Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant the accuracy of closed captions. These are derived automatically from the broadcaster's signal.
ABC News 24: Business Today -

View in ParlView

(generated from captions) This Program Is Captioned


Good morning. Elwithcome to 'Business Today' for Australia Network. I'm Simon Network. I'm Simon Palan.

Coming up on the Coming up on the program, on

will deliver a track, the Government says it

despite the soaring will deliver a Budget surplus

despite the soaring dollar. Image costs - with Qantas's

super jumbo fleet grounded, the heat is on China's massive injection has paid dividends but

winding back. Those stories coming up shortly but first

markets and we're about half let's take a quick look at the

markets and we're about half an

hour away from regional markets

beginning the day's trade and we'll have more on that shortly.

For more on the market action I'm joined by Christine from Bell direct. We're about half

an hour away from trade. is expected to be the We're looking at a flat lead is expected to be the focus?

from Wall Street. Over night we

saw the Dow end a 6-day saw the Dow end a

positive run. It will be cautious share market cautious on the Australian share market today. Looking at

the risk currencies, there's no real risk appetite and what

buying we will see will expect

to be low volumes. The banks today are under pressure with

all the Also its counterparts in Europe

and Wall Street have traded

lower. That's added pressure on

our banking stocks. Overall we expect expect a lacklustre

day. Christine, can you tell us

Street? After reaching more about the seltion on Wall

Street? After reaching a

2-year high on the 2-year high on the announcement

of $600 billion package we saw

the US market pull back

yesterday off the back of

broad-based sell-offs. The US

market had a good thanks to QE2 and expectations of had

Republicans winning the mid term profit-taking. Financials were saw quite a bit of

hardest hit. Industrials

struggled and Boeing was one of

delivery of the dream liner the worst performers after

would be delayed. The Nasdaq

gains to finish flat. The S&P managed to hold on to early

and Dow both ended yesterday's

What about the European market? session in negative territory.

Not Not a good session. The banking sector seems be too be the biggest drag on the the biggest drag on the market.

Germany second-largest bank We saw commerce bank which is

drop 5%, reporting profit of

113 million Euro which very much missed analysts' expectation. expectation. In Northern Ireland, fears for the State their banking institutions Irish life and permanent which echoed across the markets.

is one of Ireland's biggest

mortgage lenders fell 16%. We

saw the Bank of Ireland fall

12% so overall a 12% so overall a mostly

negative session across

European markets and not a lead for the Aussie market to

follow. We saw the Euro weak

frn the second day in a row.

Why the? The Euro is very much in focus. The currency fell for in

the second day in a row

throonks to debt concerns throonks to debt concerns in

the yearo - thanks to the debt concerns in the Euro zone. Overall we've seen the Euro

fall 1% this month, more fall 1% this month, more than the greenback. Christine, how

have the commodities fared?

Gold is continuing Gold is continuing to outperform equity as it's traded past the US$1,400 an

ounce and helped other ounce and helped other precious

metals reach higher. The

worries over the bubble in the US bond precious met sl more attractive

to investors. Oil gained for

the 6th day in a row. Gains

were limited thanks to the

weaker US dollar. Gold remains the

the stand-out commodity yesterday.

Now let's take a look at

and commodities. what's happening in currencies

Today's mid year Budget update will show the economy is performing bet than expected during the election performing bet than was

just over two months ago. At

the time Treasury downdpraeded the time Treasury downdpraeded

current financial year its growth forecast for the

current financial year from a

3.75% to 3% but im provements in the

in the economy will be tempboored ia $10 pill-Billion

revenue hole caused by a rise

in the dollar. The high dollar

does have an impact on revenue

but despite that the Government is

is determined to bring the Budget back to surplus and you

will see today that Government has made the will see today that the

decisions it has to make decisions it has to make to

ensure that we deliver a surplus despite the soaring

Aussie dollar. Helping offset the shortfall, Treasurer

Wayne Swan will unveil a 3.4

billion in savings mainly through lower welfare payments with higher growth and lower

unemployment, the government is

spending less on welfare than

it had budgeted for. Qantas

says it's too early to measure

the costs of problems with its Airbus A380 aircraft. Its fleet of super jumbos have grounded for of super jumbos have been airline, safety officials and

the engine maker Rolls Royce

try to work out what caused an

engine to blow up shortly engine to blow up shortly after

a flight left Singapore. In

Sydney, Singapore, LA and Frankfurt, almost $2 billion worth of planes grounded. We discovered on worth of planes remain

three engines on three

different aircraft, oil leaks

in the turbine area of the

aircraft. Alan Joyce says aircraft. Alan Joyce says the

super jumbos will be out of service for at least another 72

operating the fleet until we're hours. We will not

100% sure we can ensure the safety of our operations going forward. The share price

plummeted by more than 4% on

the news but edged back Qantas also revealed it will slightly throughout the day.

offer compensation to

passengers for the disruption.

500 people remain stranded in

LA. We are working through

what we're going to do in terms of compensation from

passengers. But the

engineers' union sees no short-term fix to Qantas's

troubles. We wouldn't expect to be in service within the next week because further

faults have been found with

engines. Australian safety

investigators say they need to

recover more debris recover more debris from Indonesia to determine

happened on QF32. Just so we

can get a whole picture of what

the nature of the failure was

and what the initiator of the

failure might have been. failure might have been. That's really integral to our investigation. Qantas has

expected to take delivery of another A380 next month. Qantas says it's not contem says it's not contem plating legal action against Rolls Royce at the moment.

progress Royce at the moment. The engine cause of the fault but the

problems have dented its

reputation and share price. The

British firm Rolls Royce

British firm Rolls Royce which supplied the engine is under increasing scrutiny, more so

after Qantas reported oil leaks on other Rolls Royce engines on

A380s. The fOek s of A380s. The fOek s of our investigation has narrowed investigation has narrowed to the possibility of an oil

leakage in the relevant leakage in the relevant turbine area, however investigations on other areas of thegen are

continuing in order to rule other potential issues. You've only got to come to the science museum to be reminded of Rolls

Royce's iconic role in the development of global aviation, making making jet engines like this

one. It has a first-rate

reputation in world markets and

there's every indication it can

navigate its way quickly

through this period of

turbulence but experts say it's

still too early to assess the

full implications. There's No Doubting that this a Doubting that this a short-term embarrassment for Rolls Royce. In

In the longer term I have No Doubt they will Doubt they will solve the

problem. The real issue is how much it's going to cost them terms of redoing the program

and of course compensating the

airlines for grounded

aircraft. The Rolls Royce share price tells its own story.

After rising steadily from

summer right up 'til last week,

it tumbled sharply on Thursday after news of after news of the Qantas emergency. It was still falling

earlier today. Late this afternoon it recovered some of the losses after Rolls the losses after Rolls Royce said it had made progress in

understanding the cause of the engine failure. The engine failure. The company said the problem was to the Trent 900 engine. As

Qantas marks its 90th

anniversary with celebrity pilot John Travolta, Rolls

Royce won't be coming to the party yet. US party yet. US President Barack Obama has marked his 3rd and

final day of his visit to India

with a dramatic diplomatic

gesture. He's backed the

emerging power for a permanent seat on the United Nations

Security Council. It's a position India has position India has been seeking for years. During the trip

President Obama hasn't forced

to defend criticism from and Russia over the US Federal

Reserve's policy of quantitative easing. quantitative easing. He's keen

to emphasise the importance of

the United States's economic

relationship with India.

Describing it as one Describing it as one of the defining partnerships of the

21st century. We are two free

market economies where people

have the freedom to pursue ideas and innovation that ideas and innovation that can

change the world change the world and that's why

I believe India and America I believe India and America are indispensable partners in meeting the challenges. His

next stup stop is a quick one-day visit to Indonesia

before heading to the meeting in soul . 6 years after

launching its to counter the global financial crisis, China is winding crisis, China is winding back its massive investment and business appears to be

booming. Reports of the fast

return to growth has experts

praising its effectiveness in stark contrast with the US and

Europe, still struggling to Europe, still struggling to get

their economies moving. Almost

everywhere in China, construction is booming. Across

the vast country, projects for new roads, bridges and new roads, bridges and railways

have been fast-tracked. It

put in place in record time.

The amount involved in the

stimulus was huge and that's why the impact was so fast, so rap scpued much stronger than

expect fed. One major beneficiary was beneficiary was the shooning

high high speed railway which

opened last month. At the peak

of the project 40,000 workers

were employed. Cheaper bank

loans and tax cuts to encourage domestic consumption have

fuelled the growth. The

difference has been enormous. From last year, the entire

country's automotive market has

been pulled up and our

dealership is no exception. The growth has been explosive. In

the last year we've sold more

than 10,000 than 10,000 cars, that's twice

as many as the year before. Infrastructure project

across the country have boosted

other industries from steel and

concrete to solar panels and

authorities say the stimulus

package has provided millions

of migrant workers with a

much-needed boost. Two years

ago, this man says, because of the financial crisis a lot oaf the companies in the cities

closed down. Now if we migrant closed down. Now if we migrant

workers come to Beijing,

finding work is much easier finding work is much easier but

despite the seemingly good

times, some fear a trail of bad bank loans and wasteful investment may mean the

investment may mean the true

cost of the stimulus is yet to

be seen. Experts though say the

overall size of overall size of the liability

should be more than manageable

in a country where in a country where Government debt remains relatively debt remains relatively low. The stimulus package is

expected to be wound down

gradually to avoid a major impact on the Chinese economy or global markets.

Well, survival in money-driven capitalistic

economic model is invariably a

case of every man for himself

but some are putting forward but some are putting forward a

new cultural and economic way

of thinking, involving a more

caring and sharing approach caring and sharing approach to consumerism. It's consumerism. It's called

collaborative consumption collaborative consumption and

here to talk about it now is

bort bought bought, the other of a new - is Rachel Botsman,

the author of a new book. What

exactly is collaborative consumption? It is basically how technology is how technology is actually

enabling all kinds of new innovative marketplace s,

they're enabling us to share,

present, barter, swap, lease stuff, spaces, gardens, stuff, spaces, gardens, money, you name. It So how is has the

idea come about? The idea's

come about really because of

four different reasons so one

is confluence of environmental

reasons and the global recession that has

fundamentally shocked consumer behaviours and the other two

reasons are we're seeing this

resurgence in the belief community in both the virtual and resurgence in the belief of and real worlds and of course

social networks social networks and technologies that are enabling

us to connect and share in ways

we've never seen before. So how

are things like the global

financial crisis and the ever

increasing concerns about the

environment that we have, how have those factors factored

into your thinking? Its really in

in two ways. I think we're

seeing a questioning of the health of the consumer system that we've never seen before.

So people are realising that an economy

economy dependent on selling more stuff is sort of like a

house of cards and deeper level we're seeing people house of cards and then on people really question what makes them happy makes them happy and realising

that maybe it's about accessing

things versus ownership. Maybe it's about experiences

more stuff. The other thing

that we're seeing is actually people realising that they have

assets all around them, whether

it's their parking space, it's their parking space, their

car, their spare room that they can make money from. So seeing this whole breed of

microentrepreneurs where people

are saying, "I've got assets I

can make extra income can make extra income from

outside of my regular day job." Lot of the sharing based on trust. Do you thainth level of trust is possible between total strangers these day s? Yes y think it's interesting that if you

said to someone 10 years ago

that you would buy something on eBay from someone called

haunted pirate and you'd pay

for that before you'd received

the item, you would have the item, you would have said you're crazy but what eBay's

shown is that the trust that we form pace to face can be replicated online so we're

seeing the growth of reputation

systems where we can figure out who behaves well, who

misbehaves in communities. Does this consumption encompass any particular market sectors or particular market sectors or is

it noticeable across the

board? That's what board? That's what been amazing to me is that you see

it happening from transport to fashion, to food, to finance. So there's examples in

marketplace s growing across those sectors and

those sectors and it's happening all around the

world. How long has it been

going on for? Is this a new

thing? No. I'd say it's in its Renaissance stages. industrial revolution took 150 years and decade. Wu saw the rises of

social networks and the change in

in the way we access music and

videos. It is tied to the dematerialisation of the web

where people say, "I don't need

a CD, I want the music it plays," or,

plays," or, "I don't want plays," or, "I don't want a DVD, I want to buy a membership

to Big Pond." Are we seeing

more of it in particular countries? We're seeing

different sectors take off. In

the UK, social lending which is

basically if you have-D $100 to

lend and I have $100 to borrow

it match-makes us. It's going

through the roof. They've done $100 million in loans and

they're already 1% of

they're already 1% of the personal loans market. I think

it's taking off there because

studies show that the banks,

the trust in the banks is

around 18% so peep are looking for alternatives. In the United States,

States, we're seeing a lot of

examples around transportation whether that's bike sharing whether that's bike sharing or

car sharing because congestion

and plus are such huge problems. In Australia, we're seeing young entrepreneurs

starting really cool starting really cool things from clothing swaps to peer-to-peer car sharing to sort of opportunities are there for for established businesses, for

the top end of town to embrace

this new way of thinking? this new way of thinking? I

think they're missing a huge

opportunity because this actually from all different

angles it's a new market so i

it's a new way to enable people to access your products and

services. It is a different way

to think of your brand so when you talk to users within you talk to users within these companies they all talk about

this immense loyalty, that their are really vachingalists and have a deep relationship with the company they're interacting with. Could there interacting with. be regulatory heard tools worry

about? Yes, people say, "What

should we be worried about and

who should be worried?" I say

the IRS because a lot of ways the people are making money off

the services they don't think

of them as income. Air B and B is a peer-to-peer travel site

and Australia is one of its biggest destinations and people are making anywhere between a

few hundred to a few thousand

dollars a month. That's revenue

they should be declaring. Does

some-T have a lot of potential in emerging markets like China and India or is it already adaptable to more developed

mark isn't It's differentment

in the developing markets what you're seeing is so much of

this is driven by technology

and smart phones so they're very interested in very interested in how the relationship between relationship between digital

technology and physical goods

can change the way we access

things. So you're seeing a lot of social tagging which is when

you attach a code to an object and then track where and then track where that object goes. It's starting to take off in countries like

China. In the developing world this make as lot of sense

because if you take a

library, you're because if you take a simple concept library, you're saying to

people, "You I have a people, "You I have a central repository of goods that everyone can access and that's more scalable than trying to distribute tools distribute tools amongst

thousands of villages." Thank you, Rachel you, Rachel Botsman. Thank

you. The head of Fortescue The head of Fortescue Metals

group Andrew forest has gone head to head with a Labor Senator during Senator during a Senate committee

proposed mining tax. Mid tier

and junior miners had their say

in the committee and in the committee and turned their fire on BHP Billiton, Rio

Tinto and X strata for signing

a tax deal with the Government

as well as on the Government

for planning it in the first

place. They say it's given the

big miners the upper hand and

left the smaller operators out

in the cold. Andrew forest says

he takes was at the suggestion by the Labor Senator by the Labor Senator Douglas

Cameron that supporting the big national interest. The three

big ones are out big ones are out there promoting investment into

industries that will compete

against the every day Australian Australian oour ability to generate jobs and wealth

in-Australians. Senator Cameron doesn't believe he offended Mr Forest and is

critical of the spall - smoling mindsers position. We need

more tax, infrastructure and

investment in this country. Miners believe emerging companies will struggle to get projects off the ground tax is implemented. If this projects off the ground if the tax tax is implemented. If this tax was imposed eight years ago

FMG wouldn't have got off the

ground and that means Atlas ground and that means Atlas

wouldn't have got wouldn't have got off the ground and another 30 or 40 companies wouldn't companies wouldn't have got off the ground. The inquiry can

take anything up to one year.

Mr Forest is pushing for a tax summit as suggested by former Prime Minister Kevin

thrash out the issue. China expected to become expected to become the world's

largest LCTV market within a few years. There are reports China has decided to billion worth of investment billion worth of investment in flat screen plants flat screen plants by South Korea's Samsung electronics and

LG display. Samsung is the

world's largest LCTV maker and soted Chinese approval soted Chinese approval for their facility in Guangzhou

province. It's a $2.3 billion

investment. LG display as

signed a $4 billion deal with

the Chinese city in the

Guangdong province. Most

companies have kept only back

end assem bly lines in China to

protect back end technologies

but growth prospects for the Chinese market caution over intellectual

company. Dulux was only spun

out of Orica in July so the net

profit of $61 million doesn't represent a complete

represent a complete financial

year but it is expecting further revenue growth in 20

11. Dulux is one of's

best-known paint brands best-known paint brands and this was its first set of

stand-alone results, one that had the chief executive Delighted to have gone through

the demerger from Orica only

four months ago in mid July and to deliver results that are not

only a record result in year

year but to do it in that

environment very environment very pleasing. That environment was one of

sluggish housing consumption

and cautious consumers but it

didn't take too much of the

gloss off the result. Earnings

from paint domestically were up

6%. The sellies and Yates

business pulled in over

throw.5% more in the period

took a hit on the conversion of the high Australian dollar.

The result highlights the defensive qualities defensive qualities of this

sort of stock. It is not dependent on whether the housing housing market is up or down.

When it's a down market people

are renovating the buying

pants. It wouldn't say by pants. It wouldn't say by how

much but Dulux increased its 40% share of the domestic market in the period, putting growth down to strong brand awareness. That dominance has made it difficult

entrants. Japan's nip onpaints is withdrawing from Australia after just two years but the

competition landscape could

change with US giant balspar

set to try its luck purchasing rival Wattle. purchasing rival Wattle. I

think the Dulux brand is strong

enough to withstand that competition. One of the interesting aspects of the

result today was their margins

which held up well. The results don't reflect the

entire financial year but

certainly set the scene for the

next 12 months. The company

expects good profit growth

going into 2011. To achieve this it's this it's looking beyond a pick up in economic conditions in

its Australian and New Zealand

markets but aeroshore to Asia. The work we're doing is looking to targeting specific positions in and that regard we bought a

leading wick air business in

Shanghai two years ago and are

now laying our sellies products

and interior and exterior paint

product. We're really combining our capabilities around brand marketing, technology, customer relationships with

relationships with the distribution footprint distribution footprint we brought there. But he won't

region. As for ac acquisitions,

it seems they are on the radar. There are businesses we

can aknier and bolt into the business

business but we are looking for businesses domestically that are close to the existing business. There had been talk

aheads of its listing aheads of its listing that

Dulux could become ratake over target if its share price underperformed. Any talk of takeovers is probably

premature. I think Dulux as a

stand-alone entity will need to

prove themselves. The share price may underperform

especially in a market that is

focused in other yares such as

Having said that y think it

would have to be marked underperform before anyone had a really good look at it. And

now let's take a look at what's making headlines around the region. The Hong Kong Standard business page business page reports Macau's emergence as the world' top

gaming club has helped its

largest casino firm record

6-fold growth in third-quarter

profit. The German chancellor warns the greatest warns the greatest danger

facing the global economy is a

return to trade protectionism. That's all for 'Business Today'. If you'd like

to look back over any of our

interviews, please visit our

website. We look forward to

your feedback. I'm Simon Palan.

Thanks for joining me have. A great day. Closed Captions by CSI

This morning, a $10 billion

black hole expected in the

The Dame Joan Sutherland

State Memorial Service to start in half an hour from the Sydney

Opera House. Post-poll violence in Burma sends thousands And Rolls Royce under pressure to sort out soon just what is wrong with its A-380

engines. Good morning. You're watching ABC News 24. watching ABC News 24. I'm Joe O'Brien.