Gillard Government Resists Pressure to Cut Spending - Talking Business 2010 Ep 42c

A review of the week in business, with expert analysis and commentary

Leon and Garry talk about the Gillard government resisting pressure to cut spending following the Mid Year Economic and Fiscal Outlook as the soaring Australian dollar slices $10 billion off government revenue. Qantas has to ground its fleet of Airbus A380 carriers, leaving them out of service during the lucrative summer months as the Qantas share price dives. Banks moving to dump exit fees and ANZ lifts its standard variable mortgage rate by 39 basis points to 7.80 per cent, just below CBA’s 7.81 per cent. Figures from APRA show that the banks decision not to lift interest rates is costing $1.1 million a day each. Commonwealth Bank plans a $500 million retail bond sale to diversify its funding. Ownership of Woodside Petroleum is now up for grabs with Shell pulling out. BHP could be a suitor. NAB survey shows that business conditions have dropped to their lowest level in more than a year. Economists warn that consumer spending will not pick up. The latest D&B survey shows that Australian firms are expecting their biggest profits in more than seven years, while the number of companies appointing administrators has fallen away sharply. Orica reports a 5% lift in profit while Dulux reports a $61.3 million profit. Australian job advertisements rise to their highest level in to years, according to the ANZ jobs survey. Unemployment rises to 5.4 per cent with more people looking for work. The value of frauds has doubled during the past two years according to the latest KPMG Fraud and Misconduct Survey. Healthscope’s new private equity owners bring in new management. Gold climbs to a record high of $US1400. Sonic Healthcare acquires US pathology business CBL Path for $123.5 million. James Packer and Lachlan Murdoch get seats on the Ten Network board. The Tasmanian and Federal Government have killed off a joint venture for the NBN. Qantas and other airlines are fined by the European Commission for running cartels. Seven is on track to record a monster profit after merging with an earthmoving company. Australians are saying they are overworked, according to the Australia Institute. Housing finance commitments rise marginally by 1.3 per cent but interest rates rises are expected to see house prices move sideways. Consumer confidence falls to a five month low. Industry super funds buy into the Port of Brisbane, signaling a shift by super funds into infrastructure. Agribusiness company AWB reports a $54.9 million loss, Optus reports a 19% lift in profit to $291 million and Bluescope Steel warns the market that it expects to make a loss. Hong Kong listed Wah Nam International Holdings buys into the Australian resources sector, sending mining stocks through the roof.

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Garry Barker and Leon Gettler
business, RMIT, Economics