The Border Watch : December 3rd 2013
BUSINESS Building approvals ease from record high SYDNEY: The housing sector is still going strong, with home building approvals in October suffering only a small fall from the three-anda-half year high recorded the month before. Home building approvals fell 1.8 per cent across Australia in October, the Australian Bureau of Statistics data said yesterday. Local councils approved the construction of 16,491 new homes in October, down from the 16,791 approvals in September, which was the highest since March 2010. JP Morgan economist Tom Kennedy said a fall in building approvals was inevitable after strong rises in recent months. “We are viewing the building approvals data in a positive light,” he said. “If you look at a two or three-month rolling average, clearly the trend is higher.” Mr Kennedy believes the housing sector is capable of being a significant driver for economic growth in the future. “This does add a bit of credence to the theory the Reserve Bank of Australia’s interest rate cuts are getting traction, the construction sector is lifting and the housing market in general is turning higher. “It’s still is early days though, building approvals are still tracking at levels that are probably pretty low, compared to where they should be with the cash rate at 2.5 per cent. Macquarie Group senior economist Brian Redican said the disappointing data for October would be unlikely to encourage the RBA to cut rates this month or early next year. “This data won’t change the RBA’s perspective here,” he said. “We think they’re marginally on the weaker side but you need several more months of substantially weaker data to change the RBA’s mind.” – AAP Door’s ajar: Prime Minister Tony Abbott says he is willing to discuss changing Qantas’ foreign ownership requirement legislation. GrainCorp upgrades need ‘rationalisation’ MELBOURNE: Grains handler GrainCorp says it will “rationalise” its storage and logistics network, in the wake of Treasurer Joe Hockey’s rejection of a $3.4 billion proposed takeover by US-based Archer Daniels Midland. Chairman Don Taylor said the company’s storage and logistics network needed upgrading, but GrainCorp would now have to do that without the significant funds ADM was prepared to provide. “What’s recognised by everyone is that our country network – storage and logistics – is going to need some work done on it in terms of improving our customer service offerings,” Mr Taylor said. “That, obviously, is going to require some rationalisation.” Mr Taylor said it was too early to say what effect the rationalisation may have on jobs. The rationalisation would be around the storage and handling network. GrainCorp had no intention of selling its malting or edible oils businesses. ADM said it would spend $250 million on GrainCorp’s business if it took over the company, including $200 million on its storage and logistics business. 8 - The Border Watch, Tuesday, December 3, 2013 ANZ case could hurt big banks MELBOURNE: The $57 million class action against ANZ Bank could turn into a multibillion-dollar claim against the nation’s banks. The three-week Federal Court hearing involving 43,500 ANZ customers must decide whether the bank’s fees of $25-$45 for over limit, late payment and other issues were illegal and unconscionable penalties disproportionate to its actual costs. The ANZ case, which began yesterday, is the first of eight planned class actions involving 185,300 members of eight lenders claiming $243 million. However, the lawyers leading Australia’s largest ever consumer class action say the nation’s banks had collected about $5 billion in such fees over six years before public pressure led NAB to start a drop in fees in 2009. If the court found the fees were illegal penalties, then that could potentially apply to not just the class action participants but potentially millions of bank customers hit by years of fees, law firm Maurice Blackburn’s class action head Andrew Watson said before the start of the hearing. “That is a huge issue that will constitute a precedent not just for the banks that we’ve used but for other financial institutions who are levying similar fees and exceptions charges.” The class action would also set precedents for other industries, although Mr Watson said the firm was currently only focused on the banks and confident it had a strong case. ANZ is only saying publicly that it will vigorously defend the case, arguing it is entitled to impose the fees on customers but will not provide a running commentary. However, the fact NAB no longer imposes such fees and ANZ only charged about $6 due to consumer pressure would make it hard to now justify the previous fees, said class action funder IMF’s investment manager James Middleweek. He said while the fees had been reduced, many banks were still over-charging customers, three years since the class action was first launched. For example, customers that had credit cards taken out before last year paid over-limit fees of up to $40 despite the fact new laws had banned those fees, he said. The primary argument before Justice Michelle Gordon to decide who wins is whether or not the banks’ fees can be called penalties. – AAP Abbott open to Qantas law changes “If legislation were to change, obviously, there would need to be a community debate and I think that debate has just begun.” CANBERRA: Prime Minister Tony Abbott has left the door open to allow greater foreign ownership of Qantas, but says any decision must be in the national interest. Qantas is subject to laws Picture: AAP ensuring it’s at least 51 per cent Australian-owned. The airline argues this hampers its access to investment capital and creates competition restraints. Asked yesterday whether he would consider easing its foreign ownership requirement, Mr Abbott said: “That’s a fair question.” “These limits were set by legislation quite a long time ago … I don’t think anyone says that because something was done once it is set in concrete forever,” Mr Abbott said. “But if legislation were to change, obviously, there would need to be a community debate and I think that debate has just begun.” Economic growth starts to rebalance SYDNEY: Australia’s economic growth isn’t losing pace and might have even picked up a little as the non-mining sectors of the economy start to recover. The Australian Bureau of Statistics’ national accounts figures, to be released tomorrow, are expected to show that gross domestic product grew 0.7 per cent in the September quarter, according to an AAP survey of 13 economists. In the June quarter, GDP growth was 0.6 per cent. HSBC chief economist Paul – AAP Bloxham said the nation’s economic growth was showing signs of rebalancing away from one that was heavily driven by mining and resources investment. “Low interest rates are lifting the established housing market and this month brought more evidence that the upswing in residential construction is picking up pace,” he said. “Helpfully, despite slowing down, mining investment has not yet fallen away sharply and it has levelled out which is allowing more time for growth to rebalance.” JP Morgan Australia chief economist Stephen Walters said September’s quarter capital expenditure data was a sign growth was slowly strengthening. IN BRIEF Dollar rallies on good housing data SYDNEY: The Australian dollar has hit a one-week high after the release of surprisingly resilient housing sector data. At the close yesterday, the local unit was trading at US91.59c, up from 91.03c on Friday. During the day, the Australian dollar peaked at US91.65c, its highest level since last Tuesday. Whitehaven changes debt demands MELBOURNE: A campaign by environmentalists has forced miner Whitehaven Coal to alter the terms of its $1.2 billion debt facility. Legal challenges have delayed the construction and first sales from Whitehaven’s $767 million Maules Creek coal project in NSW, which the debt will fund. The deal renegotiated with its lenders when Whitehaven will have to meet interest coverage ratios. Previously, the debt covenant had to be met in Decembe,r now it will not have to be met until December 2015. Metcash profit rises after Franklins drop SYDNEY: Grocery wholesaler Metcash has lifted its first-half profit more than 20 per cent thanks to its exit from the Franklins line of supermarkets, which removed a drag on its balance sheet. Metcash made a net profit of $98.9 million for the six months to October 31, up from $82 million for the same time last year. But underlying profit was down 2 per cent to $119 million. Ramsay buys French mental health clinics SYDNEY: Private – AAP hospitals operator Ramsay Health Care will pay $223.47 million to expand its French business through the acquisition of mental health clinic provider Medipsy. Ramsay’s french subsidiary, Ramsay Sante, will take over Medipsy, which operates 30 hospitals and more than 2600 beds, from the end of the month. Showdown looms for tuna industry – AAP MAJURO: The future of the world’s largest tuna fishery will be decided at a meeting in Australia this week, with Pacific island nations demanding tighter controls on a catch now worth more than $7 billion a year. Island nations, many of which rely on tuna for a significant portion of their income, fear stocks are becoming unsustainable and want action.
November 29th 2013
December 4th 2013