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Good morning. Welcome to Good morning. Welcome

Business Today for Australia

Network. I'm with its with its.

Coming up on the program -

rising concern - yields on

Spanish bonds climb as investor

s worry about the country's

Reserve debt on obligations. The

Reserve Bank of India is

expejed to cut interest rate

force first time in three

years. And new connection -

could this messaging website be the

the next Instagram? We will

look at how regional market

also perform today in a moment.

For more on the market

action I'm joined Ip from Bell action I'm joined by Christine

will regional investors will

focusing on today? Plenty. On

our local market we have the

RBA minutes and Rio Tinto and

fortescue releasing their March quarter results. The news of

job cuts from Toyota and

Telstra that haven't been

encouraging so only modest

gains expected. But the big gains expected. But the big

focus for region is Europe

where news continuing to be

trugling. We are digesting news

from China where the central

bank widened the trade ing band

of the yuan. We could see a jump in short-term volatility.

Plerntsy to focus on for the

local market. And what was

demind de - behind that mixed

decision in the overnight? We saw the US pulled decision in the US

in economic data which was

positive but on the other it

weighed on trade. We saw was European issues which

make ing gains while the make ing gains while the sand

500 and - S&P 500 was dragged about lower. We saw Apple shares down

about 4%. But for the rest of

from the positive data. US the market we did see a lift

retail sales beating estimates

for March. We saw retail sales

rising 4.8% and well above the

Dwayne which was expected. So

the gains were in - gain which

was expected. So the gains were

in Citigroup and that beat revenue expectations. So

unfortunately a bit of a mixed

result in the US and the US

market really pulled in two different directions. In Europe, major indices posted

hell tive gains. They did

manage healthy gains and that

was drive Ben by the US retail

data. We saw the rising Spanish

10-year bond yield, it went

above 6% in thedy and that followed comments from the Spanish Prime Minister warning

that un also they drastically reduced the defs they they

won't be able to fund their

debt. Sew we saw Spain falling

to a 3-year low and that did

drag on the banks. But for the

rest of the European market s

we did see gains and that was

driven by the positive US

data. Looking at currencies what is the latest news

there? The Aussie dollar is

higher. It's triting at 103.5

US this morning. In other

currencies it was the auz US dollar that weakened. . And tu

row has bounced back after

hilting a 2-month low. But it's

China's rue ewian that's been

this in the spot light. The

yuan has weakened against most majors after the Government doubled the trading for our dlairt's higher and the doubled the trading band. But

key for the dollar is the RBA minutes released

today. Thanks for joining today. Thanks for joining us us. Thanks, Whitney. Now let's

take a closer look at what's

happening with currencies and commodities.

Toyota will continue

at the process of sacking workers

at its Altona plant at its Altona plant today. Most

of the 350 workers being unwillingly retrench and according to their union 80% of them plan to appeal their redundancies at Fair Work Australia thie. Been dark days

at Toyota since January when

big job losses were fore

shadowed. That first shift work

ers arrived to find a massive

security presence stationed

even across the road. Guards

were used to escort workers

first to their lockers and then

off the promises. Tends of an

18-year job for Allan. It was shocking over 18-year job for Charles

Easter. You couldn't sleep. You

were just thinking am I going

to be one? It became apparent

that Toyota was buses the

sacked workers to a nearby function centre where the

reception wasn't a friendly one. It's a private function. You can call that person. Inside was person. Inside was another

factory line of sorts where workers given their papers,

told their payout figure and offered financial counseling

were also told they had been from Centrelink staff. But they

rated as low performers on the

factory floor, in comparison to their colleagues left working

on the line. You go on the shop

floor you've been called from

the job, go to the room, and be

humiliated, ef I are one. I

feel latele bit disappointed.

The way they show to us is The way they show to us is not

fair. The union is far from

happy with the ratings system, the

the manner of the sag and all the security gashds who the manner of the sag sacksings

asked the media to leave. A of them are going to finds it

hard - age, English, and a lot

of people have been here 20, 30 years. Nobody from Toyota would

be inter but in a statement the

company said it didn't take the

was pleased with the outcome redundancies slight lightly and

for employees. There appeal for against the sackings with Fair Work Australia. with Fair

Citigroup's profit is a Citigroup's profit is a relief

struggled with its operations for the heavyweight which

reported disappointing results

for preef previous two

quarters. A 41% increase in

North American consumer banking

revenue helped to offset losses

on credit hedging. Outside the United States, weakened retail

banking season conditions in

Europe, the Middle East and

cracka, dragged on the bottom

line. Areas of growth include lone demand and - loan demand. India's Central Bank is tipped to cut interest rates today in a bid to boost slowing today in a bid to boost slowing

growth. The reduction would be

the first in three year s.

The RBI has raised rates 13

an effort times in the past two years in

an effort to combat inflation. The latest inflation data released yesterday whoa Showed

that whole sale prices rose

6.89%, staying below 7% for the third consecutive month and well off last year's highs. But concerns remain about global

oil prices and a weak rupee,

maining the bank will probably

opt for a cut of 25 basis points. Australia's main

lenders have yet to follow the

lead of ANZ and raise their

home mortgage rates ahead of

any moves on the official cash

rate. But if they do they can

count on the support count on the support of Andrew

Robb. The Shadow Finance

Minister has defended ANZ's actions while his leader Tony

Abbott preferred to blame the

Government. With teks Government. With teks building

again over European debt,

analysts say it's only a matter

of time before the other Banks join arnz. - ANZ. Opposition

leader Tony Abbott found a manufacturer which isn't losing

sleep because of the high

Australian dollar. At the thriving mattress thriving mattress manufacturers Sleep Maker, even the ANZ bank escaped

escaped criticism, despite

lifting interest rates. I lifting interest rates. I am

not here to defend the banks.

The bank s are quite capable of

defending themselves. With the

help of Shadow Finance Minister

Robb Reserve Bank. They're not

stup yud and I don't think they

would not willy nil y put up their margin like this. They

are responsible citizens. Maybe not so according to one banker. ME Bank CEO Jamie McPhee says

the big banks are favouring

shareholders an institutions

who are rely on taxpayer

bail-outs when times turn nasty

ought to be re b haefing differently. I think the economy as a sense of fragility

about it. To your point that I

just think it's up to the major

banks to make sure that they

don't add to that fragility in the economy. The Federal Opposition Leader while not backing Andrew Robb refer preferred to lay the blame else. Where When you have the

Government worries 100 million

every single day, of course

there's going to be upward

pressure on greats and that is

the problem. The basic economic

problem it seems the ANZ failed to mention to mention when it raised rates last week. Aboriginal last week. Aboriginal analysts

say there are much larger force

at work. I think the main

reason for rates going sup the financial situation, particularry the risk in Europe

and the capital markets in

Europe. Rates are higher than

they've been for some time.

Flat growth in Australia in terms terms of loans and deposit, Flat growth in Australia in

there's nothing really to do with the Government's situation, the Government

debt And there's no end in sight to the pressures. It's

tough both in the whole sale

markets and as you've mentioned

in Europe and it doesn't seem

to be getting any better. The pressure

pressure on whole sale rate

also stay high for also stay high for some time.

That is flying into a much

greater level of

competitiveness in our retail

rates. It suggests the days of

banks run their own interest

rate raise Reyes are not

over. I would expect to see

some movement up over the next

depends little while. How much dwep

depends on how much they want to. It and mu how much

criticism they're prepared to take. A new brawl has erupted

over Australia's National

Broadband Network but this time the centre of attention, it's

emerged at a parliamentary hear

thak NBN Co. is preparing to

spend $650 million to launch the satellites into space, even

before it has form al

permission from the United

Nations to use connected to the National majority of Australians will be

Broadband Network by underground fibreglass cables on their streets. It's been

slow progress. Last year, the

NBN Co. earnt $356,000 from the

first 2,000 household s

connected to the network. It

has out goings of has out goings of 220 million dollars. And even though just

15% of households offered the

high speed broadband signed on,

the head of NBN Co. said's only

early days. We're pretty happy

with the rate at which it's

going and the fact is that the

copper network is going to be retired. It will mean a

different dynamic for

activation s once that started

s to happen. Last month, the

Prime Minister announced Prime Minister announced that by 2015 one-third of the

country will be connected to

the NBN or in areas where

construction will be under way.

Those in remote Parts of Australia are expected to be

online at the same time.

The00,000 homes an farm s will

be connected to the network by two satellites casting 101 spot

beams across the country. The beams across the country.

parliamentary hearing was told

that the NBN $650 million to buy the

satellites. But it's not yet received a parking spot from

the United Nations agency in

charge of space. The head of

the NBN Co. confirmed they

without final could be launched into space

without final approval. There's a very, very small risk in our

view, a very, very small risk. The option you for many years to let this

formal process end and then start

start the process. That means

good broadband service to the that you won't be providing

bush for many years. The Shadow Turnbull Wendt on the Communications Minister Malcolm

attack. You are leave

the possibilityings albeit attack. You are leave ing open

smacialtion of launching a

satellite into - small, of

launching a satellite into a slot prior to it being

allocated. Is the answer to

that question yes? While the

answer was yes, the NBN Co. is

far more worried about a mishap

on the launch pad than

on the launch pad than a

satellite without a parking space. It's a matter of

adapting the satellite at some adapting the satellite

point in time to adjust to a slightly different orbittal sloi.'S not knot that you the satellite. The sloi.'S not knot that you scrap

the satellite. The further you

go in the process, but in terms

of risk we rate this one way

down here. The risk we're

focussed on which I h I the

committee should be focussed on

is the risk at launch. The satellite is not due to be

launked until 2015. If there's

a change of government, Malcolm

Turnbull could be the Minister who decides whether or not it takes off.

There's been much angst and

hand wringing over the state of

spoke Australia's economy. Earlier I

spoke to Mark Bouris, executive of the private network of small businesses who employ 60% their debt. I am talking about cash and who have re instructed cash and who have re business who are flush with not just talking about big borrow money to expands: It am that is business's ability to liquidity. And what I mean by economies is the position of economies is the position it's coming from overseas issue today in our economy, facing? I think a really big facing? I think a really are the challenging it's robust as it could be or what unique position, is it as where you sit which is a very at Australia's economy. From morning. It let's look broadly Welcome to the program. Good company Yellowbrick Road. chairman of wealth management

employees pay superannuation. That

environment today's esktsed by liquidity and that has been stifled because liquidity and that liquidity

has been stifled because the

banks don't want to lend into

that aseat class. Is that

because they see it as being

too risky? It is not so much

too Rick you but it's an too Rick you but it's an asset

class they don't need to lend

gone into. There's. The banks have into. There's. The banks

gone from 85% of that market to

95% of the market, it's better

for a bank to lend its money into residential mortgages because they are they form far better, they form far better, they're

easier to manage. Therefore

liquidity is only that much money, it will go residential mortgages an money, it will go into

therefore there's less to therefore there's less to go

into loans. Then in your view

what needs to be there specific Government what needs to be done? Are

policies you would like to see policies you would like

to help encourage competition

in the bank sect or and to en

enliven that banking year? Government regular year? Government regular lace

to me - It's an anathema. It's

a problem. As soon as the Government

Government gets involved the Government gets involved the

year is over regulate and the

competition diminishes. But the answer to this question clearly answer to this question clearly

is competition. Whether it will come through come through government regulation or otherwise I don't

know the answer to that. What governments could do is instead

of regulating they could encourage in compote PETTor

coming to the market by

offering a sweetener. We have a

lot of big banks overseas who would be terrified to come to

this market. Is that because

it's too small. Too well managed. So the Australian

banks completely dominate sod we have four big banks we have four big banks who own 95% of the market thachingt is not the territory you not the territory you normally start competing in,

particularly in this country,

it's always been that way for it's always been that way for a long time. Governments can long time. Governments can do something to encourage non-bank

sector and foreign banks to

come into this country to take

on the Australian banks. That

would free up liquidity, bring

more balance sheets into this

country. You say sweetener,

what are you talking about? That could be a about? That could be a tax environment for non-resident,

non-resident banks. Secondly,

it could be in the non-bank

sector in the smaller regional

sector. It could be the

Government standing in the

market, guaranteeing the assets

to those entities an not

guaranteeing the assets to the

big Banks. So it's not

regulation but a pullback on the regulation. For the regulation. For example, we could adopt the Canadian model which is what which is what everyone keeps

talking about talking about where the

Australian Government is

affecting pools and mortgages for the smaller non-bank for the smaller non-bank sector

and for the regional banks. So

that would immediately bring

more capital into the market

place and available people to

start to compete with the big

Banks. The simple fact of the

matter is the banks saw they're

going to go from 95% market

share. They will start to say we need to find we need to find somewhere

elsewhere we can grow our book

and we will do do it at and we will do do it at a

betteris ra rate. If we look at the recent announcement of this legislation to help the manufacturing sector, I'd like

to get your view on that. Do

you think it's treading into

the dangerous area protectionism? I get concerned about governments trying to

tariff protectors or project -

protecting industries. At the

same time 85% of this economy and to the ex tent the

manufacturing industry is part of that of that 85% is going nowhere. They're negative trending. Whereas 15% of the

economy is going brilliantly

which is basically the banking

sector and the mining sector. Sie>> problem. We have We have

a structural problem in this

country. You must leave country. You must leave the structural problems structural problems to resolve itself. Does that mean more

pain before? More pain. We are

in a global environment today. in a global environment today.

We have to compete in a global

environment. We have to make

sure, therefore, that those who do very well, the Government redistributes that wealth to

those who are doing so well but to protect a particular

environment, my view is is that

shouldn't happen. What is your

view on the major banks raising

mortgage rates out of step with

the RBA? They can do whatever they want. Because they want. Because they're

Ollie gol list. But I have a

but I have a view as to their

excuse. This cost to funds

argument and there is a really good article on this in the

'Sydney Morning Herald', for

them to keep pushing out this

cost of funds argument all cost of funds argument all the

time is Buck becoming nauseating. The Reserve Bank

has come out on a number of

occasions an dually said that the gap

the gap between a cost of

funding generally for banks in

this country, that gap has

widend. In fact in other words,

their retail rate versus their

cost base has got cost base has got figger,

anywhere in the world if you're

a bank, you would be desperate

to come in and get 240 basis

points of margin. That is

from heaven. Are - manna from from heaven. Are - manna from

heaven. Are doing it out of greed? No, to protect their

shareholder base - to shareholder base - to optimise

their profit position. 6 basis

points doesn't sound much but

across a whole book is enormous

. What I find quite confusing

is on one hand they have a standard variable rate which they've increased by 6 base I

points last Friday. Then they

rush out to buy their rush out to buy their new business, business, get new bore yoers

and they give you 100 and they give you 100 basis

points s discount. The

is is the whole book, the

broader book of customers in that particular entity

subsidising their new

growth? In other words, is the standard variable standard variable rate subsidising growth coming from

a discounted new business

rate? That is an interesting

strategy, that is a fair strategy. Is this a strategy

that will come more common

place? Once upon a time it was unthought of that a bank would

move out of step with the Central Bank. I respect the

their ability to do it but I like the certainty the like the certainty the

convention brings that the interest rates change when the

Reserve Bank makes

announcements on the first

Wednesday now of every month after they've met on the

Tuesday. I think the Australian residential market is so residential market is so

important to our economy, I think Australian and the small business market is so important

to our economy that we need to

have certainty in one place and &

& and that is on interest rates

up or down. My view on that is

they should reintroduce the convention but convention but they needs

legislation and it's just not

going to happen. The Government

will not come and legislate -

regulate for that sort of environment. That convention

has been busted up and we're

not going to go back to that

convention. ANZ, smart. But

every Friday we are hanging out

now to see what they do on the 15th of every month, whatever

the date is, and all the other banks signal around and banks signal around and sit

around and say ANZ has gone up

or down we can make a determination of what we will.

Do it makes a mockery of what

the Reserve Bank may do next

month. The Reserve Bank may say

I want to introduce the

interest rates by 50 point

basis pointses but it went up

early. That tells us that the response of the bank that's put

its rates up out of cycle is

nothing more than profiteering

which is what they have to do and has nothing to do with the cost of funding because the

Reserve Bank is about to reduce cost. Mark Bouris, thank you for joining the program. Most

welcome. Facebook set the Facebook set the social

media world abuzz last week

spending $1 million to buy spending $1 million to buy the

photo messaging site Instagram.

Now a group of 20 somethings from Brisbane are hoping to

make it big on the global stage as well with their a-Mr Eggsication Kondoot. Letters

home to mum and dad were never like this in the old days. Say

you're over cease and you want to say family you can do a broadcast like this. Five or six different members of your family can view it. Mark

family can view it. Mark crack

nell is the 21-year-old co founder of Kondoot, an

18--month-old website that

combining video streaming with live social media. You can live social media. You can have

all your friends there, chatting, messaging. chatting, messaging. Video calling. There's more energy involvement and crowd

participation. The challenge is

you can't do a

video. Kondoot won't say how

many users it has at this stage but boasts subscrier scribers

in 135 countries and is now

embarking on a $10 million

capital raising It enables us

to bring on more to bring on more staff to market Kondoot around the

world, strength en ing our world, strength en ing our core

IT team and ensure that the

Kondoot can grow as our user

base grows and ensuring will

are no hiccups on the way.

Scr For an idea to success like

ince is one in a million.

Everyone has idea. They have as

much chance as anybody else. It

will come down to their

tenacity and

perseverance. Will this be too

easy to copy and the site will

need to show a need to show a strong connection with customers. Social media is a

but it very rarely makes the difference in a difference in a business working. They need to show that

people want to be doing live

transmissions of these shows.

They need to show engage ment.

They need to have people furng up day new shows. Kondoot is simple to

use even if this technological ly backwards correspondent can

get it to work. But it will be about finding enough non-paying

customers and Kondoot is yet to

earn a dollar from advertising or paid broadcasting. We're working with several large

broadcasters to really get the

ball rolling for events in the

future: So it's a question of working with them and find ing

the right use for them in the

situations. I can can't see a clear clear business model yet unless

it's advertising based. it's advertising based. They're

riskier because you need to get numbers before it produce much

much of a result. On top of

that, Kondoot is trying to

break into an already crowded space where fashions change

quickly and much more quickly and much more seasoned campaigners like Rupert campaigners like Rupert Murdoch

and Ted - Durner has been badly

burned. Now a look at the head liens around the region. The

Hong Kong Standard reports the

yuan has experienced its biggest drop in three months,

closely a nearly a third of the

per cent lower. And the 'Wall Street Journal'

Street Journal' is Street Journal' is covering

Singapore investment firm Timmy

sec Holdings. - T That is all for this

edition of Business Today. If you would like any more information on the information on the program, please check our website or

follow me on Twitter. Thanks

for joining me. Enjoy your day.

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24, I'm Joe O'Brien. Taking a quick look at in the capital cities quick look at the weather first in the nation. in the capital cities in the capital cities around the nation. The local share market has