of seeing a bit
Speaker 6: of acceleration and economic growth this year. The annual growth
Speaker 6: rate in the March quarter is probably going to be
Speaker 6: around about one and a quarter percent. We expected to
Speaker 6: be closer to two percent at the end of the year,
Speaker 6: but that will rely very heavily on the RBA continuing
Speaker 6: to ease mounty policy.
Speaker 2: Well, we got the RBA minutes from the everycent Board meeting
Speaker 2: today and they actually talked about cutting rates by fifty
Speaker 2: basis points. I mean, how many more rate cuts are
Speaker 2: you expecting We've.
Speaker 1: Got on next meetings? On the eighth of July.
Speaker 6: Yeah, so in the press conference, Michell Bullock, the RBA governor,
Speaker 6: did say that they talked about cutting by fifty and
Speaker 6: you know, that took the markets a little bit by surprise,
Speaker 6: and they really did reinforce, certainly in my mind, that
Speaker 6: there's more rate cuts coming. So we've actually got five
Speaker 6: more RBA Board meetings this calendar year, and I think
Speaker 6: we'll see rate cuts in three of those five meetings,
Speaker 6: So twenty five points in each of those meetings. That'll
Speaker 6: take us down to three point one percent by the
Speaker 6: end of the year on the cash rate. And I
Speaker 6: think we could describe that as a neutral monetary policy setting.
Speaker 6: So we know, with economic growth, soft inflation in the
Speaker 6: target zone and global economic uncertainty doing nothing but going up,
Speaker 6: I don't think there's a need for restrictive policy. So
Speaker 6: a neutral policy setting makes a lot of sense.
Speaker 2: Well, look, this week in partnership in Macro UNI, you've
Speaker 2: released a business Outlook scenario survey asking businesses about the
Speaker 2: impact of tariffs what if you found out?
Speaker 6: Yeah, so this is a survey conducted by MCCRARIRR University
Speaker 6: and I'm helping them a bit with that surveys five
Speaker 6: hundred companies. I'm not just what they think is going
Speaker 6: to happen, but some of the scenario around the outlook.
Speaker 6: So not surprisingly, trade exposed companies in Australia are already
Speaker 6: seeing a bit of an effect from the tariff war,
Speaker 6: if we can call it that. This was data from May,
Speaker 6: so internationally trade exposed companies are seeing that effect. Interestingly,
Speaker 6: they've seen an increase in their costs, but they also
Speaker 6: saw an increase in sales in the month of May,
Speaker 6: so I think that might have been a bit of
Speaker 6: a bring forward of activity before the tariffs really settled in.
Speaker 6: Of course, they were announced in April, then there was
Speaker 6: the pause and then you know, things were brought forward
Speaker 6: in the month of May, so increased uncertainty being a
Speaker 6: bit of bring forward of activity. But that volatility is
Speaker 6: not a conducive environment for a big increase in business investment.
Speaker 2: Inflation's now at two point four percent. How worried a
Speaker 2: business is still about inflationy pressures?
Speaker 6: Yeah, so Interestingly, over the last year or so, inflation,
Speaker 6: well a year or so ago, inflation was by far
Speaker 6: the biggest worry for businesses in Australia, and now that's
Speaker 6: come down and in fact being overtaken by global geopolitical
Speaker 6: worries as the biggest concern for Australian businesses. And I
Speaker 6: think we all know the reasons for that. So certainly
Speaker 6: inflation moderating declining as the biggest concern for businesses, and
Speaker 6: that really helped, I think supports the posture for the
Speaker 6: RBA to be able to get into straights down a
Speaker 6: bit further.
Speaker 1: So inflation not as big a deal now as it
Speaker 1: was in the past.
Speaker 6: Yeah, absolutely, and that's reflective in the actual inflation numbers
Speaker 6: and the trend for inflation. The outlook continues to look
Speaker 6: pretty good. The Reserve Bank themself is targeting inflation pretty
Speaker 6: much banging in the middle of the target range for
Speaker 6: the next two years.
Speaker 1: Stephen Helmerrick, Principal Economics, unchained. Thanks for your time, pleasure,
Speaker 1: I thank you.
Speaker 2: After the break, global student placement company IDP Education has
Speaker 2: been crunched after a massive prospit downgrade. Markets analyst Michael
Speaker 2: McCarthy is up next. Welcome back. Let's see how the
Speaker 2: market's finished up for the day ASX two hundred. It
Speaker 2: lifted at the open this morning, surging to a three
Speaker 2: and a half month high. Most sectors were in the green,
Speaker 2: led by the banks, ASX two hundred finished the day
Speaker 2: up points six to three percent, so pretty strong. Top
Speaker 2: performers included TAB Corp, the gold sector, fuel refiner and
Speaker 2: retailer Viv Energy plus the defense company Hostel and the
Speaker 2: airline Quantus up almost two percent. Losing value included IDP
Speaker 2: Education down forty eight percent, Agribiza's Elders, Diversified Minor MinRes,
Speaker 2: health company Klinevel and Domino's Pizza. Lizmore's ability to withstand
Speaker 2: future flood events is being examined in detail. A major
Speaker 2: report from the CSIRO is due to be released at
Speaker 2: the end of this month. The new South Wales Recovery
Speaker 2: Minister and Member for Lismoud, Janelle Saffan, says the study
Speaker 2: will help shape flood mitigation in the region.
Speaker 7: Really hugely important. Do you know we're waiting with bited breath.
Speaker 7: We have the Community Leaders Forum, the seven mayors for
Speaker 7: state MPs to federal MPs, the Regional Land Council, Business Chamber.
Speaker 7: You know, we're a community Leaders Forum and we're waiting
Speaker 7: with baited breath for that end of June. We're in
Speaker 7: touch with CSIRO. They said it's on track. Then we'll
Speaker 7: have the discussion about the options they put to us,
Speaker 7: the scenarios. We'll work through it, and then of course
Speaker 7: we have to seek funding for that.
Speaker 2: Five people died and thousands of homes and businesses were
Speaker 2: damaged across the region. In February and March twenty twenty two,
Speaker 2: intense rainfall led to flood levels more than two meters
Speaker 2: above the one in one hundred year flood level. Well,
Speaker 2: let's get back to that market's theme here with Michael McCarthy,
Speaker 2: chief executive of Moomour Australia. Michael, thanks for your time.
Speaker 2: Let's start with IDP education. It's just been absolutely hammered today.
Speaker 2: Business is really being damaged by changes to immigration policies
Speaker 2: in places like in the US.
Speaker 8: Absolutely. The share price came today down forty eight percent
Speaker 8: and the hits just keep coming for this stock. We
Speaker 8: know that immigration policy has been shifting around the globe
Speaker 8: for a couple of years at least now, and while
Speaker 8: once immigration was viewed as a good source of economic
Speaker 8: growth and potential workplace skills, the reality is that the
Speaker 8: whole world is turning its back and while Canada and Australia,
Speaker 8: having faced for lections, have now implemented new policies around
Speaker 8: student immigrants. The UK has have published a white paper
Speaker 8: on immigration that is clearly flagging changes for their immigration policy.
Speaker 8: And of course we've got Harvard taking on the White
Speaker 8: House in the US. So with all of that disruption
Speaker 8: to the international student scene, the hits for IDP have
Speaker 8: been horrible. Now today it guided the market lower. So
Speaker 8: far analysts had already slashed their earnings estimates for this
Speaker 8: year's by twenty five percent. The company outed another twenty
Speaker 8: five percent, harving their estimate for this full year. Of course,
Speaker 8: the market reaction was immediate. This closing price today at
Speaker 8: three dollars eighty eight, is one tenth of the peak price.
Speaker 8: And this company, which at the post pandemic peak was
Speaker 8: worth ten billion dollars today is worth just one billion dollars.
Speaker 2: Really tough day for them. But look what about some
Speaker 2: good news. The price of gold just seems to be
Speaker 2: getting better and better.
Speaker 1: What's driving those gains? Well, it's all.
Speaker 8: About the US dollar, and there are two factors driving
Speaker 8: the canes. First of all, being priced in the US
Speaker 8: dollars a week a US dollar is good news for
Speaker 8: gold bugs. But the reality is that the glosses come
Speaker 8: off the US dollar and there are concerns for the
Speaker 8: outlook and the once very safe haven status of the
Speaker 8: US has been tarnished, and that's been one of the
Speaker 8: reasons why we're seeing gold making another push towards all
Speaker 8: time highs. This is the third time we've seen gold
Speaker 8: trade above thirty four hundred US dollars this year, and
Speaker 8: we have seen one peak over thirty five hundred dollars.
Speaker 8: The strength we saw in gold markets today and that
Speaker 8: ongoing weakness in the US dollar suggests we could another
Speaker 8: test of that all time high.
Speaker 2: And look the overall ASX two hundred, it's closing back
Speaker 2: in on the all time high as it's set in February.
Speaker 2: Do you think we're going to reset some records within
Speaker 2: the next few weeks.
Speaker 8: Well, once again, it's sure looking like it a solid
Speaker 8: game today, but nothing too spectacular and nothing that points
Speaker 8: to instability in the market. It was just good growth
Speaker 8: in the index across the board today. The gains and
Speaker 8: the end up another fifty points take us to within
Speaker 8: two percent of the all time high for the Australian market.
Speaker 8: It's an extraordinary development given the newsflow. We've seen four
Speaker 8: investors over the course of this year so far.
Speaker 2: And what about some commodities like oil and copper seeming
Speaker 2: to defy the bond vigilantes absolutely well.
Speaker 8: Bond markets are still very much flashing signals read and
Speaker 8: real concerns about the short term growth outlook and the
Speaker 8: potential for inflation to derail some future plans. So bond
Speaker 8: markets still sending warning signals, but copper and oil, those
Speaker 8: key industrial inputs are just shrugging it off. Copper heading
Speaker 8: high are again today after a bit of weakness, Oil
Speaker 8: markets adding to gains they've the previous two sessions, and
Speaker 8: both of these key industrial inputs are pointing to growth
Speaker 8: scenarios for the global economy in contrast to what we're
Speaker 8: hearing from those bond vigilantes.
Speaker 1: So overall, pretty good day for stocks today, Michael.
Speaker 8: An amazingly good day given the news that.
Speaker 1: We've seen ed. Thanks Michael, thanks for your time. Thank you.
Speaker 2: To finish up today, money laundering regulator OSTRAK is cracking
Speaker 2: down on cryptocurrency ATM providers after Australians lost more than
Speaker 2: three million dollars to crypto ATM scams in twenty twenty
Speaker 2: four now. These ATMs allow customers to use cash to
Speaker 2: buy cryptocurrency such as bitcoin and ethereum. Ostrak says they're
Speaker 2: boomed in popularity. In twenty nineteen, there were just twenty three.
Speaker 2: Now there are more than eighteen hundred. And the crazy
Speaker 2: thing is the demographic that uses them. More than seventy
Speaker 2: percent are over fifty years old, with sixty to seventy
Speaker 2: year olds alone accounting for twenty nine percent of all transactions.
Speaker 2: Track and the Australian Federal Police say these older users
Speaker 2: are often the victims of investment scams, romance scams and
Speaker 2: extortion emails. Ostrak has also refused to renew the registration
Speaker 2: of South Australian based ATM operator Harrow's Empires. See of Oztrak,
Speaker 2: Brennan Thomas said this action draws a clear line in
Speaker 2: the sand and serves as a warning to other digital
Speaker 2: currency exchange providers that aren't meeting their responsibilities under the
Speaker 2: aml CTF act now. The director of Harrow's Empires, Michael Harrison,
Speaker 2: told us Ostrak's decision has been devastating.
Speaker 1: We'll never formally told.
Speaker 2: Our machines were linked to criminal use, nor were we
Speaker 2: given a fair chance to address any final concerns before
Speaker 2: being shut down. The constant pressure and scrutiny from Olstrak
Speaker 2: took a serious toll. I've lost my life savings, my
Speaker 2: future plans, and I separated from my partner largely due
Speaker 2: to the stress this fight placed on our family. Under
Speaker 2: the new operating conditions, CRYPTOATM providers now have a five
Speaker 2: thousand dollars limit on cash deposits and withdrawals, enhance customer
Speaker 2: due diligence obligations, mandatory scam warnings, and better transaction monitoring.
Speaker 2: Wealth Track's also encouraging digital currency exchange platforms to consider
Speaker 2: five thousand dollars cash limits, something they aren't required to
Speaker 2: do at the moment. Swift x CEO Jason Tipman said,
Speaker 2: at the moment, cryptoatms don't offer enough protection and it
Speaker 2: means Australians who use them are vulnerable to scammers. That's
Speaker 2: all for today's program. Business now returns tomorrow at four
Speaker 2: point thirty. Thanks for your company today.
Speaker 1: We'll see you then.