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.
Business Today -

View in ParlView

(generated from captions) This Program Is Captioned

Live.

Good morning. Welcome to the program. I'm Whitney

Fitzsimmons. In business today

- shared values, Australia's

Kevin Rudd and the US President

get down to business. Surplus

space, why landlords are

keeping office buildings in

China empty. And competitive

future, the new challenges

facing university graduates.

Those stories coming up

shortly. First let's take a

quick look at the markets...

For more on the market

action I'm joined by Chris

Weston from IG Markets. Good

morning, Chris. Wall Street has

lost some of its gains? When

we saw the S and P down about

2% in the session, really

driven by the fascial sector,

we saw the KBQ banking index

down 7.2%. We saw Geithner and

Bernanke talk about new powers

to take over and potentially

unwind failing institutions,

stemming from the failed

takeover of AIG. We saw from a

respected economist saying the

Government will have to

nationalise potentially some of

the major banks going forward

which is a negative. The

financials took over and a bit

of profit-taking as well from

the previous sev% highs. I

think that also affected the

markets but ultimately we

finished down about 2%. Let's

move to UK. HSBC says it may

cut 1,000 jobs there? Yeah,

HSBC are the biggest bank by

market value in the UK and

Europe. They're looking to look

to cut potentially 1,000 jobs

from their 58,000 workforce in

the UK. I think the jobs are

going to be eliminated in their

processing, operations and

potentially adminler sites as

well. They're employing about

58,000 so they've said it is

going to be a very tough year

for them so they are looking to

take pro active steps to stem

any future losses. Il in the

UK The inflation rate rose

unexpectedly in February. What

can you tell us? We were

looking for a decline there.

That's probably why we saw

stirling trade up about half a

per cent in the two minutes we

saw the Retail Price Index and

CPI coming out we're expecting

the Retail Price Index to

decline by 0.1%, it decreased

by 0.6 of a per cent . The

inflation we saw increase 0.9%

which was higher than most

expected so we did see stirling

against the greenback rally

more than most people had

anticipated. What are we

expecting on regional markets

today? Will they follow Wall

Street a little lower? I think

in Australia hay will. We're

expecting a little bit of

weakness, probably not as much

as the 2% declines we saw on

the S and P. We're expecting

the ASX to open 0.3% lower. On

the Nikkei we're seeing small

gains. We saw it yesterday

close above its 100-day moving

average and the Nikkei is up

and so is the hang seng, around

0.3 of a percent. On the Asian

market it should be OK, in

Australia a bit of weakness. In currencies, we've seen the yen

weak tonight a 5-month low

against the Euro? Yes, against

the Euro we're trading down to

131.80 which is the lowest

since October. Certainly the

bail-out plan has heightened

everyone's expectations and

people are looking to buy high

yielding assets which the Euro

is one of them. We saw a bit of weakness and against the

greenback as well. It is

trading around 98 cents, given

the current situation and in

the short to medium term with

the fiscal year beginning,

we're expecting the yen to

trade nearer to 105 in the

short to medium term. Chris

Weston from IG Markets there.

Now let's take a look at what's

commodities. happening with currencies and

Australian Prime Minister

Kevin Rudd has urged the UK and

European nations to work

closely with the United States

to boost efforts to revive the

global economy. The challenges

posed by recessions in most

major industrialised countries

dominated the first face-to-face discussions

between Mr Rudd and the

American President. Mr Obama

highlighted the importance of

next month's G20 summit in

tackling a range of issues.

The importance of doing what's

necessary to support global

demand and job development and

economic growth, the importance

of financial regulatory

mechanism that prevents the

kind of systemic risks that

have done so much damage over

the last several months and

finally making sure that, as an

international community, we are

looking after the severe threat

that poor countries, emerging

markets, are under as a

consequence of this financial crisis. The Prime Minister

also supported the

administration's plan to help

US banks purge toxic assets.

What is a global recession, a

global economic crisis coming

out of a global financial

crisis, and a global recession

requires a global solution and

that's why so much of our

discussion today focused on

common actions we need to take

another at the upcoming G20

summit in London. I think the

actions taken by the US

administration and the

statement yesterday by Treasury

secretary Geithner on impaired

asset management is an

important step in the overall

road to global economic

recovery. Kevin Rudd also says

the G20 members need to boost

funding to the International

Monetary Fund so it can deal

with a new wave of debt

anticipated to emerge from

central and Eastern Europe. US

Treasury secretary Timothy

Geithner is calling for greater

Government powers to take

control of struggling nonbank

financial firms. He says the

Obama administration is

proposing a new law to bring

the changes into effect. Currently, Federal authorities

can seize control of troubled

banks but not organisations

like insurers. Joined by Ben

the House of Representatives Bernanke, Mr Geithner spoke to

financial services committee

about the Government's $170

billion bail-out of insurance

giant AIG. Dr Bernanke noted

he'd tried to take legal

action. AIG highlights the

urgent need for new resolution

procedures for a systemically

important nonbank financial

firm. If a Federal agency had

such tools on September 16,

they could have been used to

put AIG into receivership,

unwind it slowly, protect

policiholders and impose hair

cuts on creditors and

counterparties as prop. That outcome would have been far prefer tooble the situation we

find ourselves in now. Second, the AIG situation highlights

the need for strong, effective

systemically important consolidated supervision of all

firms. The leader of America's

Central Bank added that a

collapse of AIG would spark a

full-scale 1930s style global

meltdown. It appears that Wall

Street believes many of the

so-called toxic assets held by

US banks are trading well below

their intrinsic value. Two of

the world's biggest investment

managing firms, Black Rock and

Pacific Investment Management

have thrown their weight behind

the public-private partnership

in an effort to stabilise the

banks. One of the country's

biggest investment firms and

possibly one of the biggest buyers of toxic assets from the

nation's banks called the

program a win-win. I think an

investor can earn double dickts

on these types of assets.

It'ser a win from the

standpoint of investors and can

the taxpayers that ed that

we'll be prarpting longside. A

group representing 13 private investment funds said simply,

"We look forward to exploring

whether the plan can help us,"

and sellers are wary as well.

When ABC news asked 27 of the

country's largest banks whether

they will use the plan to sell

their toxic mortgage assets,

wells Fargo told us it's

premature to comment, Bank of America supports the concept

but a studying the details.

Citigroup said it was too early

to speculate. The question now

is whether the exist toons fix

the banks which so many said

was crucial to a recovery will

help the economy turn a

corner. I look at this today

not so much as the silver

bullet that ends the crisis but

as another thing on top of

several things of late to put

on the good pile. No question

there are still problems.

Unemployment is still rising,

credit is still hard to come by

and had the Dow, even after

today's big rally, is 45% below

its high but for the first time

in a long time there are

optimists who say today's bank plan, along with Washington's

other medicine, is starting to

work. Sales are finally picking

up and mortgage rates are

heading down. We're beginning

to see some sunlight break

through into what was lots of

darkness up to now. Despite

some skepticism, the US bank

bail-out plan did raise hopes

of economic recovery and it

guaranteed another positive day

on share markets across the

region. Analysts say if it's

successful, the scheme will

help Australian companies and

the Government raise money.

Commodity currencies and prices

were boosted by higher hopes of

a recovery and the falling line

at the end of this graph shows

that investors are less nervous

about the credit quality of America's most secure

companies. But the line is

still relatively high and money

market players still have

serious reservations about this

plan's ability to get the

buyers and sellers of toxic

assets to play ball. And the

light at the end of the tunnel

isn't the end of the tunnel,

it's the freight train coming

towards it. Analysts say if

the plan works it will be mean

cheaper money for companies

across the global including

Australia. Companies won't be

the only beneficiaries. The

Government could also be a big

winner because compare would

the United States, its

budgetary position will look

much better. We have an

excellent fiscal position

compared to that of America or

the European countries or the

UK. That makes the Australian

Government debt very, very

attractive for international

investors and means it's easier

for the Government here to fund

its deficit. The US Government

spending splurge has its compensations. The world's

third-largest lender by market

value, bank of China, has

posted a bigger-than-expected

59% drop in fourth quarter

profit to $647 million. The

decline was larnly due to write-downs of US mortgage

investments and higher bad loan

provisions as well as exposure

to recession-hit Hong Kong.

Bank of China has lost more on

US mortgages than all other

Chinese lenders combined.

Japanese electronics maker

Sanyo has slashed its earnings

outlook and warned of a $920

million net loss for the year

ending this month. The company

had previously forecast it

would break even. Its

rechargeable battery,

electrical parts and semi conducted businesses have

beenheard hit by the economic

slump. And the company at the

centre of India's biggest

corporate fraud, Satyam

computer services, says the winning bidder for a controlling stake in the company will be known by at the

end of the day of April. The

buyer must hold the company's

assets for two years and retain

at least 100 key employees for

12 months. The global financial

melt-down has prompted

Australia's major banks to shy

away from committing to

long-term contracts with their

core system suppliers according

to the managing director of

IBM's Australia and New Zealand

operations, Glenn Boreham. He

says banks have revealed a

preference for shorter stages

contracts because of

uncertainty s created by the global financial crisis. He

joins me now. Good morning,

bore borbore. Welcome to

'Business Today'. Hello. How

has the global financial crisis

impacted corporate decisions

when it comes to entering into

contracts with technology

suppliers? The financial

crisis has clearly affected the

IT sector but what we've seen

is a change in the nature of

dialogue we're having with

client. A year or two ago

companies were coming to us and

saying, "Our business is growing, our volumes are

growing, we need to the

capacity, we need to grow with the market." Today they're

coming to us and saying, "In this environment we need your

help. We need to take costs

out, we need to transform and

need to look to do things

differently." So the nature of

the discussions we're having

has changed a lot it still creates a tremendous opportunity for the IT

industry. You mentioned an

opportunity there but there's

no doubt that this financial

downturn is having an impact on

the sector. How devastating do

you think it will be,

particularly to IBM and also to

the sector in general? Well,

to IBM, we've been in Australia

since 1932 so we've seen

recessions, depressions, world

wars, and I think that both IBM

and the IT industry in the

country in general will be part

of the solution rather than the

problem to what we're facing,

that we'll enable companies to

become more efficient and

change what they're doing. We're seeing dialogue with

clients where things that a

year or two ago were sacred

cows that they wouldn't touch -

business was good, profits were

growing - and they're now

coming to companies like IBM

and saying, "Let's discuss

this. Let's talk about the ways

we could do things

differently." What are the

areas they're looking at doing

differently? What are the

sacred cows they're wanting to

talk about? Things like,

"Should we be out sourcing?

Should we be doing our IT

ourselves? Should we be doing

our development ourselves?" As

every organisation looks at its

cost base, as every

organisation looks at its core

competentsies in this market,

they're saying," we're a bank,

we're good at this, we're an

airline, we're good at that,

these throoez our strengths,"

and they're willing to if gauge

partners to take things away to

make things better for their

business. There has been a

quote floating around from one

of Obama's top advisers saying

a global crisis like this is a

terrible opportunity to waste.

In line with that, there is lot

of opportunity for innovation. What technological solutions

are emerging from this current

situation? I think there's a

tremendous opportunity when we

look across the whole spectrum

of infrastructure. What's

happened in the last 20 wreerz

is enterprises, whether

Government or public companies,

have built out their digital

infrastructure for their own

purposes, so if they're

retailers, they've put RFID

chips in consumer goods, if

they're car manufacturers

they've put chips in cars.

Across the board we build out

this infrastructure and there

is now an opportunity to look

at these things as horizontal

systems so can we now make our

transport system an intelligent

transport system? Can we make our power grids intelligent

power grids? Can we make our

water systems more efficient?

And across the board the

opportunity exists to do that.

Boreham? Do you think we can And what to you think, Glenn

do those thing s? Not only we

can but we actually are. A

couple of examples in Australia

at the moment, IBM is working with the University of

Melbourne to look at the use of

irrigation water in the Murray

River. Now, traditionally the

way that farmers have irrigated

their crops has been pretty

much take a look, I think it

needs water and open the

floodgates. We're working with

the University of Melbourne and

putting censures and actuators

into the soil to measure soil

moisture and plant growth and

that will allow water to go

when, where and how it's need

and the estimates we're coming

up with is that will save a

thousand gigalitres of water,

that's as much water perannum

as the whole city of Melbourne

uses. Another example is we're

working with Queensland Motorways. They originally

approached us to talk about a

fairly simple solution,

cashless tolling over the new

Gateway Bridge in Brisbane, but

that's evolved into a

discussion to say, "Once you've

got that infrastructure there,

can we turn cashless tolling

into intelligent traffic

systems so we know where

traffic jams are, we can

predict what is going to happen

in terms of traffic flow and

make for a better journey?"

I'd like to ask you - this is

interesting, these new

technologies emerging out of

the crisis, however when the

global crisis tends to bottom

out and settle down and then we

see an upturn, are you

confident that people's

behaviour will have changed

enough to keep going down these

new strategy trajectories? I

think behaviour is actually

changing. You look at the use

we all have, whether it's as

individuals or as companies,

the US of IT - the build-out of

technology has been phenomenal.

One of the statistics that IBM

Research has come out with is

that by 2010 there will be a billion transistors per person

on the planet and this

infrastructure, this digital

capability, is just in everything. It's in building

products, it's in our cars,

it's in our phones. Virtually

everything we touch has the

potential to be digitally aware

and as the economic crisis

drives this imperative to do in

thes in a more efficient way,

as the environmental realities

tell us we need to do things in

a better way, a more

environmentally friendly way,

the capabilities are there and

we just need to look at joining

the dots. Glenn Boreham, you

brought up the environment

there. Do you think the environment going doin into the

future will be at the forefront

of the technology development?

I actually do and I think this

is one where it's not, "Is it

good for business and bad for

the environment and there's a

wall in between?", I think this

is an opportunity where both

can be winners. I have talked

about the example of

intelligent traffic systems. If

we can make traffic flow better

through our cities that's

clearly good for business. If

you're in a supply chain or

distribution business, you can

predict you can get your goods

from A to B in a particular

time and of course it's good

for the environment. Less cars

on the road, less carbon

emissions test. You look across

the board. If we could improve

our electricity grids, one of

the statistics coming out of

IBM's research is up to 10% of

electricity that's generated is

actually lost in transmission

and distribution so if we can

fix that, that's great for

business but it's also good for

the environment. Glenn Boreham,

it was very interesting to

speak to you today. Thank you.

Thank you.

It's a tough market for those

trying to lease or sell office

space in China as many

buildings are empty but the

situation is scene as an opportunity for one

enterprising American who

specialises in salvaging deals

from the aftermath of real

estate bubbles that have burst.

When Jack Rodman comes to town,

it usually mean a real estate

bubble has burst and Rodman is

taking stock of Beijing. It is

empty. It's a fab krls building

but it empty. He was Tokyo in

the '90s, then Bangkok, the

Philippines and India

specialising in selling

distressed real estate, in

other words deals gone bad. In

Beijing he says there's

plenty. I believe from 2007 to

2009 we developed in Beijing

alone 100 million feet of

commercial office. Most

developers say about 80% of

high-end office space in this

city is taken but Rodman

disagrees and by walking the

streets has a list of 53

buildings which are empty or

almost empty. Some were built

years ago but haven't opened

and so aren't counted as being

vacant. Part of the problem in

the market has been a lack of a

clear definition of what are we

including in the supply and I

think that pisled a lot of

investors and lender that the

market wasn't dproszly

over-built and therefore they

continued to build. According

to Rodman, one reason why many

buildings are actually finished

but not officially opened is

because their opens aren't

prepared to write down their

investments. Once it's on the

market and if it can't be

leased or only leased at a discount, then that

dramatically reduces the

building's book value. And many

developers may have delayed

opening, hoping the economy

improves. For 2009, we're not

projecting a very optimistic

scene. Zhang Xin isn't one of

them. The CEO of Soho China

which builds apartments, malls

and office blocks, says a market correction has been a

long time coming. When you hear when everyone's talking

about, "This will go on to grow

for another 10 years," you

begin to doubt, you know why

would it? Why is rarely asked

during the heady days of a

construction boom. Only now as building sites fall quiet and

prices begin to fall does

anyone wonder how this could

have happened in the first

place. These days it's not

enough just to make it through university. The real test for

graduates is finding a job.

Thanks to the economic crisis,

many companies are finding they

can't afford to hire

inexperienced people, no matter

how smart they are. After years

of education, it's time for

these students to find a job.

We are gonna be hiring, a lot

of other companies won't be.

The trouble is the economic

climate has changed dramatically since they started

their degrees and at Sydney

universities annual careers

fair, there are fewer companies

recruiting than last year, a

sign the employment market is shrinking. Four years ago

there was a lot of demand for

engineering places and I guess

the market was growing a lot

and now it is the opposite.

I'm trying not to think about

it. There's nothing you can do, just keep trying to get jobs

and keep applying. The

official youth unemployment

rate now stands at almost 24%

and the flow-on effect is being

felt even by the best students.

PricewaterhouseCoopers has

changed its recruitment policy

this year and will employ

people gradually rather than

sign up a large group all at

once. I think what they're

really doing is taking a

position of wait and see.

There is a glimmer of hope

amongst the doom and gloom.

Firms special ising in areas

like insolvency are looking to

to expand their workforce while

others are looking to weather

the fiesz global financial

crisis. We have previously

looked at experienced people

and this year we're taking

fresh graduates. Some students

will leave the careers fair

with a better idea of what they

want to do, for others there

will be confusion. A lot of companies aren't telling them

how many people they will

recruit this year. The Standard

reports interest in developing

the plop wedding card street

project has not wane ded spite

the financial crisis. The

'Financial Times' says the

Obama administration joined

forces with Ben Bernanke to

press Congress for stronger

powers to intervene in troubled

financial institutions. The

www.journal looks at calls to

give the US Government the

power to take over a range of

nonbank financial institutions.

That's all for this edition of

'Business Today'. If you would

like to look bang at any of our

interviews ploo,, please visit

our website. I'm Whitney

Fitzsimmons. Thanks for joining me. Enjoy your day. Closed Captions by CSI