Interest rates on hold… Broadband assistance… Qantas sale and the SME landscape… Discount food group pounces… Expensive ICT start-ups… International tourism on the up

Interest rates on hold, economic growth up 1%

The cash interest rate will stay at 6.25% after the Reserve Bank of Australia announced no change to official interest rates this morning (Wednesday).

But above expectation gross domestic product (GDP) growth of 1% for the December quarter of 2006, also announced today, has caused analysts to predict that a further interest rate increase in 2007 or early 2008 is increasingly likely.

ANZ senior economist Mark Rodrigues says annual GDP growth of 2.8% suggests domestic demand has not been seriously retarded by recent interest rate rises.

The stronger than expected GDP result underscores “the upside risk to interest rates in the near term”, he says.

Construction (0.3%), mining (0.2%), manufacturing (0.2%) and property and business services (0.2%) were the largest contributors to GDP growth, while agriculture, forestry and fishing each produced a net drag of 0.3% from GDP.

— Mike Preston


Broadband assistance

People in outer suburbs who cannot access broadband may receive assistance through a plan announced today designed to get more people online.

Prime Minister John Howard headed to regional Victoria this morning to announce a new Australian Broadband Guarantee that will provide subsidies of up to $2700 per individual for a broadband connection via satellite or wireless. The money will go to internet service providers and is designed to pick up users who cannot access broadband through city infrastructures or the subsidized schemes in remote areas.

People in black spots in major cities however have still not had their broadband fixed. Almost two years ago The Federal Government promised $50 million to fix up broadband black spots in metropolitan areas. It has so far spent less than $250,000.

— Amanda Gome


Qantas shake-up could create SME business boom

Treasurer Peter Costello yesterday announced the Federal Government will not block the sale of Qantas, but whether or not the sale goes ahead, there will be job losses and rationalisation at Qantas: the changing nature of the global airline industry demands it.

Some of who lose their jobs will find alternative employment, but a large number will become self-employed or start their own business. We saw this happen when Ansett collapsed in 2001.

This raises a crucial, but largely unasked question: who is providing the training opportunities to equip these workers with the skills they need to succeed on their own?

Some of the former Ansett workers struggled, but many went on to create a job for themselves by starting or buying businesses in diverse areas including hospitality, interior design, publishing and rubbish removal.

This reflects a more general shift in the economy towards self-employment and small business. Recent Australian Bureau of Statistics figures show that since 2003 the number of businesses with one to four employees has grown by just under 11%, by far the fastest growth of any category.

KPMG demographer Bernard Salt says one the key drivers of this trend is a desire by older workers facing an uncertain future to gain control over their fates and extend their working lives.

“Attitudes have changed — 16 years of prosperity has created a can do and give it a go culture,” Salt says.

The Federal Government does provide some opportunities through programs such as New Employment Incentive Scheme, which assists unemployed people to start new businesses, and its support for business enterprise centres. But it needs to do more to ensure that out of the slow decline of employment in the airline industry comes new enterprise opportunities — for those who have lost their jobs, and in time, for the people they will hire when their businesses grow.

— Mike Preston

Want more information about getting your business off the ground? Take a look at SmartCompany’s Start-up Guide


As one door closes another opens

An opportunistic supermarket entrepreneur in south east Queensland is taking advantage of the demise of the Coles Bi-Lo supermarket group by expanding into the discount niche. David Weeks, the man behind Coco’s Fresh Food Markets, should know what he’s doing. He sold Bi-Lo to Coles in 1987.

Coco’s, a 10-outlet chain in south east Queensland and northern NSW, is aiming to win over the Bi-Lo budget customer with fresh fruit and vegetables, grocery and variety lines. Coles is half-way through converting its 210 Bi-Lo stores to Coles and has plans to complete the transformation by May, reports The Australian Financial Review. Coco has plans to expand its network of stores.

— Jacqui Walker


Expensive ICT start-ups

The tax-payer funded ICT research centre National ICT Australia has launched its first two start-ups. Funded with $660 million in state and federal governments and educational institutions, National ICT Australia has taken three years to produce its first offspring reports The Australian Financial Review.

Digital audio technology company Audinate, which has signed up Dolby Laboratories as a customer, has raised $1 million from Starfish Ventures and other investors.

Audinate has claimed a potential global market of $US250 million for its digital technology for musicians and audio professionals.

7-ip, a company that integrates internet protocol telephony and data traffic for transport by satellite and wireless networks — is about to seek funding. And Open Kernal Labs, which embeds computer operating systems in small devices, is about to be spun off National ICT Australia.

— Jacqui Walker


International tourism spend up

Good news for tourism operators as the Federal Government claims that the “Where the bloody hell are you?” campaign is cutting through.

International tourists spent $13.9 billion in 2006, up 14.8% or $1.8 billion, compared to 2005, according to a new report by Tourism Research Australia. The three strongest increases in spending came from Korea, up 54% to $903 million, Britain, up 15% to $2.04 million, and the USA, up 28% to $1.2 million.

— Jacqui Walker


Economic round-up

The benchmark S&P/ASX 200 is up 0.56% to (32.3) points to 5804.1 at 12.30 today, a further sign that the market is shaking of the effects of last week’s China induced fall.

The Australian Industry Group – Housing Industry Association Performance of Construction Index released this morning shows a slight increase in national construction activity for February 2006.

Strong growth in commercial construction continues to lead the sector, but Ai Group chief economist Tony Pensabene says further contraction in the house building and apartment sectors in the month was cause for concern.


Less women in top roles

It’s International Women’s Day and the news isn’t good. Women in senior business roles has fallen by 6% during the last three years.

A new report out today shows that 36% of Australian businesses have no women in senior management, compared to 30% in 2004. Less than a quarter (22%) of senior positions are occupied by women.

The Grant Thornton survey, which looks at 7200 business owners in 32 countries, shows that Australia has fallen from 9th to 16th place in world rankings — well behind the Philippines where 97% of businesses have women in senior management positions.

Australiais only one of seven countries in the world reporting a fall in the number of businesses that have women in senior roles.

Kathleen Bailey-Lord, chief executive of Grant Thornton Victoria, says it is extremely disappointing. “Previous studies in Australia have found women have better leadership traits than men, they are more intuitive and can better suppress negative emotions.”

NSW has the highest percentage of women in senior management positions (27%) followed by Victoria (22%)  and SA (21%), while Queensland and WA lag far behind at 16%.

— Amanda Gome


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