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) Live.

Good morning. Welcome to biz 'Today' for Australia Network. I'm Simon Palan. Coming up - data support. Wall Street closes at another record boosted by upbeat economic numbers. Deposit hit. Savers likely to take some of the pain from the Australian Government's planned bank levy. And mixed messages. Economists are questioning China's growth outlook after conflicting readings on manufacturing. Those stories coming up shortly but first let's a quick look at the markets:

The European Central Bank has kept interest rates at a record low and has reaffirmed its commitment to leave them there 'til at least next year. The ECB refused to be swayed by recent indications of an improvement confirming the key improvement in the Eurozone, confirming the key refinancing confirming the rate at stay at 0.5%. Markets rate at stay at have been watching to see rate at stay at 0.5%. whether the positive data would lead the bank to change lead the bank to change its easing bias. Mario Draghi did acknowledge there are encouraging signs in the Eurozone's economy. Recent confidence indicators based on survey data have shown some further improvement from low levels and tentatively confirm the expectation of a stabilisation in economic activity.Last month the ECB broke with tradition by declaring would keep interest rates at record lows for an extend ed period. The bank was responding to volatility sparked by the US Federal Reserve signalling it would taper its stimulus program. For more on the marked action, I'm joined by Chris Weston from IG. The Euro fell overnight as the ECB said interest rates will probably stay low but as we just heard, Mario Draghi says there are some encouraging signs for the Eurozone? There are and we're seeing a clear current account surplus coming through in the Eurozone predicted by the IMF and that's part of the reason why the Euro is still above the nice 130 level. We saw it trade in a 70 or 80-point range last night. He maintained they want to keep rates low for an extended period was expecting them to drop the forward guidance. They said risks were to the down side and that why we saw a bit of weakness in the Euro. We're seeing recovery in peripheral Europe and good numbers out of Spain and Italy. That's part of the reason why he did acknowledge those recent trends. US markets were looking strong overnight on some good economic data? Yes, if anyone's really worried about the tapering soing awhich is going to happen in September or October, they didn't express it last night and I think the feds have done a good job in explaining the difference between the tapering and start to bond-buying program - finish to bond-buying program in September. We saw jobless claims at 326,000, much lower than expected, and then we saw the manufacturing numbers above 55, very good expansion. Good US data and the S&P rallied 1.thee%, all sectors gaining on the day. That data helped market around the world including the Nikkei which rebounded strongly? Geal we're see a good open today on the Nikkei. We're looking for a good strong open above 1%. The Australian market should open strong as well. If you look at the correlation between the dollar yen and Nikkei a strong correlation given how the weaker yen helps exporters. The dollar yen is up from yesterday. We sad see a good strongope - we should see a good strong opener in Japan today. Any other new s? We'll look at monetary base numbers out of Japan. Australia, Japan, China, everyone is looking to position their portfolios ahead of the non-fom pay roll, that's going to have a massive impact when the Fed look to taper their bond buying program and we're looking for 180,000 jobs to be created tonight. That is key for the region. Chris Weston from IG, thank you. Now let's take a look at what's happening in currencies and commodities. The Australian Government is poised to release its highly anticipated update on Federal finances. The economic statement is viewed as one of the final announcements before an election is called and the Government is risking an election-eve battle with the banks as a moves to raise a $700 million levy that would protect the funds in the of a collapse. Mere bank raid got alarm of a collapse. Mere talk of a bank raid got alarm bells bank raid got ringing. Financial stocks tumbled up to ringing. Financial tumbled up to 2%, wiping tumbled up to 2%, wiping nearly $5 million from tumbled up to 2%, $5 million from the value of the big four and leaving $5 million from the value the big four and leaving a
bemused bank boss the big four and leaving bemused bank boss with two
options. Option one is I'll make an ill informed smart-alec response without all the facts. Option two is I will research the information y will meet privately with Treasury officials to understand their thinking and make an informed comment. You want the former, I'm doing the latter. The ABC's confirmed Labor will impose a bank levy. The main will be insurance against a bank collapse and also help bail out the Budget. There will be a 0.05% impost on deposits up to $250,000, affecting banks, mutuals and credit unions from 2016. It expected to raise more than $700 million in its first 18 months. The IMF and RBA have put a view to the Government about the need for a fund to cover deposit protection.Smokers with bank deposits face a double whammy. The Government's also ratcheting up the tobacco ice by a whopping 60%. This, I know, won't be universally popular. It is a difficult decision. Wary of a backlash, the Government will phase in the hike over four years. Smokers will cough up an extra $5 billion over that period with a full increase adding around $5 to a pack of cigarettes. Ultimately, who's going to pay? It going to increase the cost of living for smokers but smokers could be pensioners, they could be low-income people, it could be - smokes and beers might be the thing that is important to them. Whether it's a deposit tax, whether it's an increase in cigarette tax, it's a-L a hit increase in cigarette a-L a hit on you, the a-L people.Big back is furious but the Government's more worried - big tobacco is furious but the Government is more worried about a backlash from banks. Financial sector sources are calling the deposit levy a cash grap and warning the banks will pass it on to customers in full. Saul Eslake of Merrill Lynch says the reason behind the introduction of the bank deposit guarantee scheme in 2008 was mainly political and there's no need for a levy. The problem actually wads, although this has been little report said, that two banks were too Queensland to fail for a Government at at the time was run by Queenslanders, that is Kevin Rudd and Wayne Swan. Two Queensland-based banks were leaking deposits and this scheme was essentially introduced to support them rather than the big banks. The history is that no Australian has lost a penny or a cent in a deposit in an Australian bank since the 1890s and Australia had a highly effective informal scheme whereby if it looked as though any of the smaller banks was likely to be at risk, one of the big banks would be prevailed upon to absorb it and honour the obligations to the depositors, so for example in the 1930athise then Government savings bank of NSW was absorbed into the Commonwealth Bank. Most recently in 1978, the bank of Adelaide was perceived to be at risk and it was absorbed by the ANZ and those arrangements worked very effectively at no cost to anyone and, as I say, no-one lost a cent. This scheme wasn't necessary. The Government nonetheless introduced one in 2008 and I suppose as Penny Wong, the finance Minister has said, if you're going to have an insurance scheme you have to have an insurance premium and ultimately if this is to protect dedepositors to banks, depositors are
probably going to pay for it but in many was this is an accounting trick. The Australian Dollar may have hit a 3-year low but it's let yet to make life easier for Australia's manufacturers. On the same day the currency dived below 90 US cents, the latest manufacturing snapshot showed an industry still on its knees and points to lower interest rates and a lower dollar. banker says rate cuts are not a panacea. Paul Hughes makes steel products like bus stops and display units for stores. He's competing with cheap Chinese imports so a weaker dollar's good news. The long-term trend is a low Aussie dollar, people will be more confident to make decision. But it's not showing up yet. The latest measure of Australian manufacturing revealed the sector continued to shrink in July. This is a sector under stress and parts of it are under severe We've now had 25 months of
contraction. We've now contraction. Car-maker GMH has contraction. Car-maker threatened to close down in contraction. Car-maker GMH 2016 without threatened to close down 2016 without more Government money and 2016 money and a 3-year wage freeze money and a 3-year wage aimed at saving $15 aimed at saving freezes or wage cuts at Holden isn't just contained isn't just contained to Holden, it's pretty much occurring across the sector in different places. The Australian Dollar's dived more than 15% since April, that's a sharp and traumatic adjustment. The first time it's dipped below 90 US cents in three years. Manufacturers want a lower dollar but the fall's initial impact has been negative. The number of companies reporting higher input costs jumped 25%. It's partly because the weaker dollar has made imported components more expensive. On the other hand, 12% more companies reported a fall in exports, suggesting the benefits of a weaker dollar have yet to flow through. It all points to lower interest rates but NAB's chief executive, Cameron Clyne, who told a business lunch that business confidence in Spain was stronger than Australia, said rate cuts were not a panacea. Lower interest rates is not necessarily a stimulator of growth and if I talk to Australian businesses about why they don't want credit at the moment, I have had virtually no-one say it's because of the level of interest rates. It's for a range of other factors that's impacting their business confidence. But it's expectation of lower rates that have traders predicting an even weaker dollar. The market is reassessing how many RBA rate cuts the RBA is going to deliver in coming months and of course the US dollar is a little bit well.Lower rates and a lower dollar. Things are looking up for Paul Hughes. Economist s are trying to work out the contradictions in the latest manufacturing data out of China. July came in at China. The official reading for July came in at 50.3, up from 50.1 in July came in at 50.3, up 50.1 in June but the closely watched HSBC index which covers a wider range of smaller export orientated companies came in at 47.7, an 11-month low. The HSBC survey suggests manufacturing remains under heavy pressure in an economy that has slowed in 9 of the past 10 quarters. Beijing has tried to allay concerns the economy has decelerated more than expected. It recently announced a series of targeted support measures and expressed confidence of meeting its 7.5% growth target for this year. China's local enterprises will come under scrutiny in the coming months after the Government said it planned to audit their debts. They have borrowed heavily to invest in property, new factories and machinery over two decades of rapid economic expansion and there's a fear many of them may have racked up huge debts. For more on this, I spoke to international channel Shanghai business reporter Wang Lihwan. It's no secret China has debt problems and no-one, not even the central Government, knows exactly how much debt there is out the right now. Most analyst say this comprehensive audit is going to give Beijing a clearer picture of the ranges as it tries to structure China's economy more away from export-driv en. It is better to find out wlirt controllable rather than later. The last time Beijing dit did a comprehensive nationwide audit was the end of 2010 and it revealed Local Governments owed a total of 10.7 trillion or 25% of China's GDP. Earlier this year the National Audit Office estimated the number is between 15 to 18 trillion, that's a sigquent increase. Why is the investigation happening now? Is it potentially fueled by a drop in growth numbers that China's seen recently? Actually the growth numbers is not thought to be a direct reason for this audit and in fact this audit will act as a break on economic growth. Since 2008, Local Government has been borrowing easily and freely to start infrastructure or real estate projects often with very little audit is going on, it's suppose lade going to make Local Government financing more difficult and therefore slow infrastructure investment and in fact the day after the news was made public, it sent the Shanghai composite index down 1.7%. It is more evidence to show the President and Premier are serious about guiding China's economy on to a more sustainable path.At the moment Chinese laws prevents Local Governments from taking on debt round but they have been getting
round this in a bid to launch round this in a bid projects. Can the central Government stop this? massive infrastructure your right, Local Governments projects. Can the central Government stop this? Jure
your right, Local have been borrowing through Local vehicles. According to Local Government financing official data there are currently more than 6,000 of them, large currently more than 6,000 them, large and small, across them, the country. They're usually well connect would the Local the country. They're Government so they can get well connect would loans easily from that Government so they can loans easily from that banks
and Government so they can get
loans easily from and issue bonds but Beijing has been trying to rein them in, been trying to rein them in, in fact in March the country's banking regulatory commission had could banks to make it hard for for them to lend to the Local Government finance vehicles by reducing loan limits and not lending to Local Government financing vehicles that have debt to asset ratio over 80%. These guidelines are not enough so all eyes will be on the audit results. Wang Lihwan, thank you.

Global trade will be higher on the agenda at the G20 summit in Saint Petersburg in September. The has been a decade-long slow-down in trade liberalisation and many say this that is contraining the global economy. Chairman of the international Chamber of Commerce, Terry McGraw s visiting Australia and joins me now in the studio. Terry McGraw, thank you for joining us. Firstly, why has there been a slow-down in trade liberalisation. Oh, boy, there's been an unwillingness to coordinate and cooperate a little bit. We've been pushing very aggressive ly on this but it's been for a decade. We started the decade in 2000 with the whole notion that a multilateral agreement, the Doha development agenda, would be the most important thing to be able to get coordination in terms of all the areas, agriculture, manufactured goods, services and trade facilitation, but there was too much discrepancy between economies failed. At this point, as we've been talking before, everything went back been talking went back to bilateral again so both in terms of bilateral free both in terms trade agreements country by country by country as well as bilateral investmentries but it's been very slow and I think in terms of some of the economic conditions and the like it hasn't gotten the right kind of focus but to your point, the number one direction for higher growth and job employment is going to be a trade and investment agenda and therefore

This Program is
Captioned Live.Good morning, we're going to interrupt that program to take you straight live to Melbourne now where the Opposition Leader Tony Abbott is giving an address at a school.And I want to say it is an honour for you to have me here today. I'm here to say a few words to you and to say a few words about how a Coalition Government will try to help schools like this. My words to you are very simple. Count your blessings, be as nice as you can be to each other, try to achieve everything that you are capable of. Count your blessings, be nice to each other, try to achieve everything that you are capable of. If you go through school and go through life trying to do those things you will be happy and by and large you will be successful. I want to say to you and to your teachers and through you and your teachers to your parents that as far as I am concerned the duty of the Commonwealth Government is to make sure that schools are not worse off and within funding mechanisms that make schools no worse off, we want to try to ensure that schools are as good as they possibly can be and this is a very good school because you have intelligently used the money that you have received from government, from parents and from the community. So thank you so much for having me. Again, congratulations on the school, congratulations on these marvellous young people who are so obviously flourishing under your leadership, under your guidance. It is a great honour to be here.(Applause)

Mr Abbott, this is a very special school and we have a wonderful community, a wonderful collection of students and staff and parents and we believe that good education is about quality of teaching and it's about community. And education is not just about what you know but about how you think and we have some wonderful thinkers here who have some questions for you. So I'm wondering if those 3 students can please come up and Ruby, would you like Mr Abbott would you like to come up and Ruby, would you like to -
Mr Abbott would come up and our students will Mr Abbott would you like to come up and our students ask you their questions.OK, that was the Opposition Leader Tony Abbott there speaking at St Andrew's Christian College in south-east Melbourne and the Opposition Leader is expected to hold a news conference a little bit later this morning, we will bring that to you as soon as it happens. Meanwhile in other news the Federal Government will release its highly anticipated updated government finances at 1pm eastern time today. The economic statement is viewed as one of the final announcements the Government will make before it calls the election. Some of the details have already been announced from 1 December, the tax on tobacco will rise by 12.5% each year for 4 years raising $# 5.3 billion over the forward estimates. There will be a new bank levy of 0.5% on deposits up to $250,000. It will take effect from 2016 and raise $750 million in the first 18 months. It will be used to guarantee deposits in the event of a bank collapse.For more details on this we can cross live to Melissa Clarke in Canberra. How is the Government's planned bank levy been received?Well, by depositors not terribly well as you might imagine given that who are saving for a home and have their money in term deposits or other bank accounts aren't getting a great deal in terms of interest rates at the aren't getting a great deal moment. The terms of interest rates moment. The prospect of banks passing on a levy, even a small one is one that hasn't been well received by the It's a move that would be welcomed by big financial institutions like the Reserve Bank, the IMF, the prudential regulation Authority and ASIC who have said this is a wise move to have the insurance premium to back up the guarantee of deposits that the Federal Government has rather than having that guarantee but having to find the money in a scramble after a bank were to collapse should that ever actually happen. So in a sense, from the institutional side and regulatory side, it's been welcomeed from punters, not terribly well but that's not terribly surprising. There's been a few eyebrows raised about the timing of this initiative and just how it's going to work given that it's coming just before an election campaign starts and before an economic statement. And a number of prominent economists have raised the question about whether or not this will be collected by the Government or by the Reserve Bank before going into a special fund and whether or not that leaves any collected room for it to be counted as part of the budget's bottom line to make the bottom line figures look good. Now Chris Bowen, the Treasurer, spoke on commercial television this morning and was quick to defend the policy saying this wasn't about propping up the Budget, that this were secure measures in place to ensure this money was put aside for an emergency should one be needed.It will go into the special fund which will be put aside, it will be run by either the future fund or another like organisation and they will put the money aside, it will be quarantine ed from the rest of the budget and just put aside in case there's ever a need with a bank getting into trouble in Australia, a bank, a building society or credit union.Now as expected the Opposition has criticised the move. They're saying that Labor's run out of money but what position are they taking on the levy?Well, at the moment the Coalition keeping their powder dry, they're walking both sides of the street at the moment because they have criticised Labor saying it's another tax, feeding it into their campaign of criticism of the government, comparing it to introducing the carbon tax and the mining tax and saying it's the Government trying to raid the coffers. Now, on the other hand it's not saying whether or not it would be willing to support the measure despite being very vociferous in criticism of the Government's approach. Mathias Cormann who is the Shadow Assistant Treasurer spoke to ABC #234us - 24 earlier this morning and you can see from his answer while there is criticism of the Government there is also the Coalition holding back from declaring whether or not it would indeed support such a measure.Over the last 6 years we've had a Government that has been wasteful, we have had a Government that has come up with one new tax after the other. They're always casting around for more cash. That is a bad track record and of course this is just a continuation of what Kevin Rudd did first up as PM but we will always, instead
of PM but we of just giving a running commentary on speculation, of just giving a commentary on speculation, we
will commentary on will make a judgment once we see the whole package, the will make a judgment whole announcement and of
course see the whole package, the course we've gone through a proper process in assessing all course we've gone through of that.And that proper process in assessing of that.And just part of a big day on the economic front for the government, just part of a big day on government, what else can we expect with the economic government, what else can statements released this afternoon?Well there's plenty of speculation and concern in some sectors who are worried they may well be the target of cuts because we know there has to be more savings in this Budget than what has already been announced from the tobacco excise and changes to fringe excise and changes to benefits tax arrangements for cars. Now , we know that not only have revenues been less than anticipated, but the Government has new spending initiatives it has to account for in particular the new Papua New Guinea asylum seeker policy arrangement that doesn't yet have a cost that we know yet that we can attribute. So that mean there's is more savings to be done, there is some in the foreign aid sector who are concerned the Government may again delay reaching the target for increasing foreign aid to 0.5% of GDP. That would save billions if they deferred that even for another year. There's also concern in the public sector that efficiency dividends may be an option for the Government which is something that they have not been happy with in the past given it's been a favoured move by government to try and reduce costs in previous budgets. What we do know though is that there will be more significant saving measures because the Treasurer, Chris Bowen, is guaranteeing, not guaranteeing is perhaps not the right word but standing by its commitment to have the Budget back in surplus by 2016-17. The May Budget had forecast for the Budget to be back in a balance, at least, by 2015-16. That now seems unlikely but there is still a commitment from the Federal Government to be back in the black by the 2016-17 financial year and that looks like it's going to be a tough ask to get to that point.I understand the Opposition's been making some new economic calculations itself?Well it's certainly raising a few eyebrows with some comments from the Shadow Treasurer this morning in a debate on television with the Treasurer Chris Bowen. Joe Hockey was quizzed about his side's own intentions when it comes to raising company tax because it's Coalition policy to raise company tax for very large businesses in order to pay for the Coalition's very generous paid parental leave scheme and when Joe Hockey was challenged to restate that or to explain that, he declined to do so and would simply say oh, watch this space, you know, we don't know what we're up to, watch this space. So that certainly has raised some eyebrows about whether or not the Coalition would be willing to make some changes to that policy that we to make policy that we may well see announced to make some changes to that announced once the election campaign has been announced once the campaign has been called. So clearly both sides are aware of the big savings tasks ahead of them and are looking at their economic policies with the possibility of an election being called very soon. So clearly anyone who wants to know what the numbers are going to be are going to need to watch both sides closely in the coming week s.That election sounds sooner rather than later. Thank you. We'll have full coverage of the Government's economic statement as Melissa said, the Treasurer Chris Bowen and Penny Wong will deliver the official announcement at 1pm eastern time and we will follow that with full analysis throughout the afternoon on ABC News 24. Meanwhile another 39 men have been sent to Papua New Guinea under the Government's new asylum seeker arrangement. 40 people arrived yesterday. The Immigration Department says if the new group of 39 Iranian men are found to be refugees they will be resettled in PNG.The American man who Kipp napped, raped and imprisoned 3 women in his home will spend the rest of his life in jail. He was sentenced to life without parole on more than 900 charges. In the a ramble ing defence Castro told the court he wasn't a monster. Ben Knight says Castro's final court appearance was difficult to watch.Look, this was really uncomfortable viewing. Of course being in the US you can watch the whole thing taking

what you saw was Ariel Castro, a man if not in denial then certainly telling some lies, even as he was being sentenced by the judge. He apologised to the victims but it was pretty clear that he was sorry only for himself. He, of course, pleaded guilty to more than 900 counts including murder, rape and kidnapping. But even in court today he was walking back from those, he was denying them. He was telling the judge "Look, really, I never killed anybody, I never killed unborn baby, I never raped anybody. Anything that took a
place was consensual. This was a happy home, it was a harmonious home." All of these things were coming out during the sentencing phase. It it was remarkable to watch and the judge, of course, wasn't having any of it. He said, "Mr Castro, you're not a victim, you were a victim iseer." He spent him to life in jail without parole

place on live on television and