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Tech touts herald new age: Transition easier than GST

Whether you believed it was the new Millennium or not, the beginning of 2000 certainly heralded the arrival of a new technological age.

Not only had we survived, unscathed, the disaster of the Bug but the corporate world had turned its attention to the Internet and all the possibilities therein.

Consultants fresh from minting fortunes on the back of Year 2000 advice were among those now egging us on to invest in the new frontier.

And so we did.

Perth’s explorers turned their backs on the State’s hidden mineral wealth in search of richer veins to mine, they went dot.com at an alarming rate, and showed the WA entrepreneurial spirit remained alive and well.

Then again what choice did they have. With the slump in commodity prices who was going to spend dollars searching the vast open spaces of WA for minerals when there was money to be made from the Net?

And for the first quarter of this calendar year, these new boundary riders of the IT industry were spurred along by an unthinking market which spurned traditional forms of valuation in their hurry to be on board the next Amazon.com.

THE GST was something of a sleeper, rating only a second mention after the ASX’s latest record-breaking float.

It seemed, somehow, unimportant that the housing sector was so hot, brickies were earning close double their normal rates. Or that the motor vehicle market had gone so quiet you could even sympathise with the plight of used car salesmen.

The quiet handover of WA’s last family owned department store chain Aherns to aid David Jones return to the local retail scene after an absence of two decades was also largely unheard among the IT cacophony, as new millionaires bought Perth’s chique apartments with views of the city they thought they ruled.

But it was not to last.

On April 14, Wall Street and the Nasdaq slumped, leaving Australia’s investors the whole weekend to contemplate the worst. Not long after Melbourne IT had broken listing records on its debut, the technology sector led the market down on a whirlwind plunge.

"As an analyst I think it was encouraging," said Hartley Poynton’s David Franklyn.

"There was no relationship between what those companies were going to earn and their share valuations."

"The Internet is not a means to make money it is just another form of distribution."

AFTER EASTER it soon became evident that there would be no bounce among the technology stocks. Scores of floats were shelved as those that had got theirs away started to chew up cash reserves, hoping to realise investors’ pre-crash dreams of revenue and profits from cyberspace.

The only bouncing going on was among the blue chips. The flight to quality revived many flagging shares prices, some which had been dubbed ‘old economy’ or others that had simply not been expected to share in the new wealth of the Net.

With the Australian dollar weakened by the US juggernaut, foreigners started to show a distinct interest in the opportunities which abounded. The lowly Aussie currency, poor commodity prices and low share prices made a number of our former resources stars vulnerable to the consolidation of the global mining industry.

DURING MAY, Royal Dutch/Shell raised the prospect of a merger with Woodside for the first time, firing the first shots in a battle which remains to be completed.

Ironically, Woodside was benefiting from one of the few commodities which was rising in price, oil. Boosted by a ever-weaker Australian dollar, Woodside shareholders could not complain about the jump in energy prices, even if they were starting to feel it at the bowser.

Not long afterwards, London-based Rio Tinto launched a $2.8 billion takeover bid for North, the owner of the Robe River iron ore operations.

The markets welcomed BHP’s efforts to clean up its balance sheet with the $2 billion write-off of the Pilbara HBI plant. The new management had not abandoned the project, but it was acknowledging the follies of the past – the corporate version of that commodity found so rarely in Australia, an apology.

It wasn’t just foreigners who were in the market for a bargain. Wesfarmers and Elders started the final scene in a long-running play for an Iama weakened by poor management and the probability that the WA grain sector was set to deliver a rare bad harvest.

MEANWHILE, the stock market’s crash had removed the elixir which had so easily persuaded us to ignore 2000’s most momentous event: July 1 and the arrival of the GST.

We learned very quickly the new vernacular of ABNs and deadlines which could be broken over and over again. John Howard’s new tax system was to be a reality, and a lot of people appeared not to be ready for it.

But, like its forebear, the Millennium Bug, the GST did not deliver the chaos expected by the doomsayers.

Business took the whole thing in its stride, as it usually does when Government finds some new red tape to bind them with – adjusting with apparent ease to the myriad of new requirements which came with the tax reform.

THE TOP SHELF corporate activity remained at pace as the Australian dollar continued to fall and our miners looked for some form of commodity price salvation.

De Beers threw $522 million on the table in a $1.62 a share bid for Kimberley miner and renegade diamond marketer Ashton. The fight between De Beers and Rio for control of Ashton turned out to be another of the year’s engaging duels.

Meanwhile, WA politics turned nasty as the various parties squared off for an election and the finance brokers scandal erupted. Premier Richard Court was on the back foot, defending his Cabinet Ministers and a series of new feel good State Government projects.

As Doug Shave and Kevin Prince ducked for cover from the finance broker fallout, Mr Court was busy trying to justify his pet project, the Bell Tower, as well as ease concerns about Multiplex’s winning proposal for the Perth Convention and Exhibition Centre contract. As the once-controversial Graham Farmer Freeway started taking traffic under Northbridge, the replication of the Narrows Bridge seemed the only public works operation not feeling the sting of public criticism.

Even the sale of a 45 per cent cornerstone investment in AlintaGas, as the first stage of its privatisation, failed to whip up much enthusiasm.

FOR HOME OWNERS and business, the news was not good when the Reserve Bank jacked up interest rates for the fourth time this year, setting the official cash rate at 6.25 per cent.

But then along came the Olympic Games. Set in Sydney in September, the world’s biggest sports event proved a mighty distraction.

We were thrilled that our nation of less than 20 million came fourth in the medal tally, achieving on the field success matched only by the smooth running of the event which attracted praise the world over.

It proved a point: if you throw money at something you can achieve marvellous results. It was a point hammered home by the nation’s scientists, who suggested all the gold medals in the world were worth little if our greatest brains kept being drained away overseas.

WITH THE OLYMPICS over, we got down to the business end of the year. Retailers put their heads down in the hope that what has been a miserable year would end on a high note, with or without the hype of a new Millennium.

Their hopeful outlook would not have been improved by fuel prices which climbed to around $1 a litre as the price of oil rocketed.

The Australian dollar continued its slide until December, when a potential dip below US50cents was averted.

"For WA, the Australian dollar has been partially beneficial," said Alan Langford, BankWest economist.

"It has caused interest rates to rise more sharply they would and probably made some resources companies a bit too cheap, but if it was not for that ($A) the gold industry would be in even worse shape."

There was also the first quarterly Business Activity Statement deadline, a drama that engulfed WA businesses and mired them in paperwork. Though the doomsayers were again proved largely wrong, the first quarterly BAS deadline did not fully reflect the smooth sailing of July 1 and many predict the true fallout from the GST will come next year.

During this final quarter, AlintaGas floated buoyantly, followed by another successful WA privatisation soon after when Westrail was sold to a joint venture which included Wesfarmers. Long a bridesmaid in the privatisation process, Wesfarmers finally won a slice of the action in its home state.

The good news for Wesfarmers’ management continued when it won the ugly battled for Iama.

Among other conflicts resolved, De Beers withdrew its final $2.25 a share bid for Ashton, leaving Rio the prizewinner at a cost of $713 million.

But, it seems, there’s always something going to keep the lawyers busy.

SHELL TOOK another shot at Woodside with a much-revised bid for majority control.

Troy Resources ended up in court in its fight for Taipan which is in a merger process with St Barbara Mines.

And then there is the new battle between Andrew Forrest’s Anaconda and Joe Gutnick’s Centaur.

Not to be forgotten was the debacle of the US Presidential election. For a month, the world’s remaining superpower did not know who had won at the ballot box after the closest result in living memory. Some say we may never know the real result, even though Republican George W Bush finally had the legal backing to form the latest administration in the Whitehouse.

All in all, we can’t wait for next year, which will definitely be in the New Millennium.

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