Government bends over backwards on broadband… No change on rates, say economists… Business confidence… VCs on the nose… All eyes on the China stockmarket… Murray-Darling plan closer… Queensland budget… ACTU push on OHS laws… Economy roundup…
Tuesday, June 5, 2007/
Government bends over backwards on broadband
Telstra could be the big winner from an expected Government move to take control of the broadband decision-making process by moving to a public tender process.
Federal cabinet will today consider establishing an independent panel to review the need for a high-speed fibre-to-the-node broadband network before calling for public tenders from all companies interested in building the network.
A public tender process will allow telcos to put forward proposals that deal not only with the quality and cost of the broadband network they would build but also the regulatory changes they would need to make it viable.
In effect, this means opening the door for a review of telecommunications competition regulations, something the Government has long resisted but that Telstra has repeatedly called for.
It could also see the Australian Competition & Consumer Commission cut out of the decision-making loop if the Government is prepared to legislate to get the preferred tender off the ground.
Stephen Dalby, manager of regulatory and corporate affairs for iiNet, a member of the G9 group of telcos, says the Government should move quickly to release details of any new process.
“Our concern is that there is a continuation of an open competitive environment and, depending on the detail, we would have no problem a tender process as long as it preserved that,” Dalby says. “Anything that moves the debate forward is good, but it’s important get this right, not get it fast.”
Telecommunications analyst Paul Budde says it is vital that the Government sets fair and transparent parameters for investment in broadband if Australia is to attract private investment in broadband into the future.
“So far the Government has failed to make decisive action, but if they do move know it’s vital that they aren’t seen to be setting regulatory parameters on the run or to cater to the needs of one particular player,” Budde says.
“And of course, the G9 have already lodged documents with the ACCC, but they won’t go ahead and invest one penny if they don’t know what’s going to happen.”
– Mike Preston
Economists predict interest rates to hold
Economists across the banking sector are this morning in furious agreement that the Reserve Bank will not decide to lift interest rates when it meets today.
Figures yesterday placing annual inflation at 2.6%, in the middle of the Reserve Bank’s 2–3% target range, were the icing on the cake for economists who were already convinced that interest rates would not rise.
St George Bank’s head of economic research, Steven Milch, says two soft quarters for inflation have taken the heat out of interest rate speculation despite strong economic growth and capacity constraints in many sectors.
“Tomorrow we think we’ll get a very strong GDP number, well above 1% for the quarter, but no matter how strong growth is, because inflation is well behaved the RBA doesn’t need to do anything. Their job is to control inflation, not growth, and they seem to have achieved that,” Milch says.
– Mike Preston
Business confidence remains high, according to the latest ACCI-Westpac Survey of industrial trends, released today. The findings echo those of the latest D&B National Business Expectations Survey, which showed strong upswing in expectations for growth in sales, employment and capital investment.
The ACCI-Westpac Survey found an increasingly strong performance by the manufacturing sector with demand, production and export indicators well up on three months ago, in the three months to June 2007.
Investment predictions for manufacturers’ plant and equipment for the coming year remain solid, but profit is under pressure as selling prices lag behind cost increases. Both prices and wages are expected to rise in the next three months.
– Jacqui Walker
VCs on the nose
Far too much emphasis is placed on access to venture capital in creating and growing new businesses, say two new reports. A new report on 42 nations shows that more than 200 million informal investors provided entrepreneurs with a total of $US600 billion to start new businesses last year compared to just $US37.3 billion in classic venture capital.
William Bygrave, a Babson professor involved in the latest Global Entrepreneurship Monitor (GEM) Finance Report, says there is not enough emphasis on informal investors or entrepreneurs.
On average, the costs of launching a new business came to $US65,000, almost all of it from people who are financing their own breakout enterprises. Entrepreneurs are their own best investors, providing more than 60% of the start-up capital required to get their businesses off the ground.
Entrepreneurs were also four times more likely than the general population to invest in other businesses
A new PricewaterhopuseCoopers survey looked into the attitudes of 753 private business owners on private equity and VCs. Only 5.7% say they would consider those two options for raising capital. Instead they preferred to take capital from existing shareholders (13%) and banks (9%).
– Amanda Gome
All eyes on China stockmarket
Exporters and importers to China should be on alert as China’s stockmarket had its second biggest daily fall in a decade yesterday, with the main index falling by 8.26% to 3670.40. Last week’s decision to triple the stamp duty on share trading is having major ramifications for investors, who are looking for further signs that the Government will cool the overheated market.
Meanwhile, China released its response to climate change yesterday promising to make “significant achievements” in controlling greenhouse gas emissions. However, China will not introduce mandatory caps, claiming they are unfair on countries lagging behind industrialised nations. Instead, China will focus on expanding forests, adapting agricultural practices and energy savings.
– Amanda Gome
Murray-Darling plan closer
The Federal Government’s Murray-Darling Basin plan looks more likely to go ahead. After discussions with Victorian Premier Steve Bracks yesterday, Prime Minister John Howard agreed to review some of the contentious terms.
Bracks had a go at bureaucrats for the six months of negotiations hitting a stalemate. But some of the sticking points were overcome. Bracks agreed the Commonwealth will have responsibility for water caps and the power to enforce them and the responsibility for a market scrutinised by the ACCC.
– Jacqui Walker
At 2.30pm today Queensland Treasurer Anna Bligh will deliver the state’s budget and a predicted $1 billion surplus, thanks to coal royalties and 14% returns from the Queensland Investment Corporation.
- $82 billion, 20-year infrastructure program.
- Stamp duty reform for home buyers.
- Infrastructure projects, including $9 billion to combat the drought in the south-east.
- $70 million over four years as part of $1.2 billion on public transport.
Click here for details after 2.30pm.
– Jacqui Walker
Strict liability OHS laws should go national: ACTU
The Australian Council of Trade Unions has called for the national implementation of NSW occupational health safety laws, which make employers liable for workplace accidents irrespective of fault.
The OHS regime is widely regarded in the business community as Australia’s most costly and draconian. The NSW Business Chamber has long campaigned for reform to bring the NSW into line with more moderate OHS regimes such as Victoria’s.
“NSW has the highest level of prosecutions, the highest level of fines and the highest number of inspectors and yet injury rates above the national average,” a NSW Business Chamber spokesman says.
The ACTU call came as it launched a charter of minimum standards for OHS yesterday. The Australian Financial Review reports the charter calls for protection for unions and a right to 100% income protection for injured workers in addition the imposition of an absolute duty of care on employers.
– Mike Preston
New housing approvals rose 8.1% in April, according to Australian Bureau of Statistics figures released today. A 19% rise in apartment approvals and 3.3% rise in private home approvals are behind the strong result, which is 5.6% above market expectations.
Short-term visitor arrivals to Australia in April 2007 increased to 483,500 from 481,500 in March 2007, a 0.4% increase.
The current account deficit fell to $15.381 billion seasonally adjusted in the March quarter, from $15.502 billion in the December quarter, a drop of 1%, according to new ABS figures. The consensus forecast of $14.8 billion.
The trade deficit narrowed $342 million to $3.311bn seasonally adjusted, with a 1.5% rise in exports and 0.8% rise in imports.
At 12.40 pm, the S&P/ASX 200 is down 0.1% to 6387.4 and the Australian dollar is trading at US83.40¢, up from last night’s US83.30¢ close.
– Mike Preston