Speaker 1: This is Business Now with Edward Boyd.
Speaker 2: Hi and welcome to Business Now. Thanks to your company today.
Speaker 2: I'm Edward Boyd coming up on the program. Foreign Minister
Speaker 2: Penny Wong has met with her American counterpart in Washington,
Speaker 2: where they discussed China's dominance of the critical minerals market
Speaker 2: and the way Australia can help improve global supply. The
Speaker 2: CEO of the Minerals Council of Australia, Tanya Constable, is
Speaker 2: up shortly. The Trump Administration's One Big Beautiful Bill has
Speaker 2: narrowly passed the US Senate and voting now shifts to
Speaker 2: the House of Representatives.
Speaker 1: So what does this bill mean for Australia?
Speaker 2: The Reserve Bank and interest rates investment strategist Stephen Miller
Speaker 2: from GSFM will explain the details. Plus, insurance claims are
Speaker 2: already being lodged by House Salton businesses on the East
Speaker 2: Coast which have been smashed by heavy winds, rain and surf.
Speaker 2: The Insurance Council of Australia is going to give us
Speaker 2: an update on this severe weather event.
Speaker 1: That's all on today's show.
Speaker 2: Other stories today you should know about QUANTUS says the
Speaker 2: personal data of up to six million customers may have
Speaker 2: been stolen in a significant cyber attack. On Monday, Perline
Speaker 2: detected unusual activity on a third party platform used by
Speaker 2: a Quantus call center, which held six million customer records.
Speaker 2: Now the data stolen by hackers includes names, emails, phone numbers,
Speaker 2: birth dates, and frequent fly numbers. Quantas says the system
Speaker 2: did not hold credit card details, pin numbers, passport numbers
Speaker 2: or personal financial information. Here's the share price reaction. Quantas
Speaker 2: today dropped two point two three percent. Domino's Pizza chairman
Speaker 2: and major shareholder Jack Cowen has taken control of managing
Speaker 2: the retailer after its CEO abruptly resigned this morning. Mister
Speaker 2: Cowen controls about twenty six percent of the company and
Speaker 2: has more than five decades experience running fast food restaurants
Speaker 2: in Australia, including Hungary Jackson KFC. He's assumed the role
Speaker 2: of executive chairman following the shop resignation of a CEO,
Speaker 2: Mark Van Dyke. Mister van Dyke only joined Domino's in
Speaker 2: November last year, but this morning he surprised the market
Speaker 2: by announcing he would finish up in December. A global
Speaker 2: recruitment search to find his replacement has already begun now.
Speaker 2: Domino shares dropped so much today the ASX hit them
Speaker 2: with a speeding ticket. Let's see how the market finished
Speaker 2: up today. It opened high this morning, surged in the afternoon.
Speaker 1: All sectors were in the green except for tech stocks,
Speaker 1: which slumped.
Speaker 2: The market finished the day up point six six percent,
Speaker 2: which is a record high close, beating the previous record
Speaker 2: by about five points, so we're at a record closed there.
Speaker 2: Farm managers Perpetual and margell And jumped after they were
Speaker 2: both upgraded by brokers. Platinum Asset Management lifted after a
Speaker 2: Japanese investor.
Speaker 1: Raised at stake to six percent.
Speaker 2: Building materials company James Hardy lifted after completing its takeover
Speaker 2: of the US decking business azek a AMP was up
Speaker 2: five point five percent. Lender's Mortgage insurance provided a Heelia
Speaker 2: dropped after it lost IG Bank as a client. Now
Speaker 2: they comprised about seventeen percent of its gross written premiums
Speaker 2: in twenty twenty four, they shared twenty one percent. Medicine
Speaker 2: making Means of Last was down Bind Now Pay Later
Speaker 2: business ZIP was sold off, along with the childcare company
Speaker 2: GAD Education and the grain handler Grain Corp. Well, the
Speaker 2: American Senate has narrowly passed the Trump administration's tax and
Speaker 2: spending bill, dubbed the One Big Beautiful Bill, which is
Speaker 2: expected to increase the US deficit by three point three
Speaker 2: trillion US dollars by twenty thirty four. Now, the House
Speaker 2: of Representatives is expected to begin voting on this bill tomorrow.
Speaker 2: But what does it mean for Australia and the Reserve Bank?
Speaker 2: Joining me now is Stephen Miller from GSFM.
Speaker 1: Stephen, thanks for your time, pleasure.
Speaker 2: It's getting closer to passing Congress this bill. There's already, though,
Speaker 2: big concerns with America's high level of debt, that's true.
Speaker 2: What's this Is this just going to make the budget
Speaker 2: even worse?
Speaker 3: I think if this gets through the House in a
Speaker 3: form that more or less got through the Senate, I
Speaker 3: think there's two things that we need to be wary
Speaker 3: of well, first of all, and none of which are
Speaker 3: going to repair Donald Trump's relationship with Jerome Powell.
Speaker 1: Just incidentally.
Speaker 3: First thing might be that it may make inflation even
Speaker 3: stickier by adding to the deficit, right, And I think
Speaker 3: that's something that will be causing Jerome Power to scratch
Speaker 3: his head as he wakes his way back from CenTra
Speaker 3: in Portugal. I think the other thing, and this is
Speaker 3: what you alluded to in your introduction, was that when
Speaker 3: you've got a budget deficit of six and a half
Speaker 3: percent of GDP, which is probably a record outside of
Speaker 3: wartime and pandemic, you've got to fund it, and you
Speaker 3: fund it by selling bonds. And if you're going to
Speaker 3: increase the supply of bonds because the deficit's bigger, you're
Speaker 3: probably going to have to pay higher interest rates in
Speaker 3: order to do so. So I worry that in the
Speaker 3: short term the impact might be to keep inflation higher,
Speaker 3: meaning the reserve, the Federal Reserve is more reticent to
Speaker 3: cut rates, and in the longer term, because these things
Speaker 3: can't be turned around quickly, that investors are going to
Speaker 3: demand a higher risk premium from US Treasury bonds, which
Speaker 3: is going to see bond yields stickier up in an
Speaker 3: upwards direction, and that ultimately might mean that there's headwinds
Speaker 3: for the performance of the US equity market. Now, bond
Speaker 3: guys like may have been sort of talking about this
Speaker 3: for ages and ages and ages, and you know, as
Speaker 3: you said in your introduction, you know, risk markets keep
Speaker 3: hitting record highs. But you know, I think, as you know,
Speaker 3: we get further and further and these sort of measures
Speaker 3: that are associated with the big beautiful bill start to hit home,
Speaker 3: we might start the seas and adverse consequences, certainly first
Speaker 3: in interest rate markets and inflation, and then back on
Speaker 3: equity markets as higher bond yields create stronger headwinds for
Speaker 3: the performance of equity markets.
Speaker 2: Well, you mentioned Jerome Power being over in Portugal last night,
Speaker 2: and he did a press conference basically where he spoke
Speaker 2: and said he's been keeping rates on hold partly due
Speaker 2: to President Trump's tariffs as the looming issue for their economy.
Speaker 3: Yes, and you know, I think that's understandable. We know
Speaker 3: where Chairman Power's coming from. If we could get a
Speaker 3: handle on what President Trump's tariff measures actually were, it
Speaker 3: might be a bit easier for him, But he can't.
Speaker 3: And I think what Chairman Powe's worried about is that
Speaker 3: price increases in the US as a result of tariff
Speaker 3: in positions run the risk of being ongoing reflected in
Speaker 3: inflation expectations, meaning that it's harder to get inflation down,
Speaker 3: meaning rates have to stay higher, and then it's associated
Speaker 3: with what I said earlier, because you've got to sell
Speaker 3: more bonds to fund that higher deficit bond neil to
Speaker 3: higher and ultimately there are there are headwinds to equity
Speaker 3: markets that come from that. The Federal Reserve recently, I
Speaker 3: think put in what I've termed a stagflation light scenario
Speaker 3: for this year. It's not the seventies, you know, but
Speaker 3: it's inflation stuck at three percent or a bit above,
Speaker 3: and growth, you know, not doing well. And you know,
Speaker 3: measures like the big beautiful Bill I don't think or
Speaker 3: tariffs don't do anything to help alleviate those pressures.
Speaker 2: All right, what about our Reserve bank? We had some
Speaker 2: kind of soft retail figures today. Really, yeah, because how
Speaker 2: are they going to react next week when they hold
Speaker 2: their next cash rate decision.
Speaker 1: Look, I suspect they'll cut rates.
Speaker 3: The market thinks, markets pricing something like ninety five percent
Speaker 3: chance that they'll cut rates. And we can see that,
Speaker 3: we can get that, you know, GDP growth this week,
Speaker 3: GDP per capital growth this week, retail sales. As you mentioned,
Speaker 3: these are for May, so they're quite recent readings their week.
Speaker 3: What we saw from the RBA last time is it's
Speaker 3: worried about a deteriorating global economic environment.
Speaker 1: Still happen, and it can still happen.
Speaker 3: And I don't think there's anything you know untoward about
Speaker 3: worrying about that. I think that's quite proper. What sort
Speaker 3: of in the back of my mind, though, is a
Speaker 3: couple of things that go the other way. And I
Speaker 3: think when the RBA and when Michelle Bullick tells us
Speaker 3: that the bank can deliver a decisive response to a
Speaker 3: deteriorating international economic environment, and despite the things I said earlier,
Speaker 3: we yet to see it in the hard data. So
Speaker 3: that's point one zero point two. The labor mark. It
Speaker 3: is in robust good health. If we believe the labor
Speaker 3: force NUMBERSO point three, we've got a very sluggish productivity performance.
Speaker 3: That means you're not labour cost growth. It's something around
Speaker 3: five and a half percent. You wonder how that's consistent
Speaker 3: with the RBA achieving the midpoint of its target range
Speaker 3: of two to three percent. But against that, the RBA
Speaker 3: is confidently predicted, or confidently as it can predict inflation
Speaker 3: going to the middle of the band. The monthly reads
Speaker 3: would just encourage them in that direction. And if you
Speaker 3: combine that with a weak economy, I think that's enough
Speaker 3: to get them across the line for a rate cut
Speaker 3: in July. I'm not as confident as the bond market,
Speaker 3: which seems to rate that prospect at about ninety five percent,
Speaker 3: but I certainly think the balance of probabilities tilt toward
Speaker 3: a rate reduction when the RBA meet next week rather
Speaker 3: than an on Hoole decision.
Speaker 1: And could there be some more cuts later.
Speaker 3: In the year, Yes, indubitably if the sorts of risks
Speaker 3: that the RBA have been talking about in terms of
Speaker 3: a deteriorating economic environment, if growth doesn't live here, if
Speaker 3: inflation turns out as they expect and hits the middle
Speaker 3: of that band, they can certainly cut rates multiple times
Speaker 3: before the end.
Speaker 4: Of the year.
Speaker 2: Stephen Miller from GSFM, thanks for your time, No, it's
Speaker 2: a pleasure, thank you. Or In Minister Penny Wong has
Speaker 2: met with Australia's Quad Partners in Washington, d C. Where
Speaker 2: the group of leaders from America, Japan and India discussed
Speaker 2: a commitment to free and open trade in the Indo Pacific.
Speaker 2: Now China's dominance of the rare earths and critical minerals
Speaker 2: market was a key talking point which was flagged by
Speaker 2: US Secretary of State Marco Rubio.
Speaker 5: And there are many topics that we can work on
Speaker 5: and focus on. One that I've personally been very focused
Speaker 5: on is diversifying the global supply chain of critical minerals,
Speaker 5: not just access to the raw material, but also access
Speaker 5: to the ability to process and refrain it to usable material.
Speaker 5: It's critical for all technologies and for all industries across
Speaker 5: the board, and so having a diverse and reliable global
Speaker 5: supply chain of these is just one example of many
Speaker 5: that we can focus on.
Speaker 2: A separate meeting in Washington overnight included thirty to forty
Speaker 2: companies from the coordinations, including the Aussie minors BHP and
Speaker 2: Linus who can help with supplying critical minerals. So for
Speaker 2: more on this, I'm joined by the CEO of the
Speaker 2: Minerals Council of Australia, Tanya Constable. Tanya, thanks for your time.
Speaker 2: It sounds like the Quad leaders are pretty concerned with
Speaker 2: China's dominance of the critical minerals and rare Earth's market.
Speaker 2: I mean, how much power do they have over the
Speaker 2: supply chain?
Speaker 4: Well, great to be with you, Ed, China has a
Speaker 4: considerable dominance across a range of critical minerals. A lot
Speaker 4: of the critical minerals processed occurs in China, so it's
Speaker 4: important that countries develop strategic partnerships. And it was great
Speaker 4: to see that the meeting on the Quad between Australia,
Speaker 4: the United States, India and Japan occur because it is
Speaker 4: so essential and the relationship between particularly the United States
Speaker 4: with Secretary Rubio and also our Foreign Minister Awong was
Speaker 4: great to see that relationship develop because it will be
Speaker 4: essential to developing supply chains in critical minerals and Australia
Speaker 4: has it all.
Speaker 2: Yeah, BHP and Linus, we're hearing we're in Washington overnight
Speaker 2: talking up their offerings in the critical mineral space. I mean,
Speaker 2: how big a role can Australia play here in the
Speaker 2: critical mineral supply chain.
Speaker 4: Well, we can play an enormous part. Not only are
Speaker 4: we very strategic at the mining end, but we are
Speaker 4: also starting to do more processing of some of the
Speaker 4: critical minerals. And it's well known that Linus as a
Speaker 4: company is so essential outside of China. It is the
Speaker 4: biggest company on rare US outside of China and it
Speaker 4: sits in Australia. It has fantastic relationships with Japan and Malaysia,
Speaker 4: United States, and of course in Australia. So it is
Speaker 4: our most strategic company at the moment outside of China.
Speaker 4: So we need to maintain that company that relationship, do
Speaker 4: further processing in rare earth which are critical for things
Speaker 4: like electronics, semiconductors across the electric vehicles and in defense materials.
Speaker 4: So that BHP and Linus and other companies were present
Speaker 4: and having their own discussions in the United States really
Speaker 4: marks a step forward in a range of relationships so
Speaker 4: critical for global supply chains, on critical minerals and for
Speaker 4: modern technology in the world.
Speaker 1: Yeah, I know.
Speaker 2: Our government launched a critical mineral strategy a couple of
Speaker 2: years ago designed to grow our output. I mean, how
Speaker 2: has that been tracking?
Speaker 1: In your eyes?
Speaker 4: It's an important It was an important first step. It
Speaker 4: demonstrated to companies around the world that we were taking
Speaker 4: this area of critical minerals very seriously. It showed the
Speaker 4: dimension of what we had available on raw materials, that
Speaker 4: we were open for business on investment in Australia, and
Speaker 4: importantly that the government was showing support for critical minerals
Speaker 4: down the supply chain. We can't do that by ourselves
Speaker 4: though as a country, because supply chains must occur at
Speaker 4: the various levels of not just the raw materials, but
Speaker 4: the manufacturing and the supply of end use materials. So
Speaker 4: developing partnerships and matching up critical minerals lists across across
Speaker 4: countries at a global level is really important to make
Speaker 4: sure that we do secure the supply chains that are
Speaker 4: needed to produce the end use materials. Again that modern
Speaker 4: the modern world needs that we use every day in
Speaker 4: our households, in the way that we might build our cities,
Speaker 4: conduct our everyday lives and things like transport as good examples.
Speaker 2: And do we have the policy settings right here in
Speaker 2: Australia at the moment to attract that global investment into
Speaker 2: the mining sector.
Speaker 4: We've been moving towards better investment conditions. Of course, I've
Speaker 4: said a number of times we would like to see
Speaker 4: more done on specific areas that are critical for investment.
Speaker 4: Areas around industrial relations and making sure that there's balance
Speaker 4: on employer employee relationships and wages very critical. We need
Speaker 4: to make sure energy prices are brought down as much
Speaker 4: as possible. We need to make sure that we have
Speaker 4: our taxation settings right, and then if we want to
Speaker 4: get more minds on the ground and make sure that
Speaker 4: we've got the minds for the future, then then we
Speaker 4: need to speed up environmental assessment approval processes and I
Speaker 4: believe that we can do that. That is a really
Speaker 4: critical area that governments around Australia are focused on. The
Speaker 4: federal government has been focused on and I've participated in
Speaker 4: very good meetings with Minister Watt, who is trying to
Speaker 4: make sure that he's working with states, working with business,
Speaker 4: working with environmental groups to make sure that we get
Speaker 4: the right sort of settings, particularly around environment to move
Speaker 4: the dial and get those minds built for the future.
Speaker 4: So progress is being made, but we need to see
Speaker 4: a lot more in that space. It's only having those
Speaker 4: settings done together holistically that will ensure that Australia has
Speaker 4: the right investment conditions to signal to the world that
Speaker 4: we are open for business and we make sure that
Speaker 4: projects not just in mining but across a range of
Speaker 4: industries occur.
Speaker 2: Tanny Constable, Chief Executive of the Minerals Council of Australia,
Speaker 2: thanks for coming.
Speaker 1: On the show.
Speaker 4: Thank you for having me ed.
Speaker 2: After the break the severe weather event that's smashing the
Speaker 2: East Coast is already causing damage and generating insurance claims.
Speaker 2: The Insurance Council of Australia is up next welcome back.
Speaker 2: Insurance claims are already being lodged by households and businesses
Speaker 2: who have been caught up in the East Coast low
Speaker 2: which has battered the New South Wales coast with wind,
Speaker 2: surf and rain. The total insured cost of extreme weather
Speaker 2: events this year is already one point eight billion dollars
Speaker 2: thanks to three major severe weather events which have created
Speaker 2: almost one hundred and fifty thousand insurance claims. Here's a
Speaker 2: look at the performance of the Ossie insurance stocks today.
Speaker 1: You can see they were all sold off.
Speaker 2: I caught up with Matthew Jones from the Insurance Council
Speaker 2: of Australia a little earlier.
Speaker 6: The Insurance Council has been in touch with its members
Speaker 6: today and there are a small number of claims that
Speaker 6: have come in from a result of the East Coast
Speaker 6: low that we're experiencing in New South Wales right now.
Speaker 6: Of course, we'll keep watching brief on that insurers are
Speaker 6: leaning into this issue already. We know that, for example,
Speaker 6: thirty dozen people have been without power, so that may
Speaker 6: lead dis some claims around food spoilage, but it's a
Speaker 6: low number of claims at this stage.
Speaker 2: How quickly could insurers step in and react to events
Speaker 2: like this and provide support for customers as.
Speaker 6: Soon as it's stays to do so. Insurers are set
Speaker 6: up to respond to these types of events, and unfortunately
Speaker 6: over the last few years that had a lot of
Speaker 6: experience responding to events just like this, so you know
Speaker 6: they're ready to be on the ground and support their
Speaker 6: customers as soon as it is safe to do so.
Speaker 2: I mean, just looking at this calendar year alone, we've
Speaker 2: obviously had quite a few extreme weather events already. I mean,
Speaker 2: how much roughly have they cost the insurance sector?
Speaker 6: Then you dart up with out today by the Insurance
Speaker 6: Council shows that we've had three extream of the events
Speaker 6: that we've declared insurance catastrophes so far this year. The
Speaker 6: largest vote, of course, was xtc Alfred, and we saw
Speaker 6: around one hundred and twenty five thousand claims from that
Speaker 6: event at around one point two billion dollars, so that's
Speaker 6: a pretty sizable event. The good thing with that event
Speaker 6: is though that the average claim was reasonably low, which
Speaker 6: shows that a lot of the damage was from minor
Speaker 6: was minor and claims were paid very quickly. We've also
Speaker 6: had two other events, the North Queensland floods and most
Speaker 6: recently the Mid North Coast and Hunter floods. They were
Speaker 6: also much more modest than xtc Alfred. So around one
Speaker 6: hundred and ninety four million for the most recent event
Speaker 6: on the Hunter and Mid North Coast and children's seventy
Speaker 6: million for the one in Queensland and around eleven thousand
Speaker 6: claims from each of those events. That's not unusual for
Speaker 6: this time of year that we call it the storm
Speaker 6: season during summer, so Australia does experience a lot of
Speaker 6: flooding during that period, particularly in the North. So it's
Speaker 6: not unusual in the fact this year has been on
Speaker 6: the lower side compared to some of the years have
Speaker 6: experienced since twenty nineteen twenty when the Black Snoblish fires
Speaker 6: impacted large parts of the country.
Speaker 2: Yeah, obviously a lot of the claims you're talking about
Speaker 2: there stemming from ext tropical cyclone out for it. I mean,
Speaker 2: how's the rebuilding process going from that weather event?
Speaker 6: Well as Ron McCall's very fortunate it didn't have the
Speaker 6: impact that was feared as it hung off the coast
Speaker 6: of Australia for a number of days. And so as
Speaker 6: I said, you know, a lot of the claims were
Speaker 6: for minor damage. We're actually seeing insurers pay those claims
Speaker 6: at a pretty fast clip, so we're very pleased with
Speaker 6: the responsive insurance to that event. Insurance also deployed a
Speaker 6: lot of resources before that event. They were proactively calling
Speaker 6: customers letting them know what they should do if they
Speaker 6: did experience that it did have a need to make
Speaker 6: a claim. They had additional resources both on the ground
Speaker 6: and in their contact centers and so they were ready
Speaker 6: to go and that's helped with getting those claims passed
Speaker 6: through very quickly.
Speaker 2: Matthew Jones from Insurance Council of Australia, thanks for coming
Speaker 2: on the show.
Speaker 6: Thank you.
Speaker 2: So that's all for today's program. Thanks to your company today.
Speaker 1: We'll see tomorrow.