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Business Today -

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Good morning, welcome to the

program, I'm Whitney

Fitzsimmons, in Business

Today. Upgrading growth

prospects for the region's

biggest economies. Committing

to emissions cuts, China

promises better fuel

efficiency. Commercial

sponsorship helps save an

Australian institution. Those

stories shortly. First, a quick

look at the markets.

markets. First, a quick look at the Those stories shortly.

For more on the market

action, I'm joined by Julia Lee

from Bell Direct. Wall Street

was higher overnight. After a

couple of sessions of losses,

Wall Street has continued its

rise. Investors are anxious

about the move in case they are

missing out, so more people

jumped on the bandwagon, which

was good news for stock. The

catch phrase seems to be that

risk is back. We saw the

energy, materials and

industrial sectors doing well.

We saw broad based gains with

20 out of the 30 Dow components

rising. The dour is up by 0.5%,

and quickly approaching the 10,000 points psychological

mark. I have drawn a line at

the 10,000 points mark - we are

200 points away. The Nasdaq

Rose 0.4% and the S&P 500 up by

0.7%. Home prices in the US

increased less than expected

They rose by 0.3%. The market

expected a rise of 0.5%, but

the June numbers were revised

up to policy 1%. What has been

underpinning the prices is the

$8,000 tax credit first home

buyers received. In the UK

there have been developments

regarding Kraft's tilt for

Cadbury. It looks like Kraft

approached Cadbury with a

proposed $16.2 billion offer.

The CEO of Kraft, Irene

Rosenfeld, was hoping to talk

to Cadbury about some of its

proposals and perhaps a deal,

but it looks like Cadbury has

gone to the regulators to try

to force cast cast's hand. It's

called the put up or shut up

clause in the market, where

regulators could force Kraft to

make a formal bid in a

one-month period and if it

refuses it won't be able to

make another bid for six months. How will regional

markets perform today? It has

been a quiet week for regional

markets so far, because Japan

is on holiday until tomorrow.

We saw the Asian Development

Bank revise its forecast for

Asia, up from previously. That

should good news for trade in

the region. The Hang Seng

futures is up by 221, the

Australian futures up by 19

points, a good performance by

Asian ADRs, with the

Australian, Chinese and Hong

Kong ADRs gaining overnight.

How are oil and gold trading?

The commodities place is US

dollar play. Overnight, the US

currency fell to a 13-month

low. That's been good news for

commodity prices across the

board. Oil prices adjourned by

2% to $781.5 5, gold prices are

up by 1% at $1,015 and base

metals trading higher. Let's

look at what is happening with

currencies and commodities.

China and India are

predicted do grow more than

previously expected this year.

The Asian Development Bank has

upgraded the region's growth

prospects and expects China to

grow by 8.2%, up from an

earlier forecast of 7%. India

is expected to grow by 6%

rather than 5%. The ADB has

raised the 2009 growth forecast

from 3.4% to 3.9% and says the expansionary fiscal and

monetary policies have soft

ebbed the blow of the global

slump. Is says the recovery

remains fragile and it's not

time to stop stimulus measure.

In New York, the global

economies pledged to reduce

carbon emissions. Hu Jintao

repeated calls for wealthy

countries to support the

developing world, with

financial help and green

technology. President Hu

reiterated his concerns of

energy security and severe pollution, vowing to fight

climate change by setting new

targets, to rein in growing

keetion koos as China's economy

continues to expand. First we

will intensify our effort to

conserve energy and improve

energy efficiency. We will

endeavour to cut carbon dioxide

meetings per unit of GDP by a

notable margin by 2020 from the

2005 levels. Japan's newly

eleninged Prime Minister UK

Hatoyama has thrown his weight

behind the climate change

debate. It is my view that

Japan should positively commit

itself to setting a long-term

reduction target for its

mid-term goal, Japan will aim

to reduce its emissions by 25%

by 2020. Prime Minister

Hatoyama also says Japan is

willing to contribute money and

technical help to those poorer

nations in an effort to cut

emissions and has called for a

fair and effective international framework to

tackle the issue. During the

previous G20 meeting, much was

said about corporate excess and

the need to closely link

executive pay to performance.

Annual reports released in the

revealed pay rates are past couple of wooes weeks have

continuing to rise at a time

when profits for some companies

have been nearly wiped out.

Shareholders are already

voicing their displeasure and

some directors may pay with

their job. Company profit

have taken a battering in

recent tiles, but some chief

executives it seems are

immune. If we keep doing the

same thing we will get the same

outcome, that is community

dissent. Three cases in the

last couple of weeks are

fuelling the latest outbreak of

dissent. BHP's earnings

plunged 62%, Marius clop% pay

jumped 61%. Aboriginal's

profits suffered, but the pay

of outgoing boss Rod Pearse

leapt 72%. At Qantas, full year

earnings flooded back to earth

with a loss recorded in the

second half. Former CEO Geoff

Dixon walked out with $11

million for five months work.

It's a situation that is hard

to descend. Kerry Katona

believes directors who approve

such payments will pay a price

when they next face the

shareholders . Two things share ownrs will be doing,

bringing out the rubber

bullets, the non-binding vote

in relation to the remuneration

report and in some cases they

will bring out the high calibre

bullet, which is the vote for

directors. It will be a

fascinating voting season The

setting in which the

negotiations took place was

after a period of many years of

highly bullish share market, everything was growing, things

looked rosy, and board in many instances signed hot property

in terms of CEOs and other

executives to very attractive

contracts in order that they

would not be lured away. Times

have changed and John Egan

believes pay packets on the

whole are starting to reflect

that. Many leading companies

have revealed in the annual

reports that salaries have been

frozen, bonuses are not being

paid, because profit are down

and shareholders haven't

received the return on their

investment or the value of

their investment has declined.

That may be true, but Erik

Mather believes for the

controversy around executive

pay to go away, a totally

different approach is needed.

We need to have remuneration

paid over five or 10 year time

frames to get things moving,

and a lot more remuneration in

the form of equity, not because

it's a magic bullet, but it

means that if the shareholder

experience in terms of their

hair price goes down that,

executive will be more exposed

than they are today. Determine

certainly and John Egan also

believe directors could help

themselves and their

shareholders by doing a much

better job of explaining the

rationale behind the pay deals

which seem to excessive. Much

has been made of Australia's export performance in the past

year and the impact of China on

national income. Volumes

continue to hold up well.

Miners and farmers are earning

less because of weaker prices

and a stronger Australian

dollar. The government's

commodities forecaster ABARE

says those factors will

translate into $40 billion in

lost earnings this financial

year. The resilience of

Australian's export industries

has helped the nation avoid

technical recession. The

latest government forecast

confirms exporters are in for a

tougher year ahead. The Australian Bureau of Agricultural and Resource

Economics is forecasting total commodity export area will

slump by a fifth this financial

year, to $158 billion. Farm

exports are tipped to be 2.5%

lower in the year to June,

while energy and minerals sales

are expected to bear the brunt

of the down your Honour,

falling 23%. The achievement

in the 2008-09 financial year

was extraordinary, partly

reflecting the very high

negotiated contract prices for

the bulk commodities, including

coal and iron ore. ABARE is

assuming the Australian dollar

will remain around US 83 cents,

which would cut $1 billion from

ore's exports this financial

year. However, it expects the

total volume of exports will

hold up. Chinese imports of

commodities across the board

has been very strong. A lot of

that seems to be recommend to

the stimulus package in China.

That demand for mineral and

energy resources is unlikely to

result in a quick return to the

record prices of recent years,

because of the oversupply that

still exists around the globe.

You have seen smelters and production facilities starting

to switch back on and increase

production. At this point, on

world commodity markets, across

metals and especially for oil,

there is quite a bill supply

overhang that is still around.

While the big falls in mining

industry contract prices have

been widely publicised, the

price cuts borne by farmers have received much less

attention much In dairy

specifically, the price has

dropped by around 40 to 50%

this year. There has been a

slight upturn recently, some announcements of price

step-ups. Chris Griffin says

the strong local currency will

affect national income, with

each 1% rise in the Australian

dollar cutting an estimated

$190 million from farm exports.

There is no end in sight to the

drought that is gripping parts

of Australia, with the Bureau

of Meteorology predictinging a

dryer than normal December quartertor the south-east.

That doesn't necessarily mean

doom and gloom, there will

still be some rain happening,

it's more of a timing thing.

Even in these testing times, it

seems for some that hope still

springs eternal. Mining joint

Rio Tinto is selling another of

its companies that it inherited

when it acquired aluminium

producer Alcan. Rio Tinto has

agreed to sell Alcan composite,

which makes materials for the

architectural and wind energy

sectors. The buyer is Swiss

manufacturer Swither

technologies -s which is paying

$349 million. Rio Tinto bought

Alcan for $38 million in 1997,

acquiring a number of manufacturing businesses which

it is keen to sell-off to pay

down debt and focus on its key mining and raw materials

businesses. It's a

surprising notion but in the

wake of the GFC there is

evidence business, particularly

large corporations, are

returning to an old style

school of management that is

less inclusive and more

dictatoral. In these tough

economic times is it prudent?

Will it lead to a notable

saving if a business stops

employees heating hot food at

their desk because it is too

messy, or will it result in

disgroundled staff I'm joined

by Avril Henry today. When did

you start to notice that

management styles are going

back to the future? We started

noticing it in late 2008, and

it's been more pronounced early

this year. As the global

financial crisis deepened and

organisations started looking

at cutting costs, we noticed

that the 1950s style was back.

What are the nuts and bolts

things management is doing to

cut costs and are they

effective? It's interesting,

because I found that not only

this time but when you think

about the tech crash and the

recession in the 1990s, we

always cut the little things,

such as tea and coffee, staff

amenities, look at cutting

cleaning costs, hence not

eating hot food in the office.

They look at cutting things

like stationery, rather than

looking at larger ticket items.

Of course, there is always head

count cuts, because head count

cuts can give you the greatest

savings in dollars, but I don't

think it gives you the greatest

savings in terms of creating a

sustainable business. I don't

think any of those things

actually have a positive impact

in the um to long term, quite

the contrary, it's quite

negative . Do the restrictions

start to erode the morale of

the workplace and therefore

employees resent working longer

hours for less pay?

Absolutely. What it leads to is

employee disengagement. A

recent gal lunch poll found

that 60% of Australian

employees today are what we

call not engaged. They turn up

and do their job and won't put

in any discretionary effort,

and another 20% are actively

disengaged, which means

sometimes they will sabotage

the organisation, their team or

their boss. That can cost the

Australian economy up to $31

billion a year. I think

disgruntled employees leads to

disengagement, which affects

productivity and obviously the

bottom line. Would you say

that business will lose good

people because they won't want

to be micromanaged?

Absolutely. I have always said

the worst thing that happens in

recessions, when you see this

micromanagement and command and

control behaviour, is that the

best people will be the first

to leave. Why? Because they

node they can get a job, they

are marketable, and you are

often left with the people you

would prefer not to have there.

Good people want to work in positive work environments

where they can do their best

work and want to be managed by

people they respect and who

respect them in return. Is it

the case when the recovery

kicks in, the collaborative

style that was popular a few

years ago will come back into

vogue? I think it will come

back into vogue, because it

came into vogue in the first

place because of the skills

shortage. People shifted the

way they were managinging and

leading people, because they

understood, particularly with

the GenXs and more so with the

GenYs, working in a collaborative environment,

where teamwork is valued and

they work for bosses they

respect is important. We

created the leadership style to

demonstrate collaboration and

now you are seeing a move back

to, we can do whatever we like,

treat our employees however we

like, because they are scared

of losing their jobs much the

reality is GenYs will leave,

even in the current

environment, because they don't

define themselves by the job

they do. The skills shortage

has not gone, it's just on the

back burner. As the recovery

rarps up, people will need

those people again and my

attitude to that is good luck

getting those people back, when

you shafted them during the

current crisis. You said

companies tend to treat people

as if they are liabilities

instead of assets. Why do you

think that is? I think it's a

lack of people management and

leadership training. I think

bad managers exist because they

don't know how to be good managers. I often refer to

myself now as a reformed

accountant, who fundamentally

understands that investing in

developing people's skills

actually delivers hard results.

We need to help people be

better managers. Unfortunately

we have run out of time, thank

you. Thanks for having me.

Newspapers are facing their

baggest challenge in decades as

advertisers join the exodus

from newsprint to news media.

Fairfax reported a full year

loss of $380 million and across

the globe every major publisher

is under pressure to adapt as

experts say newspapers must

find new ways to do business.

It's been a brutal year for

newspapers. First half spending

on ads plunged 18% from the

same time last year. The big

winner is internet

advertising. The internet

takes 14%, soon moving to 18%

of all ad doll a and that's

where the people are going.

Advertisers are doing exactly

that, they are moving where the

people R Newspapers have

already bought rival websites

to boost their online influence. Most agree there

will always be a place for

newspapers but ad man Todd

Sampson says he's not sure

advertisements will be a

permanent fixture Homely they

will still exist to deliver

news, but the question is

whether they are a good medium

for advertising. If not, how

will he fund the paper? While

say, legislation figures are

holding up, it's advertisers,

not readers, who foot the bill

for printing papers. More ad

dollars are being spent

online Nowhere is the drift

to digital more obvious than in

the weekend class fiedz. The

jobs lift-out is less than half

the size of the same supplement

in the same newspaper from

September 2000. The group

representing the nation's

biggest newspapers says that is

to be expect Ned a downturn and

there are already signs of

recovery in employment and real

estate sections. The big

question is sustainable, and

whether Australia will embrace Rupert Murdoch's recent

suggestion that users pay for

online access to help keep

newspapers afloat. All

publishers will lou look at how

they will charge core for the

content in any form. Amid talk

of consolidation, with newspapers banding together to

charge reared for online

access, the outlook for the

next year is grim. Woonchts he

are expecting revenue to

decline further by in the order

of 1.5% over the next 12

months. Press advertising is

only going south at this

point. The big which challenge

for newspapers is finding the silver lining, when the

advertising rivers of gold dry

up. New media is finding new

revenue streams, an Australian

national institution is getting

support from the business world

in an effort to keep a daily

tradition going. A commercial

sponsorship deal for the 'Last

Post' negotiated by the

Australian War Memorial has

created a contentious issue.

It's a solemn daily ritual, the

lone bugler honouring

Australia's war dead. Now, proudly brought to you by Canberra's own

telecommunications company. We

are absolutely delighted to

assist the War Memorial. The

War Memorial says budget cuts

left it with no choice. Without

sponsorship the bugler would be

replaced by a CD. We will do

nothing to compromise the dignity of the Australian War

Memorial. Officially at least

the RSL is on board. I respect

those members of the Returned Services League of Australia

who will not like this.

Sponsorship is not new to the

War Memorial but the apparent commercialisation of the 'Last

Post' has stirred up plenty of

emotion. My great-grandfather

fwaut in the war. I used to be

in the army and I think this is

ridiculous. There is some

understanding I have no hassle

with it being sponsored. And

questions for the government

What's wrong with our taxes,

that's what we pay taxes for.

It's a shame to resort to

sponsorship, it should be

funded. The Opposition calls

it a sad day and the government

admits some concerns I will be

talking to the War Memorial to

ensure the dignity and sanctity

of the ceremony is maintained.

The government is not about to

stump up with the $30,000

needed to run the ceremony each

year. The War Memorial has

promised public feedback won't

be ignored We didn't expect

dancing in the streets. We

would be more than happy to

have no logo representedal t at

all. Perhaps not all publicity

is good publicity. You might

think toys are not worth much,

fit only to be thrown out if

they don't break first, but

they can be worth big money, as

an antique toy collector in the

United States is proving. Fire

trucks, mail trucks, ice-cream

trucks, all kinds of cars, if

there's a toy heaven, it might

be in pitsfield Massachusetts

People ask me how many toys I

have. I don't know. About

7,000, stacked floor to ceiling

in a four-storey addition to

the back of Donald Kaufman's

house It makes a lot of noise.

That would be fun for a kid .

His family founded the KB toy

chain and Don helped run the

company for years. For him,

toys have never been just

business. If this toy could

talk, I think about that, I

would love to know where it's

been, who played with it, who

made it. Things are really

spinning at the toy fair. He

began collecting antique toys

at fairs like there in 1950. It

became his passion Each toy is

like a valuable painting. This

motor cycle with Mickey and

mini-mouse is worth up to $60,000. Do you trust me with

it? Sure. Now Don is putting

his entire collection up for

sale, the first part of a

five-part auction brought in $4

million. He doesn't need the

money, he says it's time to

pass them on to other people.

That doesn't mean it's easy.

This is his wife Sally. I miss

them already. I cry when I talk

about it. 7,000 toys, 7,000

stories. If there's one less

on Don Kaufman wants the world

to learn, it's that there's

always room for one more toy.

Let's look at what's making

headlines in the region. The

Standard reports Hong Kong

radio station RTHK will

continue as a government

department, rather than an

independent corporation. The

Financial Times says Chinese

state companies are supplying

petrol to Iran. The 'Wall

Street Journal' says real

estate companies in India are

challenge than the company's

technology industries for

growth and global investor

appeal. That's all for this

edition of Business Today. If

you would like to look back at

the interviews, please visit

our website. We look forward to

your feedback. I'm Whitney

Fitzsimmons, thanks for joining

me, enjoy your day. Closed Captions by CSI.