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(generated from captions) Live. This Program is Captioned Good morning, welcome to Business Today for Australia

Network, I'm Whitney

Fitzsimmons. Coming up on program - tough measure x iefrld announces spending cut

and tax rises to combat debt crisis. Crucial vote, and tax rises to combat its

legislation to split Telstra goes

goes down to the wire. inflation watch, China signals

it could raise interest

again to curb price pressures. Those stories coming up shortly

but first let's take a quick

look at the markets and we're about 30

For more on the mark I'm joined For more on the mark action

from IG Markets. The markets are about to kick off

the day, what will we be seeing? Good morning, Whitney. We can expect to see

rebound today. We were about 4 about 4 points yesterday after

early losses and you got the

feeling yesterday investors

were searching around for cheap entry points into some of these beaten down names. We expecting to see a to unwind open today calling the market

to unwind about 28 points or 0.6% higher 0.6% higher around that 4612 level. We did see financials in

the US last night up 1.3% so we

can expect adding some points today. We've had the material sect nor the

US up about 1.7% with commodity US up about 1.7% with

prices moving a little bit

higher and we do have BHP's ADR

call up about 1% today and we saw a strong rebound in energy prices last night with crude

can expect a broadly firmer open today. And Cameron, how the rest of the open today. And Cameron, how is the

to trade? You can expect the

rest of the region I think rest of the region I think to

benefit from that strong

session we saw in the US last

night. I mean yesterday the Shanghai composite

the Shanghai composite and the respectively. We had the Nikkei respectively. We had the down about 0.8% coming back from a bank holiday

the leave yous session saw the costby down which was a really good

which was a given all the

in the last couple of days but we are looking for we are looking for a broader opener we are

opener or a stronger opener

across Asia today with the

Nikkei set to open about 0.9% higher. Let's move to the US. There there's been some views

employment front, what has that out there on the consumer and

had weekly shown? Yeah, that's right, we

claims falling sharply from last week. They were down

34,000 to 407,000, that's the

best number we've seen since

July 2008. We also saw the

4-week moving average falling

down by 7,500 to 436,000 which down by 7,500 to 436,000

was also very pleasing and we

saw consumer income up about

0.5%, we had consumer spending

up for a 4th straight month up

0.4% and we saw the consumer

sentiment index rising to its

highest level since June of

this year on the back of improving employment prospects and on some early discounting for retailers. How did this affect US share markets? Yeah,

look, it was a really good

session for US markets, a nice

way to head into their thanks

giving day holiday. We had the

Dow finishing up 150 point,

1.5%, we had the S&P up about

1.5% and the NASDAQ up about 1.5% and the NASDAQ up about

1.2%. So it seemed the focus

was on some of these domestic

news focussing on some encouraging economic data and employment report and looking

past some of these macro themes which have dragged markets

lower over the last cupful of

weeks. We saw a rally in

tell us about European market, what can you

that's right, European stocks

bounced off 6-week los. We had

the FTSE up 1.#%, the DAX up 1.# and the CAC up about 0.6%. These indcy have been hard hit in recent weeks with the

remergence of European

sovereign debt fears. A lot of European banks have exposure to Irish banks but a subsiding of

these fears an the positive US

economic date a helped them

have a bit of a night. Thanks for the update. Markets there. Now let's take a Cameron Peacock from IG

closer look at what's happening with currencies and commodities.

The Irish austerity measures designed to unveiled a range of tough

help alleviate the country's debt crisis. Among the spending cuts and tax rises are a reduction in the minimum wage, to be cut. Ireland has unveiled its 15 billion euro austerity back from the brink of plan to help bring the country

bankruptcy. employees lose their jobs and sales tax is by 2014. I'm hopeful future this this pln is another another confidence building measure, journey upon journey upon which we have been embarked since this economic

crisis began. And finally to

say to our people whoo we have

done for the last 2.5 years has meant that we have adjustments of the order billion euro, 14.5 billion adjustments of the order of 15

euros over the minimum wage and a widening spending cuts include cuts to

of tax country managed to retain its 12.5% company tax rate. We know from our experience we from the international evidence that a broadly is that a broadly based tax system is what assists economic

growth. The plan the revenue not just with the quantity of

quality of the measures adopted

so that at the end of the plan lifetime we system that serves an lifetime we will have a tax

growing system that serves an advanced incent vise work, enterprise package aims to continue to

and investment into Ireland.

There is likely to be anger

over the plan with many saying it takes from the poor and

gives to the rich. It's grossly

unfair to have a dubsdy from low-paid minimum being given to business,

particularly when quite a particularly when

number of those businesses have made profits in the past year.

So we have a subsidy going like minimum wage people are being

the only people to make a

stimulus available by them

being paid a euro less an hour.

It's not remotely fair. Welfare payments are also said to down

go down as Ireland attempts to come back from the largest deficit as deficit as a percentage of GDP in modern European history. Telstra shares surged since the Government secured political support for Australia's national network. Prime Minister Julia

Gillard has given in

Opposition demands to release

the business plan for the NBN the business plan for the NBN handing over a 36-page summary

of a 400-page document. The

document revealed the NBN will

cost $37.5 billion, less than the previously estimated $43

billion. It confirms that the

NBN will be built on a financially affordable prices for

customers. The Government has

also agreed to a parliamentary

committee to oversee the

network's 8-year roll out. A

vote to struck - structurally

separate Telstra and pave the

way for the NBN will be held

today. A senior central bank

official has flagged that official has flagged that

China's monetary policy is

likely to be tightened further

in an effort to keep a lid on

inflation. The deputy governor

of the People's Bank of China has reiterated Beijing and will continue to normalise monetary supply and strengthen liquidity

monetary supply and credit. Her comments posted on the bank's

website suggest the

government will use monetary policy to

Policy makers remain concerned high food prices will flow

through to broader inflation which came in at 4.4% in

October. And returning to our top

story now and that's the detail

of the bail out plan for Ireland. To look at this and other issues that are other issues that are affecting regional economies I'm joined

by Brian Redican, senior

economist from Macquarie. Brian Redican, welcome let's start with Ireland, let's start with Ireland, will this plan be enough to put Ireland's economy back on track to achieve balance growth? for the next 12 months but really for the next 3 or raising taxes, cutting people's work work hours, the number of jobs an also their wages, it's actually going to be very detrimental to growth detrimental to growth in the

short term and of course if the

size of the economy is

shrinking then it exacerbates those debt

alarms so many investors there.

In some sense there's these fiscal become counterproductive and

actually result in actually

very little improvement in the fiscal deficit. It's interesting you mention those

cuts because there are quite cuts because there are quite a

few critics that have hit few critics that have hit out against them. They say against them. They say that, you know, Ireland should have looked at its low company looked at its low company tax rate which it has retained in the wake rather than revising, you rather than revising, you know, sort of or other sort of or cutting jobs in other areas. What do you other areas. What do you say to that? I think there is a risk that at the moment raising taxes on the raising taxes on the consumer

so much that you really do

undermine consumer spending in the economy and of course that

remains around about two of the Irish economy of the Irish economy there. So that does really raise a big dark cloud over the Ireland in the short term. Over

the medium term, however, mean Maintaining a very corporate tax rate probably induce stronger probably induce stronger investment but until you actually get big question mark big question mark over whether foreign firms will be foreign firms will be entering Ireland in this kind of environment. And given that

Ireland's in such a difficult position, what other measures would have of - that they could have looked at? This problem for economies like Ireland and Greece and to some extent Portugal as well. That

they really is over a barrel at the moment because they can't devalue their currency it's very hard to improve

competitiveness other than by

getting down the cost of wages

which means wage cuts. And so

it really is going to be a

economies like Ireland to get

out of their very parlous

position at present. So does

this raise again the case that the euro is soon to be

lived? Well, I think the

economic arguments for a single

currency have always been quite questionable for Europe, but

the political will should never be understated there and I

actually think that will with win out over the next couple of

year there's. But it does imply

that there's going to be incredible hardship for the

citizens of Ireland and those other peripheral economies such as Portugal and as Portugal and Greece. Let's

move on and look at what sort

ed debt crisis in Europe will

have on the Asian region. Well,

fortunately for Australia and

other economies in our region

the direct linkages between Europe and Asia are actually

quite small there. So in terms

of trade linkages they're not

overwhelming and Asian and

Australian banks aren't exposed

to Irish or Greek debt there.

The main question mark for a

country like Australia is

whether the funding markets

will remain open for Australian

banks and so far we haven't really seen even though people are ovebly

worried about Ireland's debt situation. What would it take

for that to happen then? I

think you would really need to

see a further drying up of think Ireland or Greece are large enough to cause that. What about that people are really worried that's the big about. And I think north

fortunately for Spain they remain competitive in more

market there's. Spain has a much larger manufacturing base, for example, and the size of their austerity measure just aren't seeing in Ireland at the moment there so you're not going through that complete hard cutbacks in increasing in spending and taxation there. Prospect or Prospect or Spain remain quite plausible and that's one of plausible and that's one of the reasons we

will get dragged down into

debt hardship place. Let's move

on to another issue affecting particularly Australia, the IMF has Australia, the IMF has recently warned that

itself vulnerable to external shocks with its increasing reliance

reliance on Asian countries like China driver of Australian growth has been business investment been business investment and

mainly mining investment and

all that is predicated on the

ore and that's been totally

driven by China. There is an

argument there that we have become much more vulnerable in

that sense. But I think the

next stage of business

investment is it has a slightly different tone. We're talking

here about LNG and coal seam

gas projects an they're not solely reliant on the Chinese

more generally. We're talking here about Indonesia, Korea and also talking going to Australia's exports, that's

combined with Japan, India,

South Korea it's about 60%, so

there is a lot of exposure there, isn't there, isn't there? There certainly is but the question is not and I think not and I think we are beginning to beginning to broaden our base beyond China and I think beyond China and I think that's going to be very important there. Should we broaden our base away from the

sector? Well, I suppose the question is while the commodity

remain high, and it's not something Australian policy makers have makers have absolutely no

control over, they really have

to accept that and the economy remains flexible

enough to accommodate those

much higher commodity prices

and really that has been the

focus for policy makers. In

some sense you have to play the

hand that's dealt you. So are there other policies there other policies though that the Government could be

introducing so it can introducing so it can encourage strength in other sectors

though such as manufacturing? I think what really needs to happen here is a big the efficiency around productivity of the services

part of the economy. So

basically making it much basically making it much easier

and cheaper for companies in the tourism sector, in the manufacturing sector that really suffering at the moment to do business. So getting the cost of electricity than putting it up certainly be a big advantage to

some of these firms. Now the

IMF also, we're nearly out

IMF also, we're nearly out of time but I want to touch on this. The IMF also estimates

GDP for Australia in 2011 will

come in around 3.5%, do you support

support that view? I think

that might be a little bit optimistic but certainly we're talking abgrowth of to be quite healthy there. to be quite healthy there. I

think the main question mark is with interest rate going up,

with the exchange rates so high how will consumer spending

fare, how will housing fare and

will governments cut back their spending as they've promising to do? If that all

takes place it's hard to see growth accelerating from this position. What's your view though? Will you see that happening? We do think growth

will actually slow over this time there. Obviously business sector is going to be very strong there but I think that

will really be the one will really be the one sect thar lot of sectors of the economy leave tlit but tougher in 2011. We'll joining the

Australia's worst offshore oil spill has been blamed on a Thai based company Thai based company that owned the oil rig. A criticised PTTEP Australasia and the Northern and the Northern Territory's

Department of Resources. The Montara well explosion off

litres of oil into the litres of oil into the Timor

Sea and took under control. Mr under control. Mr Ferguson says the incident could have been

avoided. The scathing report Thai-owned operator PTTEP Australasia and Territory Department of

Resources. The problem goes the heart the heart of a failure by industry to industry to ad here to its

regulatory requirements and the Northern Territory

designated authority to perform the duties for responsibility. But the Northern Territory resours Minister Department against claims it has a tick and flick

mentality. The reason behind the blow out was the failure of the company. In a written statement PTTEP identified in the report and is implementing implementing a 9-point action plan to ensure a similar

incident is never repeated. Mr Ferguson says Ferguson says the Montara spill presents a compelling case for a single company has been allowed to

operate since the incident and

is calling for new laws. To make sure that a is in this situation is in this situation cannot continue to operate in waters for months or longer until a

commission of inquiry of this

findings. Mr Ferguson wants to

review PTTEP's operator's hopes or restarting

the Montara project by mid

year. Shares in rare earth

miner Lynas jumped after the company announced a deal to secure supplies. European

and Japanese companies are scrambling for non-Chinese suppliers after Beijing decided to cut exports. The move is a nightmare for high manufacturers as China has

TVs, mobile fons TVs, mobile fons and electric

motors. The minerals known as rare earths are crucial to production of many of the forms

of modern technology which are the backbone of the the backbone of the Japanese export economy. At the moment

China has a virtual monopoly on

the global supply of rare

earths but it's turning its fill that gap and Kevin made this pledge to Japan's visiting Foreign Minister. Australia stands ready to be a secure, reliable supplier of rare earths to the economy in the future. As Mr Rudd was talking, Lynas Corporation was finalising a

10-year agreement to sell rare earths to a Japanese trading house known as house known as Sojitz Corporation. Lynas Corporation. Lynas is scheduled to begin production of rare ets next year.

the company has already has 6 other current market conditions augur well for a well for a bright future for

Lynas. And demands driven by

technologies which we all need

and which are growing, cat

lickic converters, magnets, compact fluorescent light

bulbs, plasma screens, technology which is pervasive

and which the consumer now accepts

accepts as normal and which is

going to continue to have high growth. The good news for Lynas shareholders is that Mr Curtis believes the strong demand for rare earths will see prices elevated for years to forecast estimate ed demand at

136,000 tonnes in 2010 compared

to a supply of 115,000 and looking forward to 2014 with a

9% growth we forecast demand to reach 190,000 tonnes per reach 190,000 tonnes per year

globally and we see a supply maximum output

maximum output 06 about 170,000 tonnes. In the current economic

environment executive and board pays are a key issue for

shareholder an it was shareholder an it was a topic

at the Lynas AGM. 28% rejected the company's remuneration

report and the vote against the granting

Curtis and other board members was more than 40%. I'd actually

in production in this point,

seem aslittle early to me that we're approaching the idea that

we should be paying rewards to

the board. I really feel it's the board. I really feel it's

too early to give options. I

think that we should wait for a year. It's been a hard slog year. It's been a hard slog for the company to get they are now and I feel that they deserve the rewards. Virgin Blue has highlighted a tentative

recovery in air travel but the budget carrier has resisted giving earnings guidance for

the full year because of the intense competition among airlines and weak airlines and weak consumer given the inflight service

treatment as executives

prepared to deliver fairly good

news with capacity expected to news with capacity growth expected to be between 6% expected to be between 6% and 8% and an improved margin expected for the second half of happy with it, yes. I'm also an employee of the employee of the company, actually and no, it was a good meeting. The main thing is they're attack

ing the Government sector in a modest way and cost effective way. It all seems

positive so it sounds good. Any concerns at all? Not concerns at all? Not from my point of view. Virgin Blue has made strong inroads into the leisure travel market leisure travel market since entering the entering the Australian

aviation sector a decade ago.

It holds around a third of the

market share but in

10%. And now Virgin want

aspiece of the pie. CEO John

Borghetti says it will use its

cost base as an advantage and 20% of the market within 2

years. It is prudent and it is our revenue base to offset any potential turbulence that potential turbulence that you might have at one end of might have at one end of the market or the other. The

company has also been winning Australian Football League and has won the business. So from our perspective we have perspective we have everything to gain from this. to gain from this. Our competitors to lose. John Borghetti has job with rising interest rates and increased competition in the leisure market. But after posting a the company turned its fortunes around making a full

profit of around $21 million

last financial year. But

there's been challenges since then. In September the in system broke down

day. Virgin Blue says it's in

discussions with the owner but

wouldn't say if any was between $15 million and $20

million and obviously million and obviously we will

try to recover as much of that

as possible. In more positive news the company announced it

news the company announced it will will take delivery of two new airbus A380s in early 2012 taking the fleet to planes will be used in operations from taking the fleet to 4. The new planes will planes will be used in operations Australian aviation market with

budget airline Air Asia establishing establishing its fourth establishing its fourth local

hub in Darwin. The move will hub in Darwin. The move will result in daily flights to Dempasar and from next month

and will be in direct competition to JetStar. Air

Asia is planning on bringing thousands of Asian travellers

to the Northern Territory. It

will be a whole new experience for the airline. You know what

it is, don't you? No. From 23 December Air Asia will begin early morning flights each day

from Darwin to damp Sar. Most of our routes are unique routes

is I have a lot of belief that this

this unique routes is going to do very well. The do very well. The Malaysian

carrier will be in direct

competition with JetStar's service. Hopefully instead of

stealing passengers, we're

inducing more passengers to

fly. Dare I say it we welcome

competition. So, you know, competition is very important for this town

executive Ian Kew admitted he executive Ian Kew

Air Asia to the Top End. I'm

asking a lot of these guys. The announcement kols just days after Tiger Airways months due to poor demand. Air

Asia says the Darwin route will

be on trial for 6 months but

the airline's confident it will

be successful. And now be successful. And now let's take a look at what's making head head dss lines around the region. The Hong has hired gold man in Hong Kong. The 'Financial Times' reports UBS has Times' reports UBS has been hit with a fraud lawsuit with $2 billion and alleged bank enable ed mor doff's scheme. Business leader and academics saying the survival

of the country hinges on

increased immigration. That's all for this edition of Business Today. Business Today. I'm Whitney Fitzsimmons, thanks for joining me, enjoy the man dubbed the the man dubbed the honourable my moon killer at least detention in Melbourne for his

deportation to the US. This Live.

to find out what caused the

deaths of 29 miners in

Greymouth. Debate over the

National Broadband Network

threatens to drag out parliamentary sittings. Ireland announces a drastic austerity

plan to tack t its mounting

dents. And Australia and

England prepare for battle at

the opening day of the Ashes in


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