Today's Business Headlines

01/04/2009 - 06:42

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No escape from recession: RBA; Labor moves to cut major project costs; Unions warn of action on public service pay; Canada fund bids for Mac satellite; BankWest battles

Today's Business Headlines

No escape from recession: RBA
The Reserve Bank has conceded that Australia cannot escape a 2009 recession and a sharp rise in unemployment as the Paris-based OECD dramatically downgraded its forecast for the developed world's economy to a 4.3 per cent fall this year. The Australian

Labor moves to cut major project costs
The Rudd government is investigating sweeping changes to inconsistent and complex approval processes to slash costs, reduce delays and attract more private sector investment in major infrastructure projects. The Fin Review

Unions warn of action on public service pay
Union bosses threatened a period of industrial unrest yesterday after the state government announced a freeze in real wages for WA public servants from July 1. The West

Canada fund bids for Mac satellite
A Canadian superannuation fund has launched a friendly $1.37 billion takeover bid for Macquarie Communications Infrastructure Group, in a move that put the squeeze on short sellers yesterday. Sydney Morning Herald

BankWest battles
The Commonwealth Bank is facing a potential writedown amid a customer exodus at its BankWest subsidiary. Herald Sun

 

THE WEST AUSTRALIAN:

Page 1: Union bosses threatened a period of industrial unrest yesterday after the state government announced a freeze in real wages for WA public servants from July 1.

Page 4: Treasurer Wayne Swan has approved Chinese government-controlled steelmaker Hunan Valin Iron & Steel Group taking a 17.55 per cent stake in billionaire Andrew Forrest's Fortescue Metals Group on condition it does not seek to increase its shareholding.

Page 6: Holden will push ahead with its restructuring plans in Australia that could lead to hundreds of staff being laid off amid fears it will be forced to take harsher action as the US government demands a tougher overhaul from its bankruptcy-threatened parent company, General Motors.

Page 7: Treasurer Wayne Swan has conceded that Australia will go into recession, just as the OECD warns that the global downturn could stretch into a second year and throw 25 million people out of work.

The commissioning of a new $30 million high-tech brewing facility at Little Creatures' Fremantle production plant is proof of the durability of beer in tough times.

Page 10: Finance Sector Union representatives will hold a stop-work meeting tomorrow to vote on a resolution concerning unexpected job losses at BankWest.

Page 12: Air travellers face more chaos, with the Transport Workers Union increasing pressure on Qantas to address what it calls serious safety breaches relating to baggage handling.

Page 13: Extended weeknight trading hours would be of less benefit to shopping centre customers than Sunday trading but are still worth introducing, according to the Shopping Council of Australia.

Page 15: Telstra has attempted to sabotage an Optus bid to build the new national broadband network by warning the government's top security agencies of the dangers of handing a foreign power control of Australia's communications infrastructure.

Business: Australian shares yesterday wrapped up their best month in nine years but will have to repeat the performance this quarter to make a major dent in hefty super losses by June 30.

Wayne Swan has struck a bitter blow against Rio Tinto's attempt to secure Chinalco's $US19.5 billion ($28.4 billion) rescue package after the Federal Treasurer ruled that Australia had to protect its mines from undue customer influence.

Fortescue Metals Group director Graeme Rowley has criticised the corporate watchdog for calling for chief executive Andrew Forrest to be banned as a company director over allegedly misleading claims made more than four years ago.

Signs that the cash is still flowing into WA's gold sector were on show yesterday as fund manager Lion Selection sank a further $15 million into Catalpa Resources and flagged plans for further investments and acquisitions.

Macquarie Group staff could more than double their combined stake in the investment banking empire after the decision to spend $500 million of their share of its cash profits and turn it into equity.

A Canadian superannuation giant has launched a friendly $1.37 billion takeover bid for Macquarie Communications Infrastructure Group, a move that raises the prospect of further buyouts among struggling Macquarie-backed listed funds.

OZ Minerals could wipe out its debt and retain its Prominent Hill mine, the Martabe gold project and its interests in listed investments if it accepts a cash offer from China Minmetals for the remainder of the company.

Agricultural chemicals supplier Nufarm expects annual profit to rise about 34 per cent on continuing strong demand after reporting a strong lift in first-half earnings.

Perth businessman Bruce Drummond may have to wait up to six months to learn the outcome of his $4.7 million claim against listed broker Euroz.

Chinese imports of Australian iron ore dropped 6 per cent in the first two months of 2009 as the global economic slowdown took its toll on China's steel industry.

Iluka Resources managing director David Robb has seen his remuneration almost double to $3 million after a year in which the WA mineral sands miner, valued at $1.5 billion, emerged as one of 2008's few success stories.

 

THE AUSTRALIAN FINANCIAL REVIEW:

Page 1: The Reserve Bank of Australia has admitted the economy is set to contract this year amid warnings that the global recession will cause world growth to contract by close to 2 per cent and cost one in 10 workers their jobs.

Macquarie Group has accelerated its strategy to weather the global financial downturn, announcing a radical restructure of the bonus system for its top 300 executives to preserve capital and head off public pressure abut its lucrative pay deals.

The Rudd government is investigating sweeping changes to inconsistent and complex approval processes to slash costs, reduce delays and attract more private sector investment in major infrastructure projects.

Sales of life insurance products are booming as financial advisers work to generate new revenue streams and consumers feel increasingly vulnerable in the downturn.

Page 3: Treasurer Wayne Swan will force one of China' biggest steelmakers top declare any conflicts of interest in its $645 million alliance with Fortescue Metals Group in a decision that sets a precedent for a series of contentious investments that wait government approval.

Page 5: The Business Council of Australia is urging Canberra to take the axe to middle-class welfare, arguing spending that doesn't support growth or provide substantial social or environmental benefits must be pruned to help return the budget to surplus.

Page 7: Western Australia has acted to slash the annual growth in public servant's salaries from a record 12 per cent to just 3 per cent from July 1, which it says will save almost $500 million in the next three years.

Page 11: The West Australian government and energy company Woodside were trying to strike a last-minute compensation deal last night with traditional owners in the Kimberley that would pave the way for a major liquefied natural gas processing hub near Broome.

 

THE AUSTRALIAN:

Page 1: The Reserve Bank has conceded that Australia cannot escape a 2009 recession and a sharp rise in unemployment as the Paris-based OECD dramatically downgraded its forecast for the developed world's economy to a 4.3 per cent fall this year.

There can be no greater authority on how Labor politicians interact with China - both in and out of office - than Bob Hawke.

The government is expected to issue special long-term investment bonds with returns linked to inflation to help self-funded retirees avoid a repeat of the superannuation calamity caused by the global financial crisis.

Wayne Swan has approved a $644.8 million investment by Chinese steel company Hunan Valin in Fortescue Metals Group, imposing conditions to overcome the sort of concerns raised about Chinalco's proposed $28 billion stake in Rio Tinto.

The man who steered Babcock & Brown towards financial oblivion is back, quietly ramping up his involvement in one of the fallen investment bank's most successful side businesses.

Page 2: Defence Minister Joel Fitzgibbon will redirect Defence funds to tackle the "hollowness" of the Australian Defence Force and make it more battle-ready.

Page 3: The number of Australian families facing mortgage stress has fallen by 300,000 from its peak last August as lower interest rates and government stimulus packages ease the pressure on households.

Page 4: Kevin Rudd has dramatically escalated his ideological assault on unfettered free markets, warning that they have become "worshipped as a god" with calamitous results for workers and the developing world.

Greg Combet appears to be on a collision course with the coalmining industry, which the new Parliamentary Secretary for Climate Change has been specifically charged with winning over to the government's proposed emissions trading scheme.

The world's leading climate economist, Nicholas Stern, has called for Kevin Rudd to make a greater commitment to "clean coal" technology and to push at the G20 summit for a worldwide commitment to at least $US400 billion ($580 billion) in new spending to fight climate change.

Page 5: A drop of 5 per cent in the number of overseas students at Australian colleges and universities would cause 6300 Australians to lose their jobs as the economy shed more than $600 million in export revenue, a new report warns.

The Australian Government has argued it would be "chilling" and absurd if a High Court action brought by an academic succeeded in blocking the $900 cash handout to taxpayers as part of the $42 billion stimulus package.

Page 6: China's state-owned English language newspaper has issued a warning about "anti-Chinese action" in Australia, as public debate rages over Defence Minister Joel Fitzgibbon's relationship with businesswoman Helen Liu and a Chinese push to invest in local mining interests.

Optus has accused Telstra of fanning xenophobia by raising the threat posed by Chinese espionage in the new national broadband network.

Page 7: The man who steered Babcock & Brown towards financial oblivion is back, quietly ramping up his involvement in one of the fallen investment bank's most successful side businesses.

The lucrative bonuses paid to millionaire Macquarie Group bankers will be slashed as the bank tries to drive up its flagging share price during the global financial crisis.

Page 8: The boss of a Job Network agency has lodged a formal legal complaint over Canberra's conduct in the calling of tenders for $2 billion in contracts to train and find work for the jobless.

Business: The Macquarie Group's boom-market business model began to unwind yesterday when its listed communications fund recommended a $1.37 billion takeover offer on fears its looming debt deadlines would not be met.

Fortescue Metals Group's $645 million deal with the Chinese has been given the green light by the federal Government, in its first significant tick of approval on the list of foreign investments it is deliberating on.

Chinalco has secured extraordinarily cheap bank loans from state-owned institutions to pay for its $US19.5 billion ($28.6 billion) investment in Rio Tinto.

OZ Minerals could resolve its debt issues and retain its flagship Prominent Hill copper-gold mine under a new deal with China Minmetals, which will see the state-owned entity buy the bulk of the remaining assets.

Confirmation that China Minmetals has offered serious cash for what most consider the ragged rump of OZ Minerals raises the absurd prospect that Treasurer Wayne Swan and the Australian Defence Department have done the debt-crushed miner a favour in bouncing China Inc's original offer for the company.

It's hard to please everyone. After Macquarie Communications Infrastructure Group (MCG) yesterday unveiled a bid for the company at a premium of 67 per cent to the previous closing price, and 134 per cent to the three-month average price, there was some grumbling among analysts and institutions that it was too low and that independent directors who have recommended the offer had focused on short-term price rather than long-term value.

Santos's proposed $7.7 billion project to convert coal seam gas to liquefied natural gas in Queensland has taken a step forward with the submission of its draft environmental impact statement.

Rio Tinto and BHP Billiton have agreed to a temporary 40 per cent cut to iron ore prices, China's steel mills say.

Australia's banking regulator APRA has knocked back a plan by Bendigo and Adelaide Bank to take over a related investment trust on the grounds the premium offered is too big.

G20 leaders meeting in London this week would seek to agree to global rules on remuneration in the banking sector, British Prime Minister Gordon Brown said yesterday.

 

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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