Coal freight company accused of pay deal bribes

Posted January 30, 2013 12:47:30

The union representing rail workers has threatened to take legal action against Pacific National Coal, accusing them of bribing workers to avoid strikes.

Pacific National Coal and the Rail, Tram and Bus Union have been locked in a pay dispute for more than 12 months.

The company has taken the unusual step of offering to guarantee a 4 per cent pay rise to individual workers who promise not to undertake industrial action.

The union’s national secretary Bob Nanva says that is discrimination, and a breach of the Fair Work Act.

“This is an unprecedented and disgraceful attempt to bribe our workers,” he said.

“This is an attempt to bribe and bully the workforce into not exercising their legal right to strike.

“Every member who participated in the ballot has a legal right to take protected action and this is an attempt by Pacific National to subvert what is a legal process.

The union is seeking a 9 per cent pay increase.

However, Pacific National is warning that its current offer will be reduced to 3 per cent if an agreement is not reached.

And it will be cut further if the dispute continues for another month.

The company says it has held many meetings with the union, but it was now apparent that the bargaining process had been exhausted.

In a statement, Pacific National says it has been approached by a number of employees who want to accept the four percent deal.

Topics: unions, industrial-relations, coal, newcastle-2300, port-kembla-2505

Coles nears $10b in quarterly sales

Updated January 30, 2013 11:36:05

Wesfarmers has recorded another strong quarter of sales growth for Coles, and its discount department stores have also started reporting a modest sales increase.

The conglomerate’s food and liquor division saw sales rise 5 per cent in the 14-week period to December 30, compared to the same period a year earlier.

The company’s convenience division, which includes its petrol business, saw sales up 5.8 per cent.

In total, the Wesfarmers-owned supermarket, liquor, convenience and petrol business made almost $9.9 billion in sales during the quarter.

Wesfarmers chief executive Richard Goyder says the result is the latest in a long run of growth for the supermarket business.

“The December quarter represented the 15th consecutive quarter of growth in comparable sales and sales density,” he noted in the report.

Wesfarmers has reported that food and liquor price deflation eased, with fresh food prices falling less than previously, but it says prices still declined by an average of 0.9 per cent in the quarter.

The company says it sold 4.4 per cent more fuel in the December quarter this year than last, with customers responding to its supermarket fuel discount campaigns.

The Bunnings hardware chain also continued its strong sales growth, with a 6.6 per cent increase in quarterly sales taking its revenue to $2.2 billion for the 14-week period.

There was also a less spectacular, but positive, result for the Kmart discount department store chain, which saw sales rise 3.8 per cent to $1.4 billion.

However, the conglomerate’s other discount department store group, Target, continued to struggle, with sales up a very modest 0.6 per cent.

The company’s Officeworks business also stagnated, with sales up just 0.3 per cent despite the opening of four new stores.

Wesfarmers blames the glacial sales growth at both Officeworks and Target on continued deflation in technology product prices.

Investors have given the sales result a cool welcome, with Wesfarmers shares down 1.4 per cent to $38.27 by 11:36am (AEDT) in a generally rising market.

Topics: business-economics-and-finance, company-news, retail, australia

First posted January 30, 2013 09:42:33

Traders expected to seek phone outage compo

Posted January 30, 2013 14:22:22

North Queensland businesses estimate the cost of the weekend’s Telstra outage to run in the hundreds of thousands of dollars.

Many regional phone and internet services were lost for almost 24 hours after flooding washed out a coastal cable and a landslide damaged an inland back-up link.

In Charters Towers, the outage coincided with the town’s main tourist drawcard, the annual Goldfield Ashes cricket tournament.

Charters Towers Chamber of Commerce president Tom Hogg says local businesses rely heavily rely on the weekend’s takings.

“I know talking to some of the hotels here, between just four hotels alone, they’ve told me they’ve lost nearly $100,000 in trading,” he said.

“Bottle shop takings are down there.

“Some of their takings are worse than a normal weekend and generally, as I said, this is the biggest take for a lot of businesses for the entire year.

“Businesses will be looking for compensation yes and rightfully so.

“If a service is supposed to be provided and if that service hasn’t been provided because redundant systems and back-up hasn’t been allowed for, then I believe a lot of these businesses should be entitled to some sort of compensation.”

Topics: small-business, regional-development, community-and-multicultural-festivals, regional, national-days, floods, australia-day, activism-and-lobbying, charters-towers-4820, townsville-4810

Guam raises energy, water rates

Updated January 30, 2013 19:50:32

Energy and water rates on Guam are set to go up by as much nine per cent from Friday, February 1.

The Public Utilities Commission approved the rate hikes at a meeting Tuesday night.

Utility prices already tend to be higher in most Pacific countries and territories compared to the US mainland and other industrialised countries.

But a lawyer for Guam’s Public Utilities Commission, Fred Horecky, has told Pacific Beat the water rate did not rise as much as originally expected.

“The water rate, which ultimately was increased … 6.10% but on a compressed basis ended up being for the rest of the fiscal year, 9.15%.

“But actually, the 6.10% increase was less than the originally approved 8% so I guess an optimistic way to look at [it ]was in fact it [was] not as much as originally expected, so that’s perhaps good news.”

But he said there may be more increases to come.

” … it was approved by the Commission that by March of this year, the Utility will provide the Commission with its next five-year rate plan, so unfortunately if I had to predict, I would say that a number of additional rate increases will likely be required on the water side.”

Mr Horecky says the water rate increases are for the water utility’s revenue and not to improve the water system, for which they have a separate ‘system-development’ charge, paid by developers when new developments are made.

But he told Pacific Beat families are already struggling with high utility costs.

” [At public] hearings, we have heard a number of the poor people in the community, I guess – some have to turn off their air-conditioning for example, reduce power usage, so there is an impact, and I know the rates are high and some people certainly cannot afford them.”

Mr Horecky said the increase in electricity rates is mainly due to fuel costs.

“… on our power bills in Guam, likely 70% – 80% of the rate is fuel oil – our generators are at this point almost all fuel-driven, although there have been a few new alternative energy, solar and wind projects, so unfortunately the power authority is stuck with the fuel price and [this] is passed through to the customers.”

Topics: electricity-energy-and-utilities, alternative-energy, guam, pacific

First posted January 30, 2013 19:40:48

Press freedom in Asia declining, says report

Updated January 30, 2013 17:10:19

Press freedom across most parts of Asia has worsened, according to the latest Press Freedom Index released by Reporters Without Borders.

The media watchdog says Burma is a rare bright spot, and changes in Afghanistan are “precarious” as foreign troops withdraw.

Authoritarian countries like North Korea, China, Vietnam and Laos continue to appear at the bottom of the list, while Cambodia and Malaysia are regarded as drifting towards authoritarianism.

The annual report noted a general decline in South Asia and Japanese restrictions on reporting the Fukushima nuclear disaster.

The head of Reporters Without Borders in Asia and the Pacific, Benjamin Ismail, told Radio Australia’s Connect Asia there is limited media freedom in North Korea and China, despite leadership changes.

“Here we are still informed almost on a daily basis of violation of press freedom in these regions such as Tibet, but also for cases concerning the mainstream media located in Beijing or Shanghai,” he said.

Burma has risen 18 places on the Press Freedom Index this year and ranks 151 out of 179 countries.

Mr Ismail says decriminalisation of the media needs to be the next step if the Burmese Government is serious about improving press freedom.

“The big challenge in 2013 for Burma will be legislative reform,” he said.

“It appears many things have changed for journalists, the reality is not at all the same.

“They can really think of a brighter future, think to develop their media. But their legislative framework – which is a repressive one – is still in place, and that needs to be abolished.”

The Press Freedom Index is determined by questionaries sent to non-governmental organisations, journalists, jurists and human rights workers.

Fiji has climbed 10 places on the annual Press Freedom Index, despite ongoing problems in the country’s media environment.

Ben Ismail says Fiji’s jump in the ranking does not necessarily mean conditions for journalists have improved.

“The movement is relative. So if several countries that were ranked in a higher position than a certain country, if their situation worsens more than the country you’re trying to assess, then that will push up the country you’re trying to measure and that’s partially what happened for Fiji.”

Papua New Guinea has slipped six places to be ranked 41st out of 179 nations surveyed, while New Zealand is considered the 8th most free press in the world.

Topics: media, censorship, world-politics, asia, burma, china

First posted January 30, 2013 13:11:18

Fears Lockyer Valley community facing weeks of isolation

Posted January 30, 2013 13:54:10

The Lockyer Valley Mayor says the council may have to airlift supplies for months to a flood-affected community in southern Queensland.

The clean-up is continuing this morning in Grantham and Laidley.

But Steve Jones says there is no access to Mount Sylvia, south-west of Gatton.

“The damage up there and the isolation of people is quite extreme,” he said.

“In fact, the damage is probably a huge amount, more than 2011 and people will be isolated there for a long time, so we’re looking to supply them by chopper at least for many weeks, if not months.”

Many Lockyer Valley residents and business owners are hard at work cleaning up after the flood.

A number of valley communities were hit, including Laidley where about 100 homes and businesses were flooded.

Local business owner Toni Teuthof says she is dealing with a different mess than in 2011.

“It’s a lot more thicker and gluggier, more dirty more this time than the 2011… the 2011 [flood] throughout the shop was more water, whereas this is think mud which has obviously ruined a lot more stock than what we thought,” she said.

Communities on Queensland’s southern border are being warned they could be isolated for several days as record flooding continues downstream.

The Goondiwindi Regional Council says flooding in the Weir River and Wyaga Creek is at levels never seen before.

Mayor Graeme Scheu says residents in Talwood need to resupply now.

“The areas out there are going to be isolated and we need to urge people, particularly in the Talwood area, the roads are open to St George at the moment and to stock up quickly because it is going to be isolated and it looks like it will be for quite a while,” he said.

Flooding in Chinchilla appears to have peaked overnight.

The weather bureau say Charleys Creek reached a major height of 6.5m overnight and has fallen slightly this morning.

Eight businesses were inundated when the creek rose on Sunday but the Western Downs Mayor, Ray Brown, says a check is being done to see if any more shops and homes have been affected.

“Obviously additional business houses have been inundated in Chinchilla overnight from yesterday,” he said.

“We’ll verify that, also verify what if any houses had inundations, so obviously some concern there this morning.”

Business owners say they are playing a waiting game for floodwaters to recede in Chinchilla so that they can begin the clean-up.

Jim Strongman’s property development firm has been impacted.

“Our company, for example, has four offices in Chinchilla, one of those has a couple of feet of water through it but because we had plenty of warning that there was a high risk of flooding we managed to empty it on Sunday,” he said.

Condamine locals are settling in for a wait with floodwaters expected to isolate the town.

Access to the town could be cut tonight if the Condamine River exceeds the major flood height of 10m.

The river is expected to peak later this week at 12.5m – about 3m short of the record flood that forced the evacuation of the town two years ago.

Resident Andrew Smith says locals are ready.

“I’ve spoken to quite a few people that have made the trip into Miles stocking up the fridge and what have you just in case that we would be isolated and it does look as though at this stage that will happen,” he said.

“We are ready and we’re experienced now too I think as a lot of places across Queensland are.”

The Warwick Chamber of Commerce and Industry says it fears some shops may not open after being flooded for the second time.

About 20 businesses are continuing to clean up today after the Condamine River peaked at 7.45 metres on Monday night.

Chamber president David Littleproud says some businesses had only just completed repairs and reopened after the 2011 floods.

“I would like to think that they’re resilient enough to do it again because all those businesses that have been affected [are] very popular local businesses, so I’d really like to think they’re resilient and Id like to think with the support of the local community that they’ll stand up and go through it one more time,” he said.

Topics: road-transport, small-business, regional, floods, activism-and-lobbying, local-government, regional-development, chinchilla-4413, talwood-4496, st-george-4487, condamine-4416, toowoomba-4350

Gas leak north of Bundaberg prompts safety warning

Posted January 30, 2013 08:37:37

Authorities are warning people to stay away from a dangerous leak in an underground natural gas pipeline about 120 kilometres north of Bundaberg.

Mark Jackson from the Bundaberg disaster management group says the underground pipeline is in rural and remote areas and does not pass close to any houses.

Crews have been out since first light trying to the source of the leak, which was noticed last night.

People living in the area have been notified and are being warned to stay clear and contact police immediately if they see it.

The 10cm pipeline is one to two metres underground.

It has been turned off but Mr Jackson says it will take some time it to depressurise.

He says anyone about 100m away may hear a loud roaring sound and could see a mist cloud which smells.

“It’s a fairly big rent in the pipe,” he said.

“It’ll be faily spectacular leak both visually and by sound.

“In its early stages when there’s a lot of pressure it certainly won’t be mistaken for much else.”

Topics: oil-and-gas, accidents—other, bundaberg-4670

Labor promises rail line to Ellenbrook if elected

Updated January 30, 2013 19:54:09

The Opposition Leader Mark McGowan has promised to build a rail line to Ellenbrook by the end of 2018 if Labor wins the March election.

The 21 kilometre line would connect to the Midland line and stop at Morley, Noranda, Bennett Springs and Whiteman.

Mr McGowan says it would cost $863 million, excluding the cost of new rail cars.

Both major parties committed to an Ellenbrook line at the last election and Labor has constantly attacked the Premier Colin Barnett for dumping the plan.

The Premier has previously argued there is not enough demand for the line but Mr McGowan insists it is needed to cope with rapid population growth in the north-eastern suburbs.

He says the Government should never have scrapped it.

“Today, I’m here to right a wrong, the wrong that was committed to the people of Ellenbrook by Colin Barnett,” he said.

“[Ellenbrook is] full of people moving in, full of people who need public transport to fix the congestion crisis.”

Mr Barnett maintains the business case still does not stack up.

“Eventually a rail line will go out there as the population develops but at this stage that rail line is not justified,” he said.

“Look, Mark McGowan and the Labor Party are announcing a new railway every day.

“I mean when’s it going to stop?”

Mr Barnett says the Government has allocated $20 million towards improving Gnangara Road.

The Ellenbrook line is part of Labor’s heavy rail proposal, known as Metronet.

Yesterday, Mr McGowan also promised to build a railway line to the Perth Airport by mid-2018.

The 10.5 kilometre rail line, stopping at Redcliffe, the airport and Forrestfield, would cost $731 million, but that does not include the cost of new rail cars to service the line.

Mr McGowan says the airport line is a priority for Labor.

Labor has costed Metronet at $3.8 billion but the Treasurer, Troy Buswell, has previously estimated it at $6.4 billion.

Topics: rail-transport, government-and-politics, ellenbrook-6069

First posted January 30, 2013 15:00:00

Rents are up and down in the Pilbara

Updated January 30, 2013 17:13:09

It’s no secret the town dubbed ‘the engine room of Australia’ is one of the most expensive places to live in the country.

Karratha, in WA’s Pilbara region, has a population of about 20,000 people and is expected to grow rapidly in the next decade.

The State Government is pouring about a billion dollars into its Pilbara Cities initiative in order to transform Karratha and Port Hedland into liveable cities of 50,000 residents each by 2035.

It is hoping the changes will attract people to live in the region.

The Chamber of Minerals and Energy is, however, predicting fly-in, fly-out workers will make up more than 80 per cent of the Pilbara’s resource sector workforce in 2020; a year in which 51,600 workers will be required.

Mining companies find it cheaper to fly workers in rather than pay the high rents.

About six months before Woodside’s Pluto Liquid Natural Gas project came online in early 2012, the average cost of renting a house in Karratha peaked at $1,800 a week.

Recently, those prices dipped to a three and half year low after steadily declining for the past six months but it is a different story in Newman.

In the smaller East Pilbara town, rents have reached record highs with tenants paying on average about $2,200 a week.

A Newman business owner, Callam, says he’s struggled with the cost.

“I’ve heard of houses being shared by six or seven different people all working for the same company,” he said.

Callam’s company owns two houses with one staff member and their family in each.

He says he has no choice but to provide housing for his employees as they wouldn’t be able to pay their own rents.

“There wouldn’t be a business in town that isn’t in the same boat as us,” he said.

“We’d prefer to own no houses and be in a situation like in Perth where people rent or buy their own places and rock up to work.

“But up here, it is too expensive for people to be able to do that.”

The Pilbara Regional Council chairwoman, Lynne Craigie, says the high cost of living has deterred new businesses and services from opening in the town, despite a steady population growth over the past few years.

“Certainly we have lost some shops,” she said.

“Newman’s growing, it’s growing at a huge rate, but we’re not seeing new services coming to town.

“There hasn’t been a new shop open for quite a while.

“If you look at the retail sector, we could probably use more shops but they’re just not coming because there’s just nowhere for people to live.”

Australian Bureau of Statistics figures show the number of people living in the Newman region has nearly doubled to 12,000 people in the past six years, ranking as the fastest growing area in the country.

Ms Craigie says she’s concerned for those who work in the essential retail and service industries.

“Obviously you just couldn’t afford a rent to house for a family if you’re only on retail wages,” she said.

“The exorbitant rents are being met by corporations and companies that have workers to house.”

The Government plans to stabilise the property market through the Pilbara Cities initiative but it will take some doing according to experts.

“That will require prices to come down to a level where people can afford them,” says Perth property commentator, Gavin Hegney, of Hegney Property Group.

“Probably what we’re faced with is Karratha prices stabilising at probably 20 to 30 percent above Perth prices which, in effect, means you’re probably looking at a drop of about 20 to 30 percent in the value of houses to get to that level.”

The average cost of buying a home in Karratha is $823,000, the lowest since December 2009.

Mr Hegney says while that may be good news for locals, it’s bad news for investors.

“The concern is investors are going in and borrowing everything expecting it’s a hot spot and they’re going to make a fortune,” he said.

“I would be cautious on that.

“I’ve seen investors buying from all around Australia and most of the buying is coming from outside Western Australia.

“If they’re borrowing lots of money to do it, they might be out of pocket, disappointed, and in financial difficulty as a result.”

The Karratha Chamber of Commerce and Industry says generally the market is looking healthy.

Its president Robin Vandenburg says residents have more property options than ever before.

“There are nearly a couple hundred properties for rent,” he said.

“So people have got a great choice, not just in price, but also what sort of property they want.”

Ms Craigie says the key to stabilising rental costs is to release more land to meet the demand.

“Over the 13 towns across the Pilbara, there’s roughly 28 blocks of land for sale,” she said.

“We’re never going to get an equal supply or demand unless we have a lot more land made available.”

The State Government recently released 38 residential lots in Newman for people who have lived in town for more than a year.

Ms Craigie says she doesn’t think that will make a difference.

“My understanding is there are over 50 expressions of interest gone in those 38 blocks so no, I don’t think that’s going to ease it at all,” she said.

However, the Pilbara Development Commission says there are about 1,900 land parcels in development or in approval processes in Newman.

A spokesman says the market will ease as the land becomes available.

Mr Hegney it’s unclear what the market will do looking forward.

“Every town has its own unique set of characteristics that drive prices,” he said.

“Probably, Karratha’s going to [have] an adequate supply of property moving forward, more so than other markets, so that’s the one you’ll see a continual softening in price.”

Mr Vandenburg says Karratha needs to establish industries away from the resource sector so the community is not so reliant on it.

“It’s going to be interesting to see how far rent prices do drop,” he said.

“We only really need one project to kickstart it again.

“Say, for instance, if Woodside said they’re going to do another train or two out at Pluto, then you pretty well would see most of that taken back up again.”

He is confident Karratha will never again have such a major rental price crisis.

“If they can keep those housing developments going and people keep buying the land, I don’t think we’ll ever again have the same sort of problems as we did during the Pluto phase,” he said.

While conditions have eased in Karratha, it may be some time before the rental squeeze ends in the town of Newman.

Topics: mining-industry, housing-industry, karratha-6714

First posted January 30, 2013 17:10:19

Train finally departs from Cairns

Posted January 30, 2013 14:28:59

Nearly 60 passengers have left Cairns on the first long-distance rail service to be run in almost a fortnight.

Flooding caused by ex-tropical cyclone Oswald had closed sections of the North Coast Line.

A Queensland Rail spokeswoman says a special service left Cairns bound for Rockhampton this morning and it is due to arrive just before 5:00am (AEST) tomorrow.

She says a northbound service will leave Rockhampton tomorrow night.

No transport can be provided south of Rockhampton due to road and rail closures from flooding.

Topics: rail-transport, regional, floods, travel-health-and-safety, rural-tourism, cairns-4870, rockhampton-4700, townsville-4810

Sunshine Coast still counting cost of storm

Posted January 30, 2013 11:13:48

Sunshine Coast Regional Council says crews are still assessing the damage from the weekend’s severe storm.

Deputy Mayor Chris Thompson says it is too early to put a figure on the damage bill to local roads and infrastructure.

He says about 80 people are still in an evacuation centre at Nambour waiting for the Bruce Highway to reopen at Gympie.

Councillor Thompson says the disaster recovery committee is prioritising areas of need.

“We’ve got a number of clean-up crews working on removing fallen trees, clearing and repairing roads and potholes,” he said.

“We’ve also got environmental health officers visiting those businesses who have had power outages for a long time.

“We’ve had environmental operations staff undertaking beach erosion assessments and we’re continuing with the evacuation centres as some people still can’t get further north.”

Topics: tourism, small-business, regional, urban-development-and-planning, cyclones, erosion, environmental-impact, oceans-and-reefs, activism-and-lobbying, local-government, environmental-health, maroochydore-4558, noosa-heads-4567, caloundra-4551, mooloolaba-4557, alexandra-headland-4572

Your say: Ipswich mayor attacks insurance industry

Updated January 30, 2013 09:53:41

Ipswich Mayor Paul Pisasale has accused the insurance industry of trying to evade its responsibilities in the wake of disasters like the floods in Queensland and New South Wales.

Last night the Insurance Council of Australia’s Rob Whelan told Lateline that governments should spend millions of dollars on more efficient infrastructure to protect flood-prone towns.

Watch the interview with Mr Whelan here.

Councillor Pisasale has told ABC News Breakfast that is just an exercise in trying to shift the blame.

“Instead of facing up to their responsibilities, what this bloke’s doing is [saying] let’s take it away from our customers and hit and blame local government,” he said.

“We’ve spent millions and millions and millions of dollars on flood mitigation and all councils are struggling, and yet insurance companies, all we see is the huge profits getting bigger and bigger and bigger.

“This guy was here in 2011 when our city was inundated… trying to defend the profits of insurance companies, and refused to pay millions and millions of profits to young people and families that were hit by floods.”

“We had to fight and fight and fight, and in actual fact we had to bring Bill Shorten in, and the Federal Government, to start reforming.

“They had all these hidden clauses all over their policies. This is how they do it. I’m glad he’s brought it up because this is a fight for the next generation. No young person will be able to afford insurance.

“Ask Rob how much money insurance companies have put up their premiums, and I’m talking about people not in flood areas. I live at the top of the hill and my premium went up $3,000… mate, it’s happened all over the place.”

What do you think about how insurance companies respond to disasters? Have your say.

Topics: insurance, industry, business-economics-and-finance, storm-disaster, floods, disasters-and-accidents, ipswich-4305, qld, australia

First posted January 30, 2013 08:47:13

Japanese airlines switched many Dreamliner batteries

Updated January 30, 2013 19:54:09

Japan’s two major airlines say they replaced a number of batteries in their 787 Dreamliners ahead of the worldwide grounding of Boeing’s next-generation aircraft earlier this month.

A spokeswoman for All Nippon Airways (ANA) said 10 batteries on its fleet were switched, while a representative of rival Japan Airlines (JAL) said “quite a few” needed changing.

The lithium-ion batteries, made by Japanese manufacturer GS Yuasa, have been at the centre of a probe into the Dreamliner’s airworthiness since a fire on a JAL plane in Boston and an emergency landing of an ANA flight in Japan.

ANA, a key customer for Boeing’s lightweight plane, says it had to replace batteries 10 times ahead of the January 16 emergency landing forced by smoke apparently linked to the powerpack.

“Batteries in general have to be replaced as frequently as need arises,” a company spokeswoman told AFP without providing further details.

It is not immediately clear if all 10 replacements were carried out on different planes or if the same aircraft saw multiple changes.

A spokeswoman for JAL says the airline has had “quite a few cases” where Boeing 787 batteries were replaced before the aircraft’s worldwide fleet was grounded.

ANA and JAL are important Dreamliner customers who have so far ordered a combined 111 aircraft.

AFP

Topics: air-transport, industry, business-economics-and-finance, japan, united-states

First posted January 30, 2013 17:37:29

US market heading for best January since the 90s

Updated January 30, 2013 09:17:10

Another round of better-than-expected profit results in the US drove shares higher overnight, with Wall Street’s benchmark S&P 500 index on track to record its best January performance in 16 years.

That is expected to drive Australian shares above yesterday’s 21-month high when the market opens later this morning.

Drug maker Pfizer was among the US companies to surprise, and figures from Bloomberg show that three out of every four firms who have reported so far this earnings season have performed better than analysts were expecting.

Adding to the optimism for US traders were data showing home prices there rose in November, erasing concern about another report indicating a drop in consumer confidence.

The Dow Jones Industrial Average ended the session 69 points, or 0.5 per cent, higher at 13,951.

The Standard & Poor’s 500 index closed 0.5 per cent higher at 1,508.

Tech stocks did not fare as well though, with the Nasdaq slightly down at 3,154.

However, an economist in the United States believes there is room for Wall Street’s value to rise further this year.

David Hale says central banks deserve much of the credit for restoring investor confidence to allow global markets to rise considerably over recent months.

“I think the odds are pretty high that by the end of this year we could set an all-time high for the New York stock market,” he told Radio National Breakfast.

“We still have modest profit growth, we have these positive factors I just mentioned. So if we don’t have major problems with fiscal policy, a government shutdown, a threatened default, that kind of thing, the stock market does have room for further gain.”

European markets mostly rose overnight, with London’s FTSE 100 up 45 points, or 0.7 per cent, to 6,339.

The German DAX rose 0.2 per cent and France’s CAC 40 ended up 0.1 per cent.

On the local futures market, the ASX SPI 200 was down 2 points to 4,852 at 8:00am (AEDT).

On commodity markets, West Texas intermediate crude oil closed higher at $US97.62 a barrel.

The spot gold price was also up, to $US1,664 an ounce.

The Australian dollar was stronger against the major currencies.

At 8:15am (AEDT) it was buying around 104.68 US cents, 77.59 euro cents, 95.00 Japanese yen, 66.42 UK pence and 124.89 New Zealand cents.

Topics: business-economics-and-finance, markets, currency, futures, stockmarket, united-states, united-kingdom, european-union, australia

First posted January 30, 2013 09:09:28

Market watch: Earnings overshadow macro worries

Benchm­ark KSE-100 index falls 51 points.  Trade volumes fell to paltry level of 190 million shares compared with Thursday’s tally of 218 million shares.


KARACHI: The local bourse opened the day rallying up as excitement over earnings announcement kept macro worries at bay. However, investors opted to bank profits above the psychological level of 17,000 points, pulling the market down as blue chips failed to deliver the high dividends and bonuses that investors had hoped for.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 0.3% or 51.37 points to end at 17,004.99 points level. Trade volumes fell to paltry level of 190 million shares compared with Thursday’s tally of 218 million shares.


“Profit taking was witnessed after major results announced today were not able to excite investors due to prevailing political uncertainty in the country,” said Shakir Padela, analyst at JS Global Capital.


“Results of Attock group and cement giant Lucky Cement compelled investors to book profits above the key 17,000 mark,” reported Samar Iqbal, equity dealer at Topline Securities.


Engro Corporation stole the show in the later hours of the session, hitting consecutive upper circuits on reported institutional activity, said Harris Batla, analyst at Elixir Securities. Engro Foods once again closed at its upper limit after excellent result announcement last week.


Pakistan Oilfields and Attock Refinery traded along the neutral line while Attock Petroleum, after failing to declare a cash dividend along with the results, shed 2.65% to close at Rs31.18.


Moreover, Lucky Cement closed almost flat with no surprises in its earnings announcement, which were in line with market expectations.


Shares of 342 companies were traded on Monday. At the end of the day 127 stocks closed higher, 182 declined while 33 remained unchanged. The value of shares traded during the day was Rs5.1 billion.


Small cap plays continued to dominate the volume charts. Fauji Cement was the volume leader with 50.18 million shares gaining Rs0.32 to finish at Rs8.12. It was followed by Maple Leaf Cement with 17.94 million shares losing Rs0.36 to close at Rs17.5 and Jahangir Siddiqui and Company with 11.93 million shares shedding Rs0.52 to close at Rs16.01.


Foreign institutional investors were net sellers of Rs34.36 million, according to data maintained by the National Clearing Company of Pakistan Limited.

Pakistan’s fuel shortage: Is Tight gas the answer to the prevailing energy crisis?

As gas reserv­es run out, compan­ies increa­singly lookin­g for altern­atives.  Pakistan is facing an energy crisis of gigantic proportions and it is expected to get worse as the summer months approach. ILLUSTRATION: JAMAL KHURSHID


KARACHI: Pakistan is facing an energy crisis of gigantic proportions and it is expected to get worse as the summer months approach. Along with that, and in some ways related to that, the country is also tackling an ever-worsening gas crisis. The winter months are the worst as demand for gas increases. But with the rising demand, from domestic consumers, the industry and also power producers, the gas crisis is only going to get worse.


This has led to the search for alternatives like importing LNG – which is expensive – or adding LPG-air mix to the natural gas system, also an expensive solution.


The Tight Gas (Exploration & Production) Policy was promulgated in May 2011 by the Ministry of Petroleum and Natural Resources and subsequently approved by the Council of Common Interests (CCI).


One of the objectives of the policy is to attract foreign direct investment, given the high cost of exploration and production. As Tight gas exploration is more difficult and the required technology is more expensive, companies don’t typically go in for exploration until given attractive incentives.


Gas price incentives are an important pre-requisite towards promoting a Tight gas investment recovery process. To encourage investment, 40% premium will be given over the respective zonal price of the Petroleum Policy 2009. And apart from this, in order to encourage the companies to fast track development and production of Tight gas, an additional 10% premium will be given for those volumes that are brought into production within two years of announcement of this policy.’


Apart from this the government is also aggressively pursuing the exploration and extraction of Shale gas but a policy for this is yet to be announced.


What is Tight gas?


Tight gas refers to natural gas reservoirs locked in extraordinarily impermeable, hard rock, making the underground formation extremely “tight.” Tight gas is usually trapped in sandstone or limestone formations that are atypically impermeable or nonporous. Tight gas is held in rock pores which are up to 20,000 times narrower than a human hair.


A conventional gas formation can be relatively easily drilled and extracted from the ground unassisted but Tight gas requires more effort to pull it from the ground because of the extremely tight formation in which it is located.


While conventional gas formations tend to be found in the younger Tertiary basins, Tight gas formations are much older, having been deposited some 248 million years ago.  Over time, the rock formations have been compacted and have undergone cementation and re-crystallisation, which all reduce the level of permeability in the rock.


Shale Gas is a description for a field in which natural gas accumulation is locked in tiny bubble-like pockets within layered sedimentary rock such as shale. The situation can be best compared to tiny air pockets trapped in a loaf of bread as it bakes.


While Shale gas is trapped in rock, Tight gas describes natural gas that is dispersed within low-porosity silt or sand areas that create a tight-fitting environment for the gas.


Exploring and extracting Tight gas


This is the real challenge since the cost and effort involved in extracting Tight gas is quite different from conventional methods. But it has been commercially extracted in many parts of the world now and there are some tried and tested methods. Some of the proven technologies used in Tight Gas exploration are:


Directional drilling


 


Directional drilling means drilling wells at multiple angles, usually vertically and  in some cases horizontally too, to better reach and produce gas reserves. From a single location, various wells can be drilled at myriad angles, tapping reserves miles away and more than a mile below the surface.


Hydraulic fracturing


 


Hydraulic fracturing is the practice of injecting a well with large amounts of frac fluids under high pressure in order to break the rocks.  Small channels are opened up as a result to release the encapsulated gas and allow it to flow into the wellbore.


Reserves in Pakistan


While there is no proven figure available, it is estimated from various independent sources that Pakistan has estimated total Tight Gas reserves in the range of 24 to 40 TCF, which makes them larger than the existing natural gas reserves.


Mari Gas Company Limited in Zarghun block, Polish Oil and Gas Company (PGNiG) in Kirthar block and OMV in Miano and Sawan blocks, have found Tight gas.


Tight gas reserves have also been identified in the existing development and production leases granted to various E&P companies operating in Pakistan. Main Tight gas regions identified are Kirthar Foldbelt  located in Dadu, Sindh, Sulaiman Foldbelt (located in Balochistan), Potohar region in Punjab and offshore areas near Karachi.


 


What does the future hold?


The first ever Tight gas sales and purchase agreement was signed on November 13, 2012 in Islamabad for first production from a Tight gas reservoir in Pakistan from Kirthar Block in Dadu, Sindh. The Kirthar Block is jointly owned by Polish Oil and Gas Company (70%) and PPL (30%).


If exploration and extraction is on schedule, SSGC will receive 30mmcfd gas into its system through two Kirthar Block wells.


For the implementation of this project, SSGC has been awarded a contract of Rs235 million for the construction of 52-km pipeline from Kirthar Block’s Rehman Gas Field which will be integrated into SSGC’s system at Naing Valve Assembly through the Bhit Gas pipeline.


 


Apart from this, PPL in collaboration with ENI is set to start for the first time drilling of exploratory well in Sindh’s deep sea in 2014. In this regard, around seven exploratory wells, eight appraisal wells, and 19 development wells have been planned for discovering 150 billion cubic feet of Shale and Tight gas in Sindh in the next five years.

Tourism lagging behind as potential remains untapped

Securi­ty matter­s, lack of inform­ation and qualit­y contro­l hamper growth.  Security matters, lack of information and quality control hamper growth. PHOTO: FAZAL KHALIQ

ISLAMABAD: 

In the field of tourism, Pakistan offers much attraction in the developing world. The historical and cultural heritage of the nation is a testimony of the glory of this ancient land as the country has numerous tourist attractions at Swat, Kalam, Malam Jabba, Shangla, Balakot, Ayubia, Murree, Chitral, Gilgit, Naran and Kaghan valleys, and other mountainous ranges, historical and archaeological places in other parts of the country.


There are few places on the earth that posses the majesty and grandeur of the northern region of Pakistan. Northern Pakistan remains a land of contrasts, unique in its legacy of landlocked civilisation and blessed as no other destination with an amazing array beautiful valleys, lakes, rivers and mountains.


However, due to mismanagement of tourism, this industry is not growing. Despite having a lot of potential, the industry is lagging behind in contributing revenue to the economy as well as behind other developing countries in the region.


If we go back a decade, the trend of tourism was fast gaining pace in 2000, but unfortunately 9/11 disrupted and reversed the advance for two consecutive years – 2001 and 2002. Thereafter, a recovery got under way and tourism recorded unprecedented growth in 2004 and 2005.


However, visitor arrivals have not progressively increased from 2005 to 2009, show latest figures for the period. Though the data shows a recovery from approximately 7.98 million visitors in 2005 to 8.6 million in 2009, an annual increase of 3.9%, it is not very encouraging when compared with India, which has achieved a 9% annual rate of increase.


 


In terms of tourism receipts, Pakistan’s receipts have declined by 1.2% from $243.5 million in 2008 to $240.6 million in 2009, shows data of the Pakistan Bureau of Statistics (PBS).


Data for 2011 and 2012 is not available. Latest figures quoted by the World Trade Organization (WTO) show that total visitor arrivals in Pakistan increased from 8.6 million in 2009 to 9.1 million in 2010, a 6.1% rise. International tourism receipts rose from around $272 million in 2009 to $305 million in 2010, a gain of 12.1%.


Pakistan’s place in South Asian tourism is also not very encouraging. Country-wise analysis reveals Pakistan is far behind others in growth of tourism. Bhutan’s tourism has grown 39%, Sri Lanka 31% and Nepal 22%, the highest growth rates in the region. They are followed by the Maldives at 18% and India, the largest destination in the region, at 9%, show WTO figures.


 


Pakistani Diaspora and others visiting friends and relatives here account for more than half of all foreign arrivals at 56%. Holiday and vacation visits are limited to only 14.7% of all arrivals.


At present, business visitors account for 21% of all arrivals in Pakistan. There is potential on this side, if more opportunities are provided to businesses to invest in different sectors on a large scale.


Pakistan has also a lot of potential for religious tourism, especially pertaining to people belonging to Sikh and Buddhist faiths. Only 8,800 tourists came to Pakistan for religious purposes in 2005, a very low figure.


In the case of holiday and recreation tourism, over 75% of long-haul leisure tourists confine their tours to major cities such as Lahore and Islamabad and to the northern part of the country.


Major impediments in the way of tourism growth include political instability, regional and local conflicts, and poor security and safety. In addition to these, lack of adequate information and poor quality control of both tourist services and facilities are also hindering the growth.


If managed properly, the tourism industry can play a significant role in socio-economic development and promise future growth of the country.


THE WRITER IS A PUBLIC POLICY ANALYST AND CONSULTANT AT THE SUSTAINABLE DEVELOPMENT POLICY INSTITUTE, ISLAMABAD

SECP to protect minority shareholders

Task force will identi­fy weakne­sses and gaps in curren­t mechan­ism.  The forum will act as a grievance handling and dispute resolution platform for minority shareholders and create awareness of their rights. PHOTO: (AFP)


ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has announced that it has set up a task force to identify weaknesses and gaps in the current protection mechanism for the shareholders of companies and suggest ways and means to overcome these through shareholder activism.


The decision came in the light of prevalent international practices, the SECP said in a press release on Monday.


The task force consists of representatives of the SECP, three stock exchanges and the Institute of Chartered Accountants of Pakistan, principally representing minority shareholders, institutional investors, nominees of professional accounting bodies and other stakeholders.


It will consider establishing a permanent platform for dialogue and cooperation on minority shareholder issues.


This will offer a unique opportunity to diverse stakeholders, including minority shareholders, representatives of different companies, experts on minority shareholder issues and representatives of government organisations to come together in a spirit of cooperation and constructive endeavour to address some of the key issues that challenge minority shareholders.


The forum will act as a grievance handling and dispute resolution platform for minority shareholders and create awareness of their rights. Moreover, it will identify and analyse best practices, challenges, opportunities and initiatives for further development.


The SECP said all shareholders should have the opportunity to have effective remedy in case of violation of their rights.

KCCI to collaborate with ACCA Pakistan

Two bodies sign MoU to promot­e greate­r cooper­ation.  Under the MoU, ACCA will provide KCCI with volunteers to conduct surveys and compile research papers on economic issues. PHOTO: FILE


KARACHI: Representatives of the Association of Chartered Certified Accountants (ACCA) Pakistan and the Karachi Chamber of Commerce and Industry (KCCI) signed a memorandum of understanding (MoU) on Monday, whereby both bodies will exchange ideas, information, research, publications, proposals and suggestions to help economy, trade and business grow in Karachi.


Under the MoU, signed by ACCA Head Arif Masud Mirza and KCCI President Haroon Agar, ACCA will provide KCCI with volunteers to conduct surveys and compile research papers on economic issues.


Both bodies will also cooperate in arranging conferences on the budget, fiscal matters, taxation issues etc. As per the MoU, members of both bodies will be able to attend professional development programmes arranged by the ACCA and KCCI. They will identify suitable research opportunities and undertake joint research and publications as well.


The two bodies will also be allowed to post each other’s research, news, trade bulletins and publications on their respective websites. Each of them will appoint a permanent member of senior staff to serve as focal person for the execution of the MoU.


ACCA Pakistan is a wholly owned subsidiary of ACCA United Kingdom, which is a global body of professional accountants with 324,000 students and 147,000 members in 170 countries.

Pernicious influence: The world reserve currency – root of all evil?

  Use of the dollar brings social inequality, income disparity for the US and the rest. CREATIVE COMMONS

DALLAS: 

The US dollar has remained world’s reserve currency since the end of World War Two. Dollar had fractional gold-backing, forcing an expansionary limit to its money supply.


Dollar was as good as gold, just more liquid. Every country chose dollar treasury bills over holding gold, as holding T-bills paid interest. Gold didn’t.


The US started building its Military Industrial Complex and took on adventures like the Korean and Vietnam War, running huge fiscal and trade deficits, putting pressure on dollar’s fixed peg to gold. In 1971, Nixon was forced to close the gold window.


Dollar was no longer as good as gold, but it had already become a widely used reserve currency and the most liquid trading asset.


Central banks of other countries were left holding the dollar-denominated treasury bills. They couldn’t simply sell them and buy gold because there just wasn’t enough gold in the world to buy with those T-bills. Or in other words, those T-bills weren’t worth what the exchange rate was telling them.


Since 1973, the US Fed got a blank cheque from the foreign central banks to expand its money supply, via reserves and commercial lending. Gold was no longer the bottleneck. Currencies were floated freely against each other.


 


Gold shot up from $35 to $615 before the prices stabilised. The markets had spoken and the emperor was declared naked.


But the world continued to accept US T-bills for its export to the US since oil was sold in dollar. There was a huge demand for T-bills in the international market to accommodate the growing international trade. It was necessary for the US to run huge trade deficits, and later accounts deficits, to produce more and more IOUs – or so the story goes.


With the closing of the gold window, the game had now been changed. Credit creation, just like money creation, was now counted in GDP growth just like any industrial growth. In measuring GDP growth, there was no difference between manufacturing machines and manufacturing credit/debt. In reality, real goods make societies rich. Debt makes societies poor via interest payments.


Interest payments are not profits but mere transfer of payments. Markets compete for capital and whichever sector is most efficient in producing profits, would see capital flow in its coffers. Industries producing consumer staples, construction material and machinery see their cost of raw material go up due to money dilution via federal debt monetisation and private credit creation.


Meanwhile, commercial banks see their business grow as financing needs of businesses and individuals grow due to the very inflation private credit creates. Profits for banks rise but those of the non-financial economy falls.


It should be no surprise to any policy-maker that the reason why the US lost its manufacturing base since the 1970s was due to currency debasement which was being entertained by a rapidly growing financial sector. Electronics and appliance manufacturing was being replaced by financially structured products and electronic credit creation.


After all, the cost of producing commercial paper is far less than the cost of producing real goods.


There would have had been a reckoning to all these financial shenanigans if the dollar was not a reserve currency. There wouldn’t have been a need for foreign central banks to buy US T-bills.


The bond markets would have reacted, interest rates would have soared and the currency would have devalued. But for the bond market to react, the capital has to flow somewhere and that somewhere only exists in non-dollar denominated capital markets which are nowhere as deep and liquid. Using derivatives, the central bankers have cornered the global bond vigilantes.


This trend of driving real economic businesses out of business and the growth of financial services sector would continue to create income disparity in the US for the years to come. A world reserve currency, which was supposed to bring prosperity to the US and stability to the rest of the world, has brought social inequality, income disparity and a police state to Americans and the rest of the world.


The writer is a Texas-based equity, bonds and derivatives trader

Corporate results: Attock group posts mixed results

 Attock Refinery and Cement see significant rise in earnings; Attock Petroleum and Pakistan Oilfields close nominally lower than last year?

KARACHI: 

The Attock group companies posted their profit and loss statements on Monday, which were approved by the Attock board. Below are snapshots of individual company results.


Attock Petroleum


Attock Petroleum’s net profits for the first half of fiscal 2013 (1HFY13) clocked in at Rs2.155 billion, lower by 3% if compared to the same period of the preceding year. Although the company’s sales in terms of volumes were almost flat, higher product prices drove a 5% growth in net revenues during 1HFY13. And even though gross profits were higher by 17% in absolute terms on the back of inventory gains, higher operating expenses (up a staggering 114%) and higher financial charges (up 35%) diluted net profit.


On a sequential quarter-on-quarter (QoQ) basis, the company posted a 33% decline in profits to Rs864 million. The company’s net sales were higher by 14% over the preceding quarter, but the company’s gross profits took a significant hit (down 37%) – possibly due to inventory losses and a fall in asphalt margins, says an analyst note released by Topline Securities.


The company also seems to be getting sucked into the circular debt cesspool, with trade debts swelling by 48% to Rs22.74 billion in 1HFY13, against Rs15.35 billion in 1HFY12. At the same time, its payables have surged by 50% to Rs26.48 billion in the quarter under review.


Pakistan Oilfields


Pakistan Oilfields’ profits were 8% lower by the end of 1HFY13, if compared to earnings in 1HFY13. The decline in profitability during 1HFY13 may be attributed to a notable decline in hydrocarbon production, significantly higher exploration charges (4.4 times higher) and lower dividend income from National Refinery and Attock Petroleum, says an analyst note issued by BMA Capital. Nonetheless, it announced an interim dividend of Rs20 per share, higher than market speculations.


On a year-on-year (YoY) basis, analysts estimate that production for Pakistan Oilfields is lower by 6% on the back of lower oil production from the Pindori and Pariwali fields, which are nearing maturity, and stagnant international oil prices.


Moreover, the 444% increase in the company’s exploration expenses has hit profits. The increased exploration expense is on account of higher seismic activity, as the company did not book any dry well, says a Topline Securities analyst note.


However, the company’s profits were an encouraging 21% higher in the October-December quarter over the preceding quarter. On a sequential QoQ basis, revenues increased by 7% to Rs7.098 billion on the back of enhanced production  from the Makori East field in the last 15 days of the quarter.


Attock Cement


Attock Cement’s profits almost doubled to Rs958 million in 1HFY13, as compared to only Rs503 million in 1HFY12. The company has also announced a Rs3 per share dividend.


In the period, the company recorded net sales higher by around 14% YoY. An analyst note released by Shajar Capital says the uptick in profitability was a direct result of record expansion in gross margin, which posted a growth of 6.1 percentage points YoY to settle at 31% in 1HFY13.


“The hefty improvement in margins was likely on the back of better efficiency metrics amid lower transportation costs and low cost coal inventory,” added the note. “Similarly, the operating profitability of the company improved by around 48% YoY.”


Attock Refinery


Attock Refinery also announced its 1HFY13 profits, which are up by an impressive 38% from 1HFY12. The company has also announced an interim cash dividend of Rs2.5 per share with the results.


A Topline Securities analyst note says the growth in earnings stems primarily from better refinery operations, thanks to higher gross refining margins compared to last year. The company’s refinery operations alone contributed 67.5% to total profits, improving by a massive 79%.


“Moreover, thanks to higher cash generation, the company’s other income increased by an impressive 50% owing to higher return on bank deposits,” added the note.


However, earnings from non-refinery operations in the same period remained almost flat compared to last year.


National Refinery


National Refinery’s topline posted a modest growth of 4.44% in 1HFY13 over the same period of the preceding year. However, its cost of sales also climbed 4.7%, restricting its gross profit to clock in below what the company earned in the previous year.


The company’s net profit also fell to Rs1.567 billion, as compared to Rs1.585 billion in 1HFY12. Although the company recorded lower distribution expenses and other operation expenses, its administrative expenses were higher and other income was lower, thereby restricting any gains during the year.

Back to the gold standard: Some benefits of using gold as currency

In times of macroe­conomi­c instab­ility, the metal can become a useful store of value for invest­ments.  The Malaysian state of Kelantan started issuing gold coins in 2006. Although the federal government of Malaysia does not recognise these coins as legal tender, the demand for these coins has been overwhelming. PHOTO: FILE

LONDON: 

In an environment of high domestic inflation, deteriorating exchange rate of local currency against major foreign currencies and decreasing interest rates, preserving the value of savings and investment is certainly a challenging task. Most people, especially unsophisticated investors, tend to seek refuge in real estate in an attempt to preserve the value of investments. However, small savers and investors who prefer liquidity find it difficult to lock their savings in illiquid investments like property.


In the Indian sub-continent, there has been an historical obsession with gold as an enduring investment: women tend to try and convince their husbands to ‘invest’ in jewellery. All of us, however, know that gold jewellery has never been a good investment. The story is different when it comes to gold metal. Gold has always proven to be a safe haven for most investors, especially for the long run. In a country like Pakistan, which at present is facing all kinds of economic problems, it is becoming increasingly difficult for investors to preserve the real value of their investments. Meanwhile, local savers are also disheartened by the prospect of earning low, or in some cases negative, real return on their savings (and hence incurring a capital loss in real terms). This is also a deterrent for many foreign investors who may wish to invest in the country.


 


One viable option for many savers is to open up foreign currency accounts in local banks to hedge against exchange rate fluctuations and rising domestic prices. This remains a preferred option for many, especially those who receive foreign remittances on a regular basis. However, while most of the local and foreign banks operating in the country offer foreign currency (US dollar, British pound and euro) accounts, there are nearly zero gold-based savings and investment products.


Given the macroeconomic conditions, it is probably high time for the introduction of gold coins in Pakistan, as an attempt to introduce a stable currency for saving. The current share of Islamic banking in overall banking in Pakistan is about 8%, and we can expect that a very significant proportion of the banked individuals and households would be interested in saving in bullion. Islamic banks in the country can exploit this opportunity to win more business by introducing bullion accounts.


If the introduction of gold coins is successful, monetary authorities – ie, the State Bank of Pakistan – may consider using gold coins to bring about monetary reforms in the country. Indeed, advocates of monetary reform have for long advocated a return to the gold standard. Some prominent economists, like Nobel laureate Robert Mundell and James Robertson, have written a lot on the benefits of returning to the gold standard. In the context of Islamic banking and trade, the likes of the former prime minister of Malaysia, Dr Mahathir Mohamed, and activists like Tarek elDiwani have been influential figures advocating the introduction of gold dinars and replacing the fractional reserve based banking system.


In fact, the Malaysian state of Kelantan rather controversially started issuing gold coins in 2006. Although the federal government of Malaysia does not recognise these coins as legal tender, the demand for these coins has been overwhelming. Since then, some silver coins have also been sold to savers who would like to save them for the longer term.


While it may be a far-fetched idea to expect the State Bank of Pakistan to start issuing gold and silver coins, the increasing demand for Islamic banking in Pakistan offers Islamic banks a window of opportunity, to exploit which they can start offering bullion-based investments to those who consider gold coins to be more Shariah-compliant than conventional money, which is created through an interest-based credit system.


THE WRITER IS AN ECONOMIST AND A PHD FROM CAMBRIDGE UNIVERSITY

New technology: Monsanto sows genetically modified corn

Crop to provid­e sample­s for farmer­s, academ­ia.  Ahmad said Monsanto was doing business and UAF was promoting opportunities that could benefit the academia, industry and farming community at large. PHOTO: FILE


FAISALABAD: Monsanto, a leading international seed company, showcased its new technology and cultivated second generation genetically modified corn at the farmland of University of Agriculture Faisalabad on Sunday to enable people associated with the agriculture sector to examine the upcoming technology.


Speaking to people present on the occasion, UAF Vice Chancellor Dr Iqrar Ahmad described the event as a wonderful beginning of the university-industry linkages.


He stressed that Monsanto had introduced Bt cotton in Pakistan and the cotton variety being sown in the name of Bt was originally designed by the company.


He said Monsanto was doing business and UAF was promoting opportunities that could benefit the academia, industry and farming community at large.


He pointed out that Pakistan’s laws had laid down some prerequisites for risk assessment and field test, which would provide critical information to meet legal requirements.

Recipe for success: Mobilink leads with slogan of understand, invest and innovate

Cellul­ar operat­or to invest a furthe­r $1 billio­n in networ­k expans­ion.  Mobilink has already invested close to $4 billion in upgrading its voice and data services. DESIGN: KIRAN SHAHID

ISLAMABAD: 

Understanding of the market, continuous investment and innovation is what has helped Pakistan Mobile Company Limited – known for its brand name Mobilink – sustain the top position among the country’s cellular mobile operators (CMOs), according to Farid Ahmad, company’s Vice President of Marketing.


“Understand, invest and innovate,” Ahmad said, summing up how Mobilink has succeeded in leading the market.


“You have to be customer focused, that is, serve the customers,” he said during a recent interview with The Express Tribune.


A subsidiary of VimpelCom Telecom, the world’s sixth largest telecommunications service provider based in Amsterdam, the Netherlands, Mobilink has already invested close to $4 billion in upgrading its voice and data services. It has announced another investment of $1 billion for network enhancement.


Because of its continuous investment, the company has achieved over 8% growth in cell sites last year alone, spreading its cellular network to more than 9,000 sites, the largest in the industry.


The telecom giant, with more than 36.5 million subscribers, has not only maintained its leadership position locally, but also made a significant financial contribution to its holding company.


For the financial year ended December 31, 2011, Mobilink contributed $1.1 billion or 31.2% to the annual revenue ($3.6 billion) of its parent company.


Among the products that have driven this growth, Ahmad said the Jazz brand has served them well and is the most popular. “It’s the first mobile connection for many Pakistanis,” he said.


Ahmad, who holds an MBA from the Lahore University of Management Sciences, is one of Mobilink’s senior officials with a combined work experience of 19 years. Prior to becoming the company’s VP of marketing, he served as the head of business analysis and planning ever since the department was created in January 2010.


Ahmad has also headed the strategy and pricing function. He has seen the company flourish during the telecom boom of 2006 and 2007, which he described as high growth years when Mobilink increased its subscriber base from 7 million as of June 30, 2005 to a whopping 26 million at the end of June 2007, adding almost 20 million new subscribers.


Unlike the last decade, which was dominated by Mobilink, the industry has entered a challenging phase where the subscriber base is reaching saturation point with sales shrinking and profitability under threat for most CMOs.


“Maintaining our profitability is a challenge because of inflation, low tariffs and high energy costs,” Ahmad said. In order to be profitable, the company has to still maintain that balance.


Mobilink has recently increased its call set-up charges while a dip in its revenue was also reflected in the latest quarterly report.


Mobilink’s revenue decreased to $269 million in the third quarter of 2012, down by 4.3% from $281 million it earned in the same quarter of the previous year. Depreciation of the rupee against the US dollar led to this decline, the report said.


Services suspension is another factor that has an impact on the revenue. “A call not made by a customer is obviously an opportunity lost for the industry, and since our fixed costs continue regardless, profitability is hurt,” Ahmad said.


“We will do everything that we can to remain number one mobile company in the country,” he said. “Market is highly competitive, which is a challenge but we respect good healthy competition.”


The company has to work on operational efficiencies and operate with even more efficient cost structures, Ahmad said. New services such as mobile financial services and 3G data markets can open up new revenue streams, he added.


“We are here for long term and 3G is the way for future,” he said, in support of Mobilink’s long-term interest in the market.

Lotte Pakistan’s profits dive 81%

Shrink­ing margin­s, lower financ­e income negate auster­ity measur­es.  PTA prices fell 13%. Resultantly, revenues declined 8.26% to Rs52.8 billion for the year.

KARACHI: 

Lotte Pakistan PTA reported a profit of Rs0.795 billion for 2012 against Rs4.178 billion in 2011, according to the results copy sent to the Karachi Stock Exchange on Monday. The result announcement was in sharp contrast to market estimates.


Lotte Pakistan PTA is a supplier of purified terephthalic acid (PTA), an essential raw material used in the polyester industry. Over 30% of PTA is sold to the Polyethylene Terephthalate (PET) sector while the rest goes to polyester staple fibre and other sectors. PET is used in the plastics industry for the production of bottles and bed sheets.


The severe hammering of the PTA-PX margins coupled with lower other income remained the primary reason behind the sluggish performance, said Muhammad Ismail of BMA Capital.


Lotte Pakistan PTA is a supplier of purified terephthalic acid (PTA), an essential raw material used in the polyester industry.


On account of looming concerns on PTA supply coupled with lacklustre downstream demand, PTA prices fell 13%. Resultantly, revenues declined 8.26% to Rs52.8 billion for the year.


Apart from weaker PTA prices, strong PX prices remained the major reason behind worsening PTA-PX margins. Margins shrank to an average $80 per ton in 2012 against $216 per ton in the same period last year. Thus, Lotte posted a gross profit of Rs206 million in 2012.


Moreover, declining financial income to Rs0.291 billion on account of lower cash balance further dented the profits.


However, cost savings, estimated at Rs0.421 billion, from the recently commissioned captive power plant provided significant cushion to the bottom-line.

Smart monitoring: TDAP to utilise market intelligence to enhance exports

Says it is focuss­ing on expand­ing trade with the help of proper data.  The LCCI president observed that Pakistan’s total share of exports to Africa was 5.5% in 2007, which inched up marginally to 6.7% in 2011. DESIGN: MOHSIN ALAM


LAHORE: The Trade Development Authority of Pakistan (TDAP) has worked out a plan to ensure a substantial increase in Pakistan’s exports, says the authority’s Chief Executive Abid Javaid Akbar.


Akbar, who was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Monday, said that Pakistan’s exports can go up to $50 billion in the coming years, as TDAP has adopted a focused approach to enhancing exports on the basis of information received from 45 Pakistani missions abroad.


Akbar also hinted at the possibility of initiating barter trade with Developing 8 (D8) countries that have weaker banking and financial systems. He said that the proposition was discussed especially with Iran and Nigeria during the recently-concluded D8 Summit.


He also said that TDAP is ready to work with LCCI proposals regarding holding of exhibitions at the Lahore Expo Centre and patronising the chamber’s delegations on visit to various global destinations. Akbar said that TDAP is presently working on creating awareness among businesspersons regarding the right market places for their products.


“TDAP is a facilitator and will extend maximum facilitation to entrepreneurs. The government is quite wary of the issues and challenges faced by the business community and is taking necessary measures to overcome these problems,” he said.


 


Speaking on the occasion, LCCI President Farooq Iftikhar urged TDAP to focus on exploring markets for Pakistani value-added items, as about one half of Pakistan’s exports go to seven countries only while a fourth of exports consistently finds its way into the European Union.


He said that there is a lot of potential in trading with regional countries and blocs like the South Asian Association for Regional Cooperation (Saarc), the Association of Southeast Asian Nations (Asean), the Organisation of Islamic Cooperation (OIC), the Central Asian republics, the Middle East, Africa, China, Iran and India, but unfortunately no strategy has been adopted to tap this potential.


The LCCI president observed that Pakistan’s total share of exports to Africa was 5.5% in 2007, which inched up marginally to 6.7% in 2011. “It speaks volumes about our failures in tapping such a huge market,” he observed. “TDAP must spearhead efforts to increase our share in Africa. It is high time that the government follows the EU model for promoting regional trade under Asean, Saarc, OIC and D8,” he added.


The LCCI president also urged TDAP to study the reasons of decline in intra-Saarc and intra-OIC trade. “While suggesting ways to reverse these trends, TDAP should also focus on increasing the share of intra-Asean trade,” he added.

Bank Alfalah, Warid to offer branchless banking

Abu Dhabi Group compan­ies latest entran­ts in mobile bankin­g market.  A pilot launch is currently underway as approved by the State Bank of Pakistan. DESIGN: FAIZAN DAWOOD


Bank Alfalah (BAFL) and Warid Telecom, both owned and operated by the Abu Dhabi Group, have joined hands for their upcoming branchless banking services in Pakistan, says a press release issued by the two companies. The technological support for this collaboration is being provided by Monet and a pilot launch is currently underway as approved by the State Bank of Pakistan.


The two companies have been working extensively to develop a branchless ecosystem which will offer a range of customised products and services tailored to suit the evolving needs of various stakeholders, said the release.


“We will continue to explore joint efforts in order to provide innovative, technology driven value-additional propositions that increase access to financial services and hence reduce the gap between the ‘banked’ and ‘yet-to-be-banked’ in Pakistan,” said Bank Alfalah CEO Atif Bajwa.


Warid Telecom CEO Muneer Farooqui said: “The future of the telecom industry in Pakistan lies in providing technological solutions that cater to a wide range of customer requirements which are not necessarily linked to communication only. The synergistic relationship between Warid Telecom and Bank Alfalah is a natural fit and the launch of Mobile Financial Services is another step in the right direction, where we look forward to using our collective resources and experience to provide further convenience to the Pakistani consumer.”

Notes from the world of IT: 2013 – looking ahead into the year

 Here is what the year holds for Pakistan in terms of the trends in technology.


LAHORE: The past year has been an interesting one for Pakistan from the point of view of technology and telecommunications. With 2013 well on its way, it is now time to think about what the future holds. No doubt, there is much looming on the horizon: all indicators point to 2013 as a year of better performance and service delivery in the telecoms industry. This is the time for advancement and technological upgrades, and while there will be many developments, here are my top picks for the year to come.


Cloud services


2013 will see the adoption of Cloud services continue to grow in Pakistan. Increasingly, customers – both individuals and companies – will seek to store their data ‘in the Cloud’ as opposed to physical data servers, as well as avail of software services on a ‘rental’ basis. Large MNCs, banks and other financial services companies have already moved into this domain some time ago. Looking forward, educational institutions are likely to take the next step, as digitisation of educational content takes place. Some progressive institutions have already adopted softwares such as Moodle and Learning Management Systems and incorporated their curriculum on them, thereby preparing their scholars for a digital future.


There is also a lot of potential for the government in this regard, like the provision of electronic support to farming in rural areas, and in the consolidation of various departments online on a single portal. All of this requires data hosting facilities that can be provided on the Cloud for relatively low costs.


Mobile internet/open hotspots


3G will play a significant role in pushing mobile broadband and looks to be the next big thing in fulfilling Pakistan’s data needs.


 


Pakistan has over 100 million cellular subscribers; reportedly, around 10% of these use smart phones. Data usage has grown substantially, and there are an estimated 10 million mobile data users in Pakistan. However, it is important to note that 3G has been overhyped and may actually fall short of expectations, as it has in India.


Almost a year into its launch in India, only 2% of subscribers have opted for 3G services. 3G will require ubiquitous coverage for consumers to be satisfied with the services. WiMAX can play an important role here by offering a solution for data backhauling for telecom operators. Wateen has already deployed around 250 WiFi hotspots in Karachi, Lahore and Islamabad, and is ideally positioned to fulfill the data needs for mobile operators.


Innovation in the telecommunications sector


Branchless banking and m-commerce services will be the biggest innovations for the year. New entrants (Zong and Askari Bank, and Mobilink and Waseela) have recently launched their offerings and promise to improve the take-up of this service. New payment solutions will also be a first in the country, as smart phones enable swipe magnetic card readers and pioneering companies such as Inov8 Ltd begin to deliver on their potential for the consumer market. Smart phone apps will also be big. These are being developed at an exponential rate, and telecom operators may need to look into developing customised customer relationship management applications to service their customers. Last year, a new system of tracking and predicting dengue outbreaks saved hundreds of lives in Pakistan. The project, another PITB brainchild, created a data management system whereby public sector hospitals sent reports of all suspected dengue patients with their home addresses and test results. This data was mapped and a statistical analysis algorithmically highlighted areas where dengue was likely to spread, allowing pre-emptive action. As a result, deaths from dengue dropped to zero in Punjab. Similar clever uses of mobile technology are likely to proliferate through 2013.


Low-cost handheld devices


Asian countries, especially China and India, are taking the lead in developing low-cost tablets and handheld devices to cater to their large populations.


In Pakistan, some companies have already started bringing Android-based devices for as low as Rs5,000. Indians have recently announced that they will be developing the world’s cheapest tablet for $35. These devices will play an exceptional role in transforming societies. The consumerisation of IT has already started taking place in Pakistan. Companies like QMobile will play an important role in the proliferation of low-cost handheld devices. This, in turn, will impact the use of mobile internet and broadband, open WiFi and WiMAX, as well as Cloud services, as consumers look to access data and media on their handheld devices.


THE WRITER IS THE CEO OF WATEEN TELECOM, AND A BOARD MEMBER OF THE WORLD WIMAX FORUM

Diamer Bhasha Dam: United States to provide major chunk for project

Promis­es to help Pakist­an pull out of the energy crisis.  900 megawatts of electricity will be added to the national grid by the end of 2013. PHOTO: CREATIVE COMMONS

LAHORE: 

The United States has reminded Pakistan that it is committed to helping Islamabad, an important partner of the US, pull out of the crippling energy crisis with financing for electricity projects, in particular for the gigantic Diamer Bhasha Dam.


The US would provide funds for new and existing hydropower projects, which would increase electricity production by 900 megawatts by the end of 2013, said US Ambassador to Pakistan Richard Olson while talking to the media here on Monday.


He was speaking after the signing of a memorandum of understanding between the Overseas Security Advisory Council (OSAC) and American Business Forum (ABF). The memorandum is meant to explore new ways of enhancing bilateral trade between the two countries.


“We always consider Pakistan an important partner of the US,” he said. “We have constituted an energy working group for Pakistan and the US, so far America has financed a major share for upgrading Mangla Dam and will be the biggest financier for Diamer Bhasha Dam.”


Pakistan would see more and more energy projects with US assistance in coming days, he said, believing without solving this issue economic progress might not be achieved.


About 400MW had already been added to the national grid and the rest would be added by the end of the year, he said.


The ambassador, however, appreciated the economic progress the country had made in such tough conditions. “Although Pakistan is going through the worst of the energy crisis, still the economic growth is expected to be 4% this year, which is appreciable,” he said.


 


Talking about Iran-Pakistan gas pipeline, Olson did not budge from the old stance, saying the US had reservations about the project.


Discussing the hurdles in the way of bilateral trade, he pointed out that the US and Pakistan had held discussions over the issue and the US was still open to discussing how Pakistan’s products could win better access to US markets.


“We are hopeful about a positive outcome of such meetings and deliberations,” he said. “We want bilateral trade to grow even more in coming years, for this we are working with the business community of Pakistan, different chambers and also encouraging women entrepreneurship to play its role.”


Two-way trade stood at $5 billion in 2011 and Pakistan’s exports to the US were the largest than to any other country in the world.


With a consumer base of 180 million people, a young and educated workforce and a culture of entrepreneurship, Olson saw significant business opportunities in Pakistan for American businesses in an array of sectors, including energy, consumer goods and technology.


He also had words of praise for the success of democratic process in Pakistan and expressed the hope that a peaceful change of government would help cope with economic difficulties.


“US supports the democratic setup in Pakistan and hopes that this will continue in future as in the democratic system people choose best people to govern and achieve economic stability,” Olson said.


“Once such processes are put in place, corruption and mismanagement will be eliminated gradually,” he added.

Residents want testing, not review of Orica plant


Residents living near Orica’s former chemical plant at Port Botany in southern Sydney say an independent review of mercury contamination around the site does not go far enough.


The Environment Protection Authority (EPA) says it will assess current data to decide if mercury testing in the surrounding residential area is required.


The review will be conducted in consultation with New South Wales Health and paid for by Orica.


But resident Chantal Snell, who lives just one kilometre from the plant, says testing should be done right now because mercury cell technology was used extensively at the site.


She says if there is contamination it is important that it is treated as soon as possible.


“There’s a history of an awful lot of chemicals onsite from Orica and around the area and we need to understand whether they have travelled, given they’ve been onsite for such a long time,” she said.


Ms Snell says the EPA review alone will not give locals the peace of mind they are after.


“Residents want to see testing undertaken in their community. I think residents want that reassurance that there is no risk to their health and a review of data may be a good first step but testing is required and required urgently,” she said.


This week EPA acting chief executive Mark Gifford said there had been some testing done outside Orica’s plant, and mercury was detected in a nearby canal which was cleaned-up.


“I particularly, very clearly understand the community’s concerns around what is the legacy, the historical activities on that site and in that area,” he said.

Topics: chemicals-and-pharmaceuticals, business-economics-and-finance, health, environment, environmental-impact, port-botany-2036, nsw

Shell plans US export of gas to Asian markets


Shell’s plan to export LNG from the United States is expected to increase competition for Australia in its traditional Asian markets.


Shell has announced it has entered an agreement with a US energy company to export LNG from Elba Island near Georgia.


The company says the total project is expected to have a capacity of 2.5 million tonnes a year and has approval to export 4 million tonnes a year to free trade agreement countries.


The U.S. has abundant supplies of shale gas and new technology, which has facilitated the process of ‘hydraulic fracking’, has revolutionised its energy industry.


The country has gone from an importer of oil and gas to near energy self-sufficiency and potential exporter.


The rise of the industry in the US has created a glut of gas, causing prices to collapse and potentially giving Asian countries access to cheaper energy.


Resource analyst Edwin Bulseco, from DJ Carmichaels, says the move suggests that future greenfield gas projects in Australia are at risk.


“It does represent a shift in strategy to a certain level compared to what the outlook probably was five years ago,” he said.


“The US has a significant amount of gas and potentially a low cost development environment compared to Australia at the moment, so I think it just shows their outlook is that there could higher rates of return with US projects.”


Mr Bulseco says Australia is a high cost LNG producer.


“The only cost advantage that Australia has over the US is the shipping cost from the US to Asia, because the distance is higher, but that can be significantly eroded given the high cost environment that Australia is operating in now,” he said.


“The global LNG market is definitely changing, obviously, the US with shale gas, East Africa has now opened up given the huge gas discoveries offshore there.”


Mr Bulseco says LNG projects where a final investment decision has been made will go ahead but others, such as Browse, will be at risk.


“The projects that have a post FID (final investment decision) and sanctioned, and future expansion of those projects will probably still be competitive because a lot of the capital expenditure has sunk and you’ve got the security of supply because the project’s de-risked,” he said.


“I think future projects, particularly by the majors, will always be ranked on a global basis and I think the higher rates of return projects will be given preference.


“The next indicator will be Woodside’s final investment decision on Browse.


“My expectation is that it won’t go ahead, and if that greenfield development doesn’t go ahead in it’s current onshore form and goes to floating LNG, I think that is another indicator that costs are getting higher.”

Topics: oil-and-gas, perth-6000, united-states

First posted January 29, 2013 11:10:09

Telstra sorry for north Qld outage


Telstra has apologised for a major outage that cut communications in the northern half of Queensland.


Since the weekend, landlines, mobile phones and internet access has been affected north of Gladstone, after flooding damaged cables near Bundaberg and Kingaroy.


Telstra’s May Boisen says technicians worked in tough conditions to restore services late yesterday.


“To get the amount of services restored that we did in such a short period … it’s a credit to the guys … they were working in extreme conditions in flooded areas, walking in there and trying to deal with cables and stuff,” she said.


“So it’s a very difficult time for everybody, we apologise that this has happened to our customers.”


Telstra says it cannot rule out more disruptions in northern Queensland as the flood emergency continues further south.


Ms Boisen says repairs were hampered by flooding and power outages.


“I’ve been with this organisation for over 15 years and this has never happened since I’ve been in the role,” she said.


“However, as after any disaster we will review what we have in place and always look at improving services to our customers.”


Telstra says any claims for compensation after yesterday’s widespread outage will be dealt with on a case-by-case basis.


Ms Boisen says it will assess individual claims.


“I think that would be on a case-by-case basis,” she said.


“The customers or the businesses would be dealt with individually in that scenario.


“So it’s just a matter of waiting and seeing what our business comes back with as well but we do normally businesses individually when this sort of situation happens.”


The Local Government Minister says it is not good enough that alternative triple-zero numbers had to be used across large parts of the state during the outage.


The triple-zero number in parts of north Queensland stopped working, along with mobile phone, some landline and internet services.


David Crisafulli says once the flood emergency is over there will be a review of the state’s emergency communications back-up system.


“When a crisis is on people are struggling to absorb the information as it is,” he said.


“The one comfort they know is that when crisis hits at least they know what number to ring to get immediate service, when that number’s not there you do have to ask some serious questions.”


Townsville’s Mayor says she will be talking with the city’s local disaster management group and state members about how to prevent another major telecommunications outage in the north.


Jenny Hill says her biggest concern was for the city’s emergency services, who had to rely on two alternative triple-0 numbers.


“What that meant to the community, especially in times of emergency, what it meant to health services here, what it meant to ambulance services, police and … the firemen, that’s the real concern I have for the fact that this has gone down and the fact that the State Government didn’t really see it as a priority,” she said.


“What should’ve happened was as part of the disaster management in the south-east corner it wouldn’t have taken very much to ensure yesterday that information was made available – people have been on their TV sets watching what’s happening down south.


“It was our only link in terms of communication with residents here in north Queensland and it was impossible to get the message out.”


The Townsville Chamber of Commerce president Dawson Wilkie says businesses across the region suffered as a result of the outages.


“When you do think of the number of places where you do use a plastic card, that’s the norm … and if you find yourself without money, well you couldn’t get money because you couldn’t get into the ATM machine, so it certainly curtailed a lot of spending over the weekend that’s for sure,” he said.


“Well it’s that opportunistic sale that hasn’t happened … people haven’t been able to buy the things and I guess at the same time shops are being open over the long weekend and would have been expecting a busy trade given it’s school going back and that sort of thing and that’s been virtually lost for a lot of small businesses.”


Farmers say the telecommunications breakdown created more stress, after days of highway flooding caused havoc for transporting produce.


Mareeba fruit grower Marcello Avolio says farmers need reliable telecommunications services.


“A simple example was that I was waiting for a simple label, a gif image, by email from down Brisbane and I just couldn’t get it,” he said.


“So if I didn’t get it today, I couldn’t send fruit today. That’s the big deal.”

Topics: information-and-communication, telecommunications, weather, storm-disaster, storm-event, mobile-phones, emergency-incidents, floods, disasters-and-accidents, qld, mackay-4740, cairns-4870, townsville-4810, rockhampton-4700, gladstone-4680

Wine to be sold in SA supermarkets


A proposal to allow wine sales in South Australian supermarkets contradicts Government policies to target alcohol-fuelled violence, the Opposition says.


The State Government intends to introduce draft legislation to Parliament to create a new type of liquor licence and has released a discussion paper on the issue.


The licence would allow supermarkets of more than 400 square metres to sell bottled wine but no other type of alcohol.


Opposition Leader Isobel Redmond says she is suspending judgment until she sees the details but is concerned it could aggravate the types of social problems already caused by alcohol.


“The Government has identified alcohol-fuelled violence is a problem they say they’re trying to address and that indeed preloading is one of the problems they say is causing this alcohol-fuelled violence, that is people having alcohol before going out to licensed premises,” she said.


Ms Redmond says excessive drinking is a problem among teenagers and young adults and the culture needs to change.


“There is implicit in the attitude that you have to have the availability of alcohol generally a lesson that all our young people seem to be learning and that is you cannot socialise without alcohol,” she said.


Attorney-General John Rau says the proposal is intended to save shoppers time and would not lead to more street crime.


“We don’t want to turn supermarkets into in effect bottle shops … this is a very limited and deliberately limited licence category,” he said.


“The idea with this is that a person who might be buying some chops or some vegetables for their evening meal can also pick up a bottle of wine in the same place.


“There is absolutely no evidence to suggest that that sort of person is displaying irresponsible consumption of alcohol.


“The alcohol-fuelled violence we see in the city in particular, which I abhor, tends to occur in late-night venues where there are large amounts of people where spirits and fairly powerful alcoholic beverages are sold.”


Staff selling the wine would have to be 18-years-old and trained in the responsible service of alcohol.


Mr Rau says the proposal is also intended to give local wineries an alternative means of selling their produce.


“Small producers here in South Australia are feeling a bit of a squeeze at the present time by having limited access to retail markets,” he said.


“We would hope some of the smaller independent wineries would be able to take advantage of this as an alternative way of getting their product sold into the local market.”


The discussion paper follows debate on the issue and has divided retailers.


Joseph Romeo says his North Adelaide supermarket would apply for a licence.


“It would just compliment our store. It becomes a one-stop shop and it’s no different to what happens in the ACT, Victoria, New Zealand, Europe and America,” he said.


But John Swanson from a nearby bottle shop says it could put specialty retailers like his under threat.


“This is a con, to start saying ‘we only want to sell wine, we only want to help small wineries,’ that’s rubbish,” he said.


“As soon as they get wine in the next step will be spirits, the next step will be beer.”


The Australian Hotels Association says the proposal was developed with little or no industry consultation and wants it withdrawn.


Spokesman Ian Horne says the association will raise several concerns with the government during a period allowed for submissions.


“Many government agencies, South Australian government agencies, are very, very concerned about the expanding of availability of alcohol,” he said.


“On the one hand this Government is trying to shut down liquor outlets with curtailing promotions of alcohol, trying to reduce hours, trying to make it more difficult for current operators with their promotions, and on the other hand they’re giving a free kick to the big end of town.”


Feedback on the discussion paper is open until March.

Topics: states-and-territories, retail, sa, adelaide-5000, port-augusta-5700, port-lincoln-5606, port-pirie-5540, renmark-5341, mount-gambier-5290

First posted January 28, 2013 11:49:01

Downpour disrupts central Qld coal mines


Heavy rain and flooding has halted production at a number of central Queensland coal mines.


The Queensland Resources Council (QRC) says falls of up to 250 millimetres have been recorded at some sites, with about 20 mines now releasing water.


In 2011, flooding cost the industry $7 billion in lost production.


QRC chief executive Michael Roche says this year’s flooding is not as bad.


“There’s no doubt that there’s many mines that received rainfall in the order of 200 to 250mm of water,” Mr Roche said.


“Unfortunately for some mines that probably added to their unwanted excess water problem.


“The good news is that Abbot Point and the Hay Point ports and the Goonyella system are open.”


Mr Roche says the mines will be keen to resume delivery of coal as quickly as possible.


The torrential rain has disrupted haulage operations in the Moura and Blackwater systems.


The QRC says it is too early to say how much damage has been done to the coal freight network.


Haulage along the Goonyella line to Hay Point and Abbot Point are unaffected.

Topics: coal, weather, mining-industry, rainfall, floods, moura-4718, blackwater-4717, rockhampton-4700, mackay-4740

First posted January 29, 2013 12:54:33

Share market rises despite flood impacts


The local share market is making solid and broad gains, despite some flood-related falls for the insurance sector.


The All Ordinaries index was up 46 points, or around 1 per cent, at 4,905 shortly before 1:00pm (AEDT).


The ASX 200 index was up 48 points to 4,883.


Clothing manufacturer Pacific Brands jumped nearly 4 per cent, while Myer was leading retail gains with a 2.2 per cent rise.


Woolworths was up 0.9 per cent, while Wesfarmers had risen 1.8 per cent.


Westpac had also risen 2.2 per cent, with CBA and ANZ gaining 1.5 per cent, and NAB up by 1.4 per cent.


The local airlines have not fared so well though, with flights disrupted by bad weather along much of the eastern seaboard: Qantas had slipped 1 per cent, and Virgin Australia was losing 1.2 per cent.


Shares in Australian insurance companies have fallen as flood-related claims begin to mount: QBE Insurance had fallen 2.4 per cent; Suncorp was down 2.3 per cent; and Insurance Australia Group had lost 1.7 per cent.


The mining sector has swung to some modest gains, with Rio Tinto up 0.2 per cent and BHP Billiton up 0.3 per cent, while Fortescue Metals Group gained 1.8 per cent.


Telstra was also performing strongly, up 1.4 per cent.


The Australian dollar had risen against the greenback to around 104.38 US cents.

Topics: business-economics-and-finance, markets, currency, stockmarket, australia

Construction to hamper ACT economy


An economic forecaster is predicting a slowdown in the ACT economy over the next few years.


The December quarter Business Outlook by Deloitte Access Economics says the Territory’s economy has been dodging bullets left, right and centre.


Most recently Canberra has avoided fiscal pain with the Federal Government’s decision to delay the return to surplus.


The report says recent interest rate cuts have also helped free up spending in the mortgage belt and boost the retail sector.


But while the momentum is good, the report says growth in the economy will be hampered this year by the increased public service efficiency dividend and a slowdown in housing construction.


The report says while the rest of the country can expect a recovery in housing construction this year, the ACT should expect the opposite.

Topics: business-economics-and-finance, economic-trends, canberra-2600, act

First posted January 29, 2013 08:12:38

Tas economy set for modest growth


An economic forecaster is predicting Tasmania’s economy will grow modestly next financial year.


The latest Deloitte Access Economics Business Outlook says the value of Tasmania’s economy will increase by 0.7 per cent in 2013-14.


That is expected to be be followed by significantly higher growth, reaching a rate of of 2.5 per cent in 2016.


But the report says growth is conditional on the value Australian dollar falling over the coming years.


It says if that does not occur, export-dependent industries like manufacturing and forestry will continue to suffer.


The dairy, aquaculture and tourism industries are among the few bright spots left in the economy.

Topics: economic-trends, states-and-territories, tas, hobart-7000, launceston-7250

US rally halted by mixed trading session


A month-long rally for US markets has hit a hump, with a negative trading session reflecting uncertainty fuelled by mixed economic data.


A report showing another increase in orders of durable goods, such as cars and home appliances, in the United States has been offset by figures showing a drop in pending home sales.


However, there was a silver lining for tech stocks, with Apple shares gaining more than 2 per cent as buyers return to the computer giant after the disappointment of last week’s quarterly results.


That helped the Nasdaq to close up 5 points, or 0.2 per cent, to 3,154.


It was the only bright spot though, as the Dow Jones Industrial Average lost 0.1 per cent, or 14 points, to 1,882.


The broader S&P 500 fell 3 points, or nearly 0.2 per cent, to 1,500.


European markets closed flat overnight, held back by data from the European Central Bank.


The figures showed bank lending to eurozone companies contracted again in December.


Economists also have negative expectations for another measure of Europe’s real economy, employment data, with a Bloomberg survey finding analysts expect the unemployment rate to rise to just under 12 per cent.


In spite of that, London’s FTSE 100 index gained 10 points to 6,294.


France’s CAC 40 also posted a slight gain, but the German DAX slipped 0.3 per cent.


Local futures trade are pointing to a negative start to Australian trading.


At 8:00am (AEDT) the ASX SPI 200 was down 3 points, or 0.1 per cent, to 4,830.


On the commodity markets, West Texas crude oil was up at $US96.26 a barrel, while the spot gold price had slipped to $US1,655 an ounce.


The Australian dollar was weaker against the greenback. At 8:45am (AEDT) it was buying around 104.14 US cents.


The local dollar was also worth around 94.52 Japanese yen, 77.42 euro cents, 66.37 UK pence and 124.98 New Zealand cents.

Topics: business-economics-and-finance, markets, currency, stockmarket, futures, united-states, australia, european-union, united-kingdom

Insurers start counting the mounting cost of floods


The Insurance Council of Australia says thousands of claims have already been lodged in the wake of flood damage in Queensland and New South Wales.


The council says insurers have fully staffed their call centres to deal with demand, but assessors will not be moving into affected areas until the waters have receded.


Council spokesman Campbell Fuller says insurers are hopeful the damage will be far less than from severe flooding two years ago.


“At the moment we’re looking at about 6,500 claims having been received and estimated insurance losses of about $72 million,” he said.


“Bundaberg is our main concern at the moment. We’re aware of about 1,000 properties that have been inundated, and it’s possible that this could double over the next few hours or days.”


Mr Fuller says the damage bill is likely to rise considerably, but insurers were prepared financially and logistically for a wet summer.


“Many people won’t have returned to their homes yet. We’re still waiting to see what’s going to happen throughout northern and central NSW – there are many areas of concern, including Grafton,” he said.


“Bundaberg is our main worry at the moment, but of course there’s other areas of Queensland where rivers are going to peak again later in the week.”


Investors are concerned about the effect the damage bill may have on insurers’ bottom lines, with the three major listed Australian insurers all falling substantially in a generally rising market.


Queensland-based insurer Suncorp has been hardest hit, with its shares falling 3.4 per cent to $10.54 by 11:08am (AEDT).


In an update to the market, Suncorp says it has received about 4,500 claims so far associated with flooding and storms generated by ex-tropical cyclone Oswald.


The company says it expects more claims to come in, with floods yet to peak in some areas.


However, Suncorp says it has set aside an allowance of $520 million for natural hazards this financial year, and such claims only totalled $147 by the end of December.


It also says its reinsurance program and loss sharing arrangements will help limit the financial impact of the floods.


QBE Insurance was down 2.5 per cent to $11.31, while Insurance Australia Group was off 2 per cent to $4.82.

Topics: insurance, floods, bundaberg-4670, grafton-2460, nsw, qld

First posted January 29, 2013 09:48:13

Tonga looks to 50 per cent renewables


The Tongan Government says it is aiming to have half all the country’s energy needs come from renewable sources by 2020.


Its new ten-year Energy Road Map is the result of a major review of Tonga’s energy sector.


Projects director Inoke Vala has told Radio Australia’s Pacific Beat program Tonga’s current power generation is largely based on fossil fuels imported from Singapore.


“If you are going to get significant contributions from renewable energy, you’ll be looking at mixing wind, wave and also solar or biomass,” he said.


A New Zealand funded solar power plant has already been commissioned.


Mr Vala said the solar plant will eventually contribute about four per cent of Tonga’s energy demands.


“It will be about 370,000 litres of oil displaced during the year,” he said.


“So that will go on for about 20 years, which is the life span of the panels.”


Tonga is also investigating wind tower options in surrounding waters.


“In addition to that there is a biomass feasibility study, there is a tidal wave feasibility study already going on and a wave feasibility study,” Mr Vala said.


“So there are a lot of opportunities we are looking at right now.”

Topics: alternative-energy, electricity-energy-and-utilities, tonga, pacific

First posted January 29, 2013 11:17:50

Phone companies ‘resisting’ locator technology


Victoria’s triple 0 service operator is calling for telecommunications regulators to introduce technology which identifies the location of mobile phones.


The state’s Emergency Services Telecommunications Authority says callers from landlines are likely to get help more quickly.


It is urging regulators to adopt technology in use overseas.


The general manager of Victoria’s triple 0 operator, Andrew Wellwood, says it will be a worthwhile investment.


“It probably is expensive, but certainly we think the community’s safety is more important,” he said.


“Other countries introduced this some time ago.


He says local companies seem to be resisting its introduction.

Topics: business-economics-and-finance, industry, telecommunications, information-and-communication, emergency-planning, melbourne-3000

First posted January 28, 2013 10:19:12

Pay deal stamped as kids return to school


A pay rise for South Australian public school teachers has been certified by the Industrial Relations Commission.


The enterprise agreement gives secondary, primary and pre-school teachers and schools support officers (SSOs) a 3 per cent pay rise each year over three years.


A teacher on a top annual salary of $83,000 dollars will get more than $91,000 by 2014.


The agreement comes after 97 per cent of Education Union members voted in favour of the deal in December.


The State Government and the union reached the agreement after eight months of negotiations.


Teachers last received a pay rise of more than 15 per cent in 2010 after a protracted dispute.


The union’s acting state president David Smith says the deal includes provisions to maintain current class sizes and offers better job security through a plan to increase permanent employment.


“Now that it’s been officially stamped by the Industrial Relations Commission the implementation stage can begin,” he said.


“There will be greater clarity about details such as the conditions for operating within schools, the class sizes are fixed but the amount of time that teachers have to spend face to face is very clear, class sizes will be maintained.


“There will be a greater increase to permanency for people who have got fallback positions if currently they are in a leadership position.


“When that tenure concludes then those people will be able to made permanent if they weren’t permanent to begin with.”


The new pay deal is expected to be backdated to October last year.


The union says negotiations are ongoing about a range of other measures, including strategies to reduce bullying in schools and a plan to boost the number of Aboriginal teachers.


“It is the case that while a number of Aboriginal people are employed, the number of Aboriginal teachers is low rather than other employment categories,” Mr Smith said.


“We’re going to be negotiating over a fairer induction package for overseas trained teachers because they have particular needs.”


The announcement comes as thousands of children return to school at the end of summer holidays.


Several amalgamated schools have opened for the first time, including in Whyalla and Kadina.


Parents voted in favour of the merger of the Kadina Primary and High Schools in 2011 and the State Government approved it soon after.


More than a thousand students will attend the combined Memorial School.


Principal Dean Angus says changes have been made to administrative staff but there have been no cuts to teachers.


“The support and administrative staff, you to combine two of those together, so the core business of teaching and learning doesn’t change,” he said.


“There’s been reallocations but in terms of teaching staff and the number of SSOs, we’re basically increased by about five.”

Topics: industrial-relations, states-and-territories, teachers, sa, adelaide-5000

First posted January 29, 2013 09:06:38

Lucasfilm confirms Abrams to direct next Star Wars


Sci-fi and action filmmaker JJ Abrams has been confirmed as the director of the next Star Wars film, due out in 2015.


The creators and owners of the Star Wars franchise confirmed the appointment on Saturday, saying the series’ legacy “couldn’t be in better hands”.


George Lucas’s Lucasfilm, bought by entertainment giant Disney for $US4 billion in October, said Oscar-winning writer Michael Arndt will pen the screenplay for Star Wars: Episode VII, due out in 2015.


“It’s very exciting to have JJ aboard, leading the charge as we set off to make a new Star Wars movie,” said Lucasfilm president Kathleen Kennedy in a statement.


“JJ is the perfect director to helm this … He understands the essence of the Star Wars experience, and will bring that talent to create an unforgettable motion picture.”


George Lucas added: “I’ve consistently been impressed with JJ as a filmmaker and storyteller. He’s an ideal choice to direct the new Star Wars film and the legacy couldn’t be in better hands.”


Abrams himself said the collaboration was “an absolute honour”.


“I may be even more grateful to George Lucas now than I was as a kid,” he said.


Abrams, 46, has directed Mission: Impossible III, Star Trek and Super 8.


He is also the co-creator of the popular television series Lost, and is currently finishing work on Star Trek Into Darkness.


Writer Arndt won a best screenplay Oscar for 2006′s Little Miss Sunshine.


He was also nominated for an Academy Award for Toy Story 3 in 2011.


His other credits include Brave, nominated for best animated film at next month’s Oscars.


Disney announced when it bought Lucasfilm last year that it was planning a new trilogy in the wildly popular Star Wars sci-fi saga, which has raked in an estimated $US4.4 billion since 1977.


Lucas, who created the saga and directed four of the six films to date, will serve as a creative consultant for the three new films, which are expected to come out every two to three years.


Lucas’s original Star Wars movie in 1977 marked the birth of a new era of blockbuster cinema and launched the career of a young Harrison Ford.


It was soon followed by the equally popular The Empire Strikes Back, in 1980, and Return of the Jedi, in 1983.


In the late 1990s, Lucas drew mixed reviews when he resurrected the blockbuster series with a prequel trilogy: The Phantom Menace, The Attack of the Clones and The Revenge of the Sith.


The newer trilogy featured Liam Neeson, Ewan McGregor, Natalie Portman and Hayden Christensen.


AFP

Topics: film-movies, science-fiction-films, film, arts-and-entertainment, united-states

First posted January 27, 2013 11:13:16

Blackouts could last days: Energex


Energex is warning that some homes in south-east Queensland could be without power until Wednesday.


More than 230,000 homes are in the dark today after 2,000 wires were blown down in high winds yesterday.


That includes 88,000 homes and businesses in Brisbane, 32,000 on the Sunshine Coast, 28,000 in the Moreton Bay area and 28,000 on the Gold Coast.


Mike Swanston from Energex say every effort is being made to restore power.


“It’s frustrating there are so many people sitting in the dark this morning,” Mr Swanston said.


“Toward Gympie and the Sunshine Coast hinterland have been off for the best part of 36 hours now.


“But really we’ve just got to chug away and check all of these wires.”


Extra crews have started work this morning and their priority will be to make fallen powerlines safe.


“We’ll start working in areas that we can get restoration done – more in the urban areas,” Mr Swanston said.


Meanwhile, telecommunications outages in central and north Queensland are expected to continue throughout the day.


Telstra says most landline and broadband services in Mackay, Rockhampton, Townsville, Mount Isa and Gladstone are down.


Mobile services north of Kingaroy have also been effected.


Triple-zero coverage is also down and a single temporary number for emergency calls has been set up.


Spokesman Kris Carver says it is hoped services will start to come back online this afternoon.


“If everything goes well the vast majority of services will come back online,” he said.


“We still will have localised areas where we may not have power or something like that but the vast majority of services will come back online once we’re able to fix these major transmissions errors.”


Telstra says customers impacted by service outages due to the wild weather can still use their mobile phones to call triple-zero.


The carrier’s mobile, landline and broadband services in central and north Queensland have been effected by cable damage and blackouts.


Mr Carver says customers can use mobile coverage of an alternative carrier to make emergency calls.


“We do recommend especially in emergency situations that they use their mobiles to call triple-zero,” he said.


“Mobile phones will pick any available network when they dial triple-zero.”

Topics: electricity-energy-and-utilities, weather, storm-disaster, disasters-and-accidents, storm-event, telecommunications, brisbane-4000, qld, bundaberg-4670, maroochydore-4558, cairns-4870, ipswich-4305, gladstone-4680, mount-isa-4825, longreach-4730, southport-4215, toowoomba-4350, townsville-4810, rockhampton-4700, mackay-4740

First posted January 28, 2013 11:30:38

Business sentiment surges, conditions stagnate


Business confidence surged in December, despite trading conditions and profitability remaining poor.


National Australia Bank’s Monthly Business Survey shows confidence jumped from -9 in November to +3 in December, as another interest rate cut, the avoidance of the US fiscal cliff and signs of economic improvement in China all boosted the business outlook.


However, current conditions remained subdued, rising from -6 to -4, but still stuck firmly in negative territory.


Profitability also rose from -11 to -6; employment rose 2 points to -3; and forward orders improved 6 points, but also remained negative at -5.


Trading and exports got slightly worse, both falling 1 point to -4.


NAB’s chief economist, Alan Oster, remains downbeat on the economic outlook, despite the bounce in confidence.


He says a deterioration in the wholesale sector does not bode well for the broader economy.


“Wholesale business conditions collapsed in the final months of 2012 – to its lowest level in the history of the survey (since 1997),” Mr Oster noted in the report.


“The weakness in wholesale conditions is a real concern as it appears to be a leading indicator of overall business conditions.”


NAB is forecasting Australian economic growth of just 2 per cent this year, before a recovery to 3.3 per cent (around average levels) next year, with unemployment rising to 5.75 per cent by the middle of this year.


In that context, the bank expects three more official interest rate cuts this year, starting with one 25-basis-point cut next month, taking the official cash rate down to 2.25 per cent.

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, australia

First posted January 29, 2013 11:35:12

Victorians commuters ‘unhappy’ with Government


A new survey has found commuters believe the Baillieu Government has failed to make any improvements to Melbourne’s public transport network.


More than 1,000 people were surveyed by the Metropolitan Transport Forum which represents 22 Melbourne municipalities on transport issues.


Most respondents believe that public transport has not improved.
Across the board, the most common response was that there was no change to overcrowding, frequency, amenity or overall services.


The survey found that while there were respondents that did report improvements, they were significantly outnumbered by those saying the service was somewhat worse or much worse.


The forum’s chairman, Tom Melican, says more than 80 per cent of participants said the Government had failed to improve public transport services.


“People were expecting a fair bit from this Government,” he said

Summary of public transport survey

Best decisions The shuttle bus between Monash and HuntingdaleComplete the south Morang lineIntroduction of Protective Service Officers (PSOs)
Worst decisions Myki and removal of day ticketsIgnoring the needs of people living in outer suburbs

“I think they [the Government] were elected on a promise of improving public transport.


“I think the biggest issue is the lack of public transport that’s been developed in the outer suburbs.


“People were expecting to see some improvements, and I think the big ticket items just haven’t been delivered, the airport rail, the Doncaster rail and the Rowville rail.”

Topics: state-parliament, transport, community-and-society, melbourne-3000

First posted January 28, 2013 09:12:32

Labor partially costs Metronet heavy rail line


The State Opposition has promised to build a railway line to the Perth Airport by mid-2018 if it wins the election in March.


The Opposition Leader, Mark McGowan says the 10.5 kilometre rail line, stopping at Redcliffe, the airport and Forrestfield, would cost $731 million.


It does not include the cost of new rail cars to service the line.


Mr McGowan says the airport line is a priority for Labor.


“It’s the fastest growing airport in Australia, it is going to have 20 million passengers per year,” he said.


“They all have to get into the airport and out of the airport.”


He says traffic congestion is choking the city.


“Perth needs a rail line to the airport to ease road congestion and provide better services for tourists and business travellers,” he said.


“Everyone knows that gridlock is choking our city.


“It’s time to do something about it.”


Labor plans to build the airport line as part of its heavy rail Metronet proposal.


That includes a line to Ellenbrook, extensions to Yanchep and Byford and a number of new stations.


Labor has costed Metronet at $3.8 billion but the Treasurer, Troy Buswell, has previously estimated it at $6.4 billion.


The Premier Colin Barnett does not doubt his figure.


“I would back Troy Buswell compared to Mark McGowan,” he said.


Mr Barnett says the Liberal Party will announce a fully costed transport plan as part of its election campaign.

Topics: rail-transport, government-and-politics, perth-airport-6105

First posted January 29, 2013 14:03:53

Share market strengthens despite disasters


Investors have jumped back into trade after the Australia Day holiday, pushing the share market to a new 21-month high.


The biggest gains were in health and telecommunications stocks, but all sectors advanced.


The All Ordinaries index rose by 1.1 to 4,911. The ASX 200 index gained the same amount to 4,889.


Shares in the Commonwealth Bank rose by 1.1 per cent to a record high of $64.73.


Other bank stocks also reached multi-year highs and Westpac gained 2.4 per cent.


However, insurance stocks struggled amid flood disasters in Queensland and New South Wales with QBE losing 2.7 per cent while Suncorp fell nearly 2 per cent.


Elsewhere in the finance sector, shares in Macquarie Group rose by 0.6 per cent on the day the corporate regulator announced action against one of its divisions for what it called “serious compliance deficiencies”.


ASIC found that Macquarie Private Wealth had lax standards of record keeping and lacked commitment to compliance.


Macquarie says the company takes its regulatory obligations “very seriously” and is committed to making the necessary changes.


Elsewhere on the market, the major mining stocks managed moderate gains – BHP Billiton rose by 0.2 of a per cent and Rio Tinto edged up 0.1 of a per cent.


And Telstra rallied 2 per cent to $4.67.


NAB’s latest business survey has found confidence among business owners recorded its biggest monthly rise since September 2011, with gains in all sectors.


But the survey found conditions for business activity remain weak.


And a survey of nearly 500 businesses by the Australian Industry Group has found many are overestimating rises in their energy costs caused by the price on carbon.


The businesses estimated their energy prices increased on average by 14.5 per cent by the end of November.


But AIGroup says that is more than double the price increase found by the Australian Bureau of Statistics.


In commodities, spot gold had risen to $US1,661 an ounce by 5pm (AEDT).


West Texas crude oil was slightly higher at $US96 a barrel. And Tapis crude’s lower at $US120.70 a barrel.


In currency trade, the Australian dollar was buoyant against most of its major counterparts.


At 5pm it was buying 104.5 US cents, 77.7 euro cents, 94.8 Japanese yen and 66.6 British pence.

Topics: markets, stockmarket, banking, insurance, mining-industry, australia

First posted January 29, 2013 18:39:05

Businesses overestimate carbon tax costs


A survey has found many businesses believe the carbon tax has increased their costs by far more than it actually has.


The study of nearly 500 firms by the Australian Industry Group found around half experienced an immediate impact on the cost of production inputs when the carbon tax was introduced on July 1, with 61 per cent of manufacturing businesses noting rising prices.


A follow up survey found that businesses said the carbon tax had increased their energy costs by an average of 14.5 per cent, but the Bureau of Statistics Producer Price Index found a much lower 6.7 per cent rise in energy prices during the September quarter which followed the introduction of the tax.


The Australian Industry Group says many firms also overestimated the impact of the tax versus the effect of network price increases due to transmission maintenance and improvement (poles and wires).


“In the November survey, manufacturing businesses attributed close to 85 per cent of their total electricity cost increases over the past year to the carbon tax, whereas data from other sources suggest that, at least for many smaller businesses, the contribution of the carbon tax to total energy price rises was probably closer to one half,” observed the Ai Group’s chief executive Innes Willox.


The Ai Group says the recent 18 per cent price increase for electricity in New South Wales was roughly half due to the Federal Government’s carbon pricing scheme and half due to rising network costs.


The survey also found that around a third of manufacturers and construction businesses and almost half of services businesses surveyed could not estimate the direct impact of the carbon tax on their own energy costs six months after its introduction.


While many businesses may have overestimated the impact of the tax in rising energy costs, Mr Willox says a lot of firms are struggling to pass on any of those rising costs.


“The first survey in our multi-stage research program, which we conducted in June before the carbon tax took effect, suggested that just 42 per cent of businesses intended to pass on their increased costs,” he said.


“The barriers they face include: pricing power among their customers; local demand conditions; and competition from imports produced in countries that do not impose similar carbon costs.”


The Ai Group says food manufacturers have been hit particularly hard, with 90 per cent reporting immediate cost increases but only 11 per cent being able to pass on those increases to customers.


“Food manufacturers do not qualify for the trade exposed industry assistance program and are currently facing substantial resistance to price rises from the major retailers,” Mr Willox added.

Topics: business-economics-and-finance, manufacturing, tax, emissions-trading, australia

EPA flags dredging guidelines as pressures build


The Northern Territory Environment Protection Agency is drafting new guidelines for dredging projects.


A big dredging operation is underway in Darwin Harbour as part of the Inpex gas project.


EPA chairman Dr Bill Freeland says the guidelines will not disrupt the Inpex work.


He says dredging proposals are currently assessed on a case-by-case basis, and there is a need for uniform standards.


“New dredging proposals are going to come; it’s inevitable, he said.


“One of the problems with all the guidelines is we can’t tell the public what we’re doing and we can’t actually tell the proponents what they have to achieve.”


The new NT Environmental Protection Agency meets for the first time today.


It is made up of six members, including NT Planning Commission head Gary Nairn, a former federal Liberal politician.

Topics: environmental-management, sea-transport, darwin-0800, nt

Storm forces Darwin flight to be diverted


A Qantas flight from Sydney to Darwin was diverted to Alice Springs last night.


The general manager of Alice Springs Airport Katie Cooper says the flight was diverted because of storms over Darwin.


She says about 140 passengers had to be accommodated overnight, but they will continue their journey to the Top End today.


“I believe the scheduled route departure time for the service is at 12:35,” she said.


“But I would encourage any passengers on that service to just confirm that with the airline.”

Topics: air-transport, travel-and-tourism, darwin-0800, alice-springs-0870

First posted January 28, 2013 10:53:03

Rinehart branches out into oil and gas


One of Gina Rinehart’s companies has invested more than $4 million in a Victorian-based gas exploration firm.


Lakes Oil has announced a $4.25 million investment by a subsidiary of Mrs Rinehart’s Western Australian iron ore giant Hancock Prospecting.


The deal gives Hancock Prospecting’s subsidiary an 18.6 per cent interest in the Gippsland-based exploration company.


Part of the deal is the appointment of mining expert and climate change sceptic, Professor Ian Plimer, as a director of Lakes Oil.


The chairman of Lakes Oil, Rob Annells, says the appointment of Professor Plimer to the Board will strengthen the company’s position.


“He’s had tremendous experience in the mining business and so we’ll have the benefit of that, plus he’s of international standing which once again will help us at a later stage when we’re looking for funding for development,” he said.


Mr Plimer currently serves on the boards of four listed resources companies and three unlisted companies, including the Hancock Prospecting group.


Lakes Oil says the current plan is for another Hancock nominee to be appointed as a non-executive director in due course.

Topics: business-economics-and-finance, company-news, iron-ore, oil-and-gas, vic, wa, australia

No major fault at Dreamliner battery plant


Japan’s transport ministry says safety inspectors have found no major problem on the production line making batteries for Boeing’s Dreamliner, further muddying the waters in a worldwide probe.


“We have found no major quality or technical problem,” an official at the ministry said on condition of anonymity, as Japanese and American safety inspectors ended a week-long probe at battery maker GS Yuasa.


GS Yuasa has the contract for all Dreamliner batteries and is based in the western city of Kyoto.


Aviation regulators were focusing on the lithium-ion batteries as the cause of a problem that forced an All Nippon Airways (ANA) flight to make an emergency landing on January 16.


They have released a picture showing the blackened remains of the battery that inspectors removed from the plane.


But they said last week there were no signs of a battery fire, while information gleaned from the flight’s digital data recorder showed the power pack did not suffer a rapid surge in voltage.


GS Yuasa is just one of many contractors in a complex global chain that led to three years of delays before Boeing delivered its first 787 to ANA in 2011.


The transport ministry official said the authorities would now inspect suppliers of parts used in battery packs.


US regulators have said they would not allow the 787 to fly again until they were sure the problems around the battery system were fixed.


The worldwide grounding of the next-generation plane is having an increasing effect on airlines flying it.


ANA has reportedly cancelled 838 flights, affecting nearly 83,000 domestic and international passengers, over the period to the middle of next month.


AFP

Topics: air-transport, industry, japan, united-states

First posted January 28, 2013 19:53:35

Premier fobs off early poll whispers


The Tasmanian Premier is insisting there are no plans to call an early election, as her minority government struggles to revive the state economy.


The latest outlook from Deloitte Access Economics says Tasmania’s economic indicators are “awash in a sea of red ink” and any growth hinges on a fall in the Australian dollar.


The report also says it is hard to find any areas of growth, the total value of engineering construction works has hit its lowest level in 10 years and the pace of spending has nosedived.


The Shadow Treasurer Peter Gutwein says Tasmania is lagging in all economic indicators compared with other states facing the same pressures.


“We’re the one state that’s going backwards on the majority of indicators and the reason being is that this Green-Labor minority government is failing the state,” Mr Gutwein said.


The Premier Lara Giddings rejects the comparison, saying the Deloitte outlook shows the big issues affecting the economy are out of her government’s control.


But the Premier says she readily acknowledges that more needs to be done to strengthen the economy, and the $25million jobs package is a good start.


“We’ve obviously got some challenging times that we’ve had to face and the best way that we can work through those is together and through stimulus like this that we’re providing through the jobs package.”


The ABC has been told the State Government is considering going to the polls early, weighing up two dates later in the year.


But Lara Giddings says there are no plans for an election in 2013.


“The only Government going to an election in 2013 is the Federal Government, the state election is not due until March 2014 and that’s what we’re aiming to go to,” the Premier said.


Lara Giddings was in Devonport today to announce a round of spending from the jobs package to upgrade neighbourhood houses throughout the state.


“With the $2million program, we expect to see about 30 jobs created across the state.


“It’s part of a larger package designed to inject life into Tasmania’s struggling economy,” said Ms Giddings.


Some of the money will be spent on improving the kitchen at the Devonport Community House.


The centre’s manager, Kate Beer, says the house is a meeting place for people who are often from low socio-economic backgrounds.


“They’re bit more of a home-type atmosphere than a commercial kitchen or even an education-type atmosphere so that’s a real bonus for us so that we’re able to attract the people that actually are harder to get into your service generally, so that’s what we are really hoping for,” said Ms Beer.


The Government’s pre-election Budget is now less than four months away.

Topics: states-and-territories, business-economics-and-finance, tas, devonport-7310

First posted January 29, 2013 21:02:09

Proposals to back up big building projects in NSW


An inquiry into the building industry in New South Wales has recommended the creation of construction trusts for all projects valued over $1 million.


The state Finance Minister Greg Pearce appointed Bruce Collins QC to look at causes of insolvency in the industry after a string of high-profile collapses.


The failures of major companies Kell and Rigby, Reed Constructions, Hastie Group and St Hilliers have left subcontractors more than $1 billion out of pocket.


Mr Collins has made 44 recommendations for change.


Number one is a requirement for construction trusts to be established on all private and public sector projects costing more than $1 million.


He has also called for a strengthened security of payments scheme, the creation of a Building and Construction Authority to oversee the industry and a licensing system for all commercial builders and construction contractors.


The Master Builders Association has cautiously welcomed the recommendations.


MBA executive director Brian Sidler says the measures are needed.


“A lot of builders complain bitterly that they don’t get their last few payments from clients,” he said.


“So any sort of security for the residential sector, as long as it’s not cumbersome administratively, and it works, I think will be welcomed by those who have lost payments.”


But Mr Sidler says construction trusts might prove problematic for major commercial jobs.


“When we’re talking hundreds of millions of dollars, and you might have thousands of subcontractors on some of these very large projects,” he said.


“We’ll have to wait and see how these trusts will be put together or how they will be run.”

Topics: states-and-territories, housing, building-and-construction, nsw

First posted January 28, 2013 12:14:15

Federal Court approves Nine debt deal


The Federal Court has approved a deal to effectively hand control of Nine Entertainment to two US-based hedge funds.


The $3.4 billion plan to recapitalise the owner of Channel Nine allows its lenders to swap their debt for a stake in the company.


The hedge funds Apollo and Oaktree, along with Nine’s other secured lenders, will hold a combined 95.5 per cent of Nine Entertainment, while unsecured creditor Goldman Sachs will take a 3.4 per cent stake, and the private equity company which formerly owned Nine – CVC Asia Pacific – will hold less than 1 per cent.


The plan saves Nine from sliding into receivership.


A group of secured creditors other than Oaktree and Apollo had attempted in December to have the deal blocked, because they argued it would effectively hand control of the broadcaster to the two US hedge funds despite them holding less than half the debt between them.

Topics: business-economics-and-finance, company-news, media, australia

First posted January 29, 2013 14:55:26

Business outlook better globally, weaker locally


The latest business outlook from a leading economic forecasting agency suggests global growth will start to improve this year.


The latest Business Outlook report from Deloitte Access Economics says the big mining construction projects, which have fuelled much of Australia’s recent growth, are “hurtling towards a peak”.


Deloitte Access director, Chris Richardson, says the non-mining industries will need to step up.


“The risk is that Australia has a pothole, and that does mean that other sectors will have to take a load,” he said.


Chris Richardson says an expected pick-up in home building and retail spending should help, but the strong Australian dollar means manufacturing and tourism are likely to remain flat.


“We know that the interest rate sensitive sectors – things like home building in Australia and retail spending – they’ve had a tough time, but they will pick up,” he forecast.


“Where the question mark lies is whether the dollar-dependent sectors will do the same – manufacturing, tourism, international education – all of those have taking a pasting, given where the Australian dollar is.”


The Business Outlook paints a mixed international picture, with the United States tipped to benefit from a housing rebound, steady growth projected for China, but weakness in Europe and Japan.

Topics: business-economics-and-finance, economic-trends, australia

Carers offered free public transport in Perth


The WA Liberal Party has promised to offer free public transport to carers if it wins the state election.


The Disability Services Minister, Helen Morton, says the plan would allow travel on all metropolitan buses, trains and ferries during non-peak periods, at a cost of $1.2 million to taxpayers over four years.


She says more than 8,500 carers would benefit from the pledge.


“They sometimes have to give up careers, they often sell businesses,” she said.


“The carers’ SmartRider is a small way of us acknowledging and recognising and appreciating that fantastic role that they perform.”

Topics: road-transport, government-and-politics, perth-6000

Creditors cut half of Burma’s debt


The Paris Club of creditor countries has agreed to cancel half of the arrears owed to it by Burma, and individual countries have offered big debt cancellations, giving total debt relief of about $6 billion.


Burma’s government says Norway has cancelled all the $US 534 million owed to it, while Japan is cancelling more than $US3 billion.


Earlier, the World Bank and Asian Development Bank said Burma had cleared the arrears it owed to them, with help from Japan, and the two development banks were now able to restart lending programmes to the country, which has opened up since 2011 after decades of military rule.


Reuters

Topics: international-financial-institutions, business-economics-and-finance, foreign-affairs, government-and-politics, burma, norway, japan, asia

First posted January 28, 2013 14:27:09

Macquarie hits trouble with corporate regulator


Macquarie Private Wealth has committed to lift its performance, after the corporate regulator found it failed to comply with investment standards.


The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking from Macquarie Equities Limited (which trades as Macquarie Private Wealth) to develop and implement a risk management and compliance plan, to be overseen for the next two years by an independent expert.


The plan must address the company’s failure to maintain a culture with a commitment to compliance, the effectiveness of its risk management, its compliance with various investment advice standards, adequate consideration of personal circumstances in advice to retail clients, and appropriate record keeping and supervision.


ASIC says the independent expert will report to it over the next two years on Macquarie’s progress in implementing the plan.


The regulator says Macquarie Private Wealth had been ineffective in addressing a number of deficiencies identified from client files going back to 2008.


It says the deficiencies included: client files not containing statements of advice; advisers failing to demonstrate a reasonable basis for their advice; poor client record and a lack of detail in advice; lack of supporting documentation; and a failure to provide enough evidence that certain clients were sophisticated investors.


ASIC’s chairman Greg Medcraft says the deficiencies were serious.


“ASIC is about ensuring investors can be confident and informed, and central to this is ensuring financial services are provided efficiently, honestly and fairly,” he noted in a statement.


“Our surveillance found Macquarie Private Wealth fell significantly short of this mark, so ASIC took action. This is a major enforceable undertaking affecting one of the wealth industry’s biggest players, which we believe will rectify some serious compliance deficiencies.”


Macquarie says the company is committed to implementing the necessary changes at Macquarie Private Wealth to address ASIC’s concerns about compliance.


“We take our obligations to regulators very seriously. We have a strong track record of compliance practice and if concerns are raised, we work diligently to resolve them,” a spokesperson said in a statement.


“Accordingly we have been working and will continue to work constructively with ASIC.”

Topics: business-economics-and-finance, consumer-protection, consumer-finance, banking, regulation, australia

First posted January 29, 2013 16:01:43

Obesity not a problem for the rich

malnourished child and obese man At first sight, a photo of emaciated children in developing countries alongside obese people in the West might seem like an apt way to illustrate the massive gap between the rich and the poor.


But it is not, according to experts at the annual meeting of the World Economic Forum (WEF) in Davos.


A truer picture of wealth can be seen during lunch as the WEF is hosting some 2,500 political and business leaders, including many billionaires.


As these inappropriately dubbed “fat cats” tuck into modest portions of healthy food, sipping water or smoothies, it becomes clear that their wealth has not inspired excess – or at least not excessive eating.


Very few of them appear to have any serious weight problems. And given the number of business leaders dressed in ski wear over the weekend, it seems many of them live active lifestyles too.


Davos Man and Woman are not only wealthy but healthy too, which is clearly much better than being sick and poor.


“A couple of years ago, delegates were invited to have their blood pressure and cholesterol tested,” according to the speaker at one of the many private talks here.


“The results were very low, so this is a very healthy community.”

Access to healthy food

By contrast, both starvation and obesity are closely linked with poverty, and as such they are both symptoms of malnutrition, Ertharin Cousin, executive director of the United Nations World Food Programme, tells BBC News.


“As countries develop, they often get a double problem,” she says.


“Affordable nutritious food is the way to address both. It’s about having access to such food.”

Buffet lunch at the WEF Lunch on the go: Delegates mingle over the buffet lunch at Davos

Marc Van Ameringen, executive director of the Global Alliance for Improved Nutrition, agrees.


“You cannot see undernourishment and obesity as separate phenomenons,” he says. “Poor nutrition in the womb and during a child’s early life often leads to obesity in later life.”

Obesity ‘pandemic’

Obesity is not merely a problem in the developing world, adds Prof Linda Fried, dean of the Mailman School of Public Health at Columbia University.


“There are many places where there’s no access to healthy food, and when it is there it is not affordable,” she observes.


“Obesity is very much associated with lower financial resources in the US.”


Obesity kills 2.8 million adults every year, and in many countries more people die from obesity-related diseases than as a result of undernourishment, according to WEF.

Catering staff at Davos There is no scarcity of food or staff waiting to help at the WEF

And the phenomenon is spreading like wildfire.


“During the past 30 years, the percentage of the world’s population that is obese has doubled,” according to Prof Fried.


“If this was a communicable disease, we would call it a pandemic.”

Will power

As such, obesity poses a huge threat, both to individuals and to society, yet not enough is being done to curb it, believes sportswear maker Nike’s access to sports executive, Lisa MacCallum Carter.

Continue reading the main story
Once you become significantly obese, it is very hard to lose weight”

End Quote Prof Linda Fried Mailman School of Public Health at Columbia University “This issue is bankrupting economies and short-changing future generations in a major way,” she says, and yet, “we are relying heavily on individuals’ will power” as a solution to the problem.


Fat people are often blamed for being greedy and lazy, and for failing to take personal responsibility for their own health, but such an explanation for the phenomenon is far too simplistic, according to both Prof Fried and Ms Carter.


“There’s no evidence that there’s been a simultaneous global loss of will power,” says Prof Fried.


Ms Carter points to how modern living has resulted in sharp drops in activity levels in people’s everyday lives. “We have an inactivity crisis,” she says.

Eat less, move more

At a basic level, obesity is a result of too little exercise and too much unhealthy food.


But figuring out how to change people’s behaviour is far from easy.

Buffet lunch at the WEF Medical professionals and business leaders agree that obesity must be tackled

On the calorie intake side, “it’s not like tackling smoking, where you simply give up smoking and that’s that”, observes Jason Li Yat-Sen, director of the George Institute for Global Health.


After all, we cannot simply stop eating.


Getting people to move enough to burn more calories than they consume is also very difficult, especially if they are obese already.


“Once you become significantly obese, it is very hard to lose weight,” says Prof Fried. “The solution is on the side of prevention, and we don’t do prevention so well.”

Action required

Medical professionals and business leaders broadly agree that they must work with governments to hammer out strategic solutions to halt and reverse the obesity “pandemic”.

Food and beverage companies must play a role, both by ensuring the food they make is healthier than it is today, as well as by ensuring people can get hold of it at a price they can afford, Nestle’s chief executive Paul Bulcke acknowledges.


The insurance industry can also play a central role by rewarding healthy living, including efforts to scale back unhealthy lifestyles, according to Alison Martin, head of life and health at Swiss Reinsurance.


Ms Martin disapproves of the use of rather forceful incentives, such as denying obese people life insurance, as insurance is about mutuality of risk so we’ll have to ensure everyone is insurable – though she points out that someone with diabetes and a body mass index of more than 35 will pay twice as much for life insurance.


And structural changes to society – including new ways of working that help people move more rather than sit in front of computers all day, or efforts to make people walk or cycle to work – are useful ways to help people build exercise into their everyday lives.


Urgent action is essential, insists Mr Van Ameringen, and it should come in the form of rigorous agreements between all stakeholders.


“We need clear targets and accountability by all,” he says.


You can follow Jorn’s coverage from Davos on Twitter @jornmadslien.

Peugeot job cuts halted by court

MT Peugeot and Citroen logos Peugeot Citroen, like its main rivals, has been hit by the sharp downturn in the European car market A court in France has suspended the restructuring plans of Peugeot Citroen, saying the carmaker had failed to consult some of its employees properly.


The plans are controversial in France, as they involve 8,000 job cuts in the country and closure of a Paris factory.


Peugeot said it would continue to negotiate the cuts with unions, despite the Paris appeal court ruling delaying their implementation.


The ruling upheld complaints by workers at parts-supplier subsidiary Faurecia.


The CGT union successfully argued that Peugeot had not fulfilled legal obligations to notify the worker committees at two Faurecia sites that are likely to be affected by the planned closure of the carmaker’s factory at Aulnay, near Paris.


Peugeot had hoped to complete the restructuring by March. It said it would go ahead with planned negotiations with the company’s main workforce in February, and would initiate talks with Faurecia workers as soon as possible.


The French government called on Peugeot last year to scale back its plans.


However, the company, like of all its European rivals, faces a depressed home market. Car sales in the EU fell 8.2% last year from 2011.

Ryanair raises profit forecast

 Ryanair’s deputy chief executive, Michael Cawley: “Ryanair profits will grow”

Ryanair has increased its profit forecast for the full year after a better-than-expected performance in the last three months of 2012.


The low-frills airline reported an 18.1m-euro ($24.3m; £15.4m) profit after tax in the three months to December, the third quarter of its financial year, up 21% on a year ago.


It was boosted by strong pre-Christmas bookings and lower operating costs.


It now expects annual profits of close to 540m euros.


Its previous guidance was for profits of 490-520m euros.


Last week, rival Easyjet said its losses for the first half of the year would be much lower than in 2011, as it reported a 9% rise in revenues.

Aer Lingus proposal

In the third quarter, Ryanair benefited from an 8% rise in average fares, lifting overall revenues 15% to 969m euros.


The company said fares would continue to rise next year, though capacity would only rise by 2-3%, down from the 4% rise forecast in the current year, due to the lack of new plane deliveries planned.


The airline also gave an update on its bid for rival airline Aer Lingus. Ryanair is making its third attempt to buy Aer Lingus but was given a list of objections by the European Commission in October last year.


“Ryanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus. We believe these remedies address every current Ryanair/Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections,” Ryanair said.


“The remedies involve two upfront buyers each basing aircraft in Ireland to take over and operate a substantial part of Aer Lingus’ existing route network and short-haul business.


“This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers. We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March.”

Tax laws ‘influenced by big firms’

 BBC News Pound coins and notes The Public Accounts Committee will question accountancy firms. New tax laws are too heavily influenced by major corporations and accountancy firms, the chairwoman of the Public Accounts Committee (PAC) has claimed.


The government “only talks to those who have a self interest in reducing their tax contribution”, Margaret Hodge said.


On Wednesday representatives of the UK’s biggest accountancy firms are due to be questioned by MPs on the PAC.


Treasury minister David Gauke said it was vital to listen to firms, “but we expect businesses to pay their tax”.


Last week Prime Minister David Cameron told leaders at the World Economic Forum in Davos that countries must work together to clamp down on tax avoidance.

Offshore finance

Speaking to the BBC, Mrs Hodge said working groups set up by the government to discuss a series of tax reforms were too heavily dominated by those with something to gain.


Legal changes which come in this year include tax breaks for companies which patent their products.


Another controversial change allows companies which have offshore finance arms to pay just a quarter of the standard 23% rate of corporation tax.


Two managers from accountancy firm KPMG were among those seconded to the Treasury to help formulate tax changes.


Those managers are now named on brochures produced by KPMG for potential clients, telling them how they might use the changes to reduce their tax bills, the BBC has learned.

Continue reading the main story

Listen to the full report on File on 4 on BBC Radio 4 on Tuesday, 29 January at 20:00 GMT and Sunday, 3 February at 17:00 GMT

Some of the companies appointed to the working groups have been in dispute with HM Revenue & Customs (HMRC) about their tax bills.


In July 2010, Vodafone settled a long-running dispute over its Controlled Foreign Companies (CFC) arrangements with HMRC, agreeing to pay £1.25bn.


Vodafone’s head of tax, John Connors, was named as a member of the Treasury working group helping to rewrite CFC rules soon afterwards.


Vodaphone said it had a policy of complete transparency with all tax authorities and added: “As one of the UK’s leading multinational companies and a significant taxpayer worldwide – for every £4 we make in profit, we pay £1 in tax around the world – are we not entitled to make our opinion known when the opportunity arises to do so?”

‘Legitimate objectives’ Continue reading the main story
There has been a lot of very bad legislation enacted in the past, very often because government and the civil servants don’t have an understanding of what happens in the commercial world”

End Quote Jane McCormick KPMG Mrs Hodge told the BBC that at Wednesday’s PAC meeting she would question representatives from the big accountancy firms about their role in helping big companies cut their tax bills.


“What to me is really dangerous… is that many are working very closely both with HMRC and with the Treasury to devise new tax changes… and then they exploit those perfectly legitimate objectives,” she said.


Mrs Hodge added: “My concern with the way the current government is developing tax law is that it only talks to those who have a self interest in reducing their tax contribution.”


Jane McCormick, head of tax for KPMG, sits on a panel overseeing changes to the tax policy-making process, but said that the firm and its clients did not benefit.


“Clearly there is an advantage to us if we were involved in the formulation of the legislation, but… government formulates policy, we provide technical expertise to help them to do that,” she said.


“There has been a lot of very bad legislation enacted in the past, very often because government and the civil servants don’t have an understanding of what happens in the commercial world.”


And Exchequer Secretary David Gauke, who is responsible for tax policy, said it was important to involve companies like KPMG who were able to act as ambassadors for inward investment into the UK.


“Our intention is to have the most competitive tax system in the G20,” he said.


“Yes, we believe in lower rates – but we also expect businesses to pay their tax that is due under the law and that’s what we’re determined to do.”

Listen to the full report on File on 4 on BBC Radio 4 on Tuesday, 29 January at 20:00 GMT and Sunday, 3 February at 17:00 GMT. Listen again via the Radio 4 website or the File on 4 download.

Nursery changes ‘to raise quality’

Nursery class The government says mandatory staff ratios are tighter in England than in much of Europe Nurseries and childminders in England are to be allowed to look after more children, in a package ministers say will improve quality and cut costs.


The ratio of children to carers can be raised, but only if carers’ qualifications meet new standards.


Children’s Minister Liz Truss said the proposals would make more childcare places available and reduce costs for parents in the “long term”.


Critics warn the change in ratios could actually compromise quality of care.


They also predict the changes – which are due to come into force in the autumn – will be unpopular with parents and are unlikely to reduce the overall costs of childcare.

Continue reading the main story CURRENTUnder one and one-year-olds – 1:3Two-year-olds – 1:4Three-year-olds and above – 1:8 or 1:13 (teacher-led)PROPOSEDUnder one and one-year-olds 1:4Two-year-olds – 1:6Three-year-olds and above – 1:8 or 1:13 (teacher-led)Statutory ratios for carers per child vary depending on age and setting. Ratios for two-year-olds are set to rise from four children per adult to six children per adult, and for ones-and-under to rise from three children per adult to four children per adult.


Ratios for three-year-olds and over would remain at eight or 13 children per adult, depending on whether a qualified graduate was present.


Ms Truss says the changes will bring the UK in line with countries such as France and Sweden. England’s higher ratios lead to higher costs for parents and lower pay for staff, she says.


Ms Truss told the BBC the proposals were about raising standards and only those nurseries that hired staff with higher qualifications would be able to take on more children.

Continue reading the main story

Source: OECD


* Allows teams of carers to look after extra children as part of a group

Continue reading the main story”It will make it higher quality, more available and more affordable. It will take time to recruit new people and expand nurseries. In the long term it will be more affordable,” she said.

Liz Truss: “We’re raising the standards so that parents will be able to get more available nursery places.”


Britain has some of the highest childcare costs in the world, with many mothers with two or more children saying it does not make financial sense to work.


An earlier report by Ms Truss suggested the average family spends 27% of their income on childcare.


Ms Truss said childcare professionals should be better qualified in the UK.


“When parents hand their child over to the care of a childminder or nursery, they are not just entrusting them with their child’s physical safety, they are also entrusting their child’s brain,” she said


“With this in mind, it is no longer acceptable that childcare professionals are not required to have a GCSE grade C or above in English and maths.”


This will apply to new nursery staff only, however.


‘Very difficult’


Shadow education secretary Stephen Twigg said the plans to increase the ratios would undermine the quality of childcare in the UK.

Stephen Twigg: “Saying that more children will be in each setting risks undermining quality and even risks undermining safety.”


“I think this is one area where we’ve actually got something to teach other countries.


“If you look at France, there’s actually quite a big public debate about whether they’ve got this right. I don’t think you can compare the situation with Sweden where they have very, very generous parental leave so very few young babies are in these sorts of settings.”


Anand Shukla, from national childcare charity Daycare Trust, said: “No matter how well qualified the members of staff, there are practical considerations when you increase the number of children that they have to look after,” he said.


“For one person to look after six two-year-olds, for one person to talk to six two-year-olds, to help their language development, we think is going to be very difficult.”


National Day Nurseries Association chief executive Purnima Tanuku welcomed the commitment made by the government to improve childcare but said the “quality of childcare and early education must not be sacrificed”.


She said: “Many parents do not want an increase in the number of children nursery staff are allowed look after. They are worried it will have a negative impact on the individual attention and care their child receives.”


Anne Longfield, chief executive of children’s charity and nursery provider 4Children, said: “The welfare of the child must be our first concern throughout, but with highly qualified early-years teachers and a better inspection regime, there is an opportunity to review current arrangements and provide simpler information for parents and better incentives for providers to concentrate on what matters – children.”

Toyota reclaims number one title

A Toyota showroom in the US Toyota’s recovery has been boosted by a sharp rebound in sales in the US market Japanese carmaker Toyota has regained its slot as the world’s biggest vehicle maker, capping a year of a dramatic turnaround in its fortunes.


Toyota said it sold 9.75 million vehicles in 2012, a jump of more than 22% from a year earlier.


General Motors, which was the biggest vehicle maker in 2011, sold 9.29 million vehicles in 2012.


Toyota’s sales in 2011 were hit by natural disasters in Japan and Thailand which hurt production at its factories.


However, Toyota, and other Japanese carmakers that were affected, have seen a steady recovery since then and have been regaining share in key markets such as the US.


“The last two years have been very difficult for Toyota,” Vivek Vaidya, an auto analyst with Frost & Sullivan, told the BBC.


“The regaining of the top slot would definitely be heartening for the firm and is good news for its investors and share holders,” he added.


Toyota’s rivals also reported record numbers in vehicle sales for 2012.


Nissan Motor said it sold 4.94 million vehicles globally, up almost 6% from the previous year, while Honda Motor said it saw a jump of 19% from a year earlier, selling 3.82 million vehicles.

Profit boost?

Along with the natural disasters, Japanese carmakers have also been hit by a strong yen.

Continue reading the main story
We are likely to see profit margins rise, giving it more cash in hand and the ability to invest in developing new technologies”

End Quote Vivek Vaidya Frost & Sullivan A strong currency not only makes Japanese goods more expensive to foreign buyers but also hits firms’ profits when they repatriate their foreign earnings back home.


This especially hurts companies – such as Toyota – which rely heavily on overseas sales.


However, Japanese carmakers have received a boost in the past few weeks as the yen has fallen against the US dollar.


The Japanese currency has dropped nearly 15% against the US dollar since last November. It was trading close to 90.8 yen against US dollar in Asian trade on Monday.


Analysts said the fall was likely to have a positive impact on Toyota’s growth.


“The decline in the yen is a welcome relief for Toyota,” said Frost & Sullivan’s Mr Vaidya.


“We are likely to see profit margins rise, giving it more cash in hand and the ability to invest in developing new technologies, which should help in its growth momentum going forward.”


The Japanese carmaker raised its annual profit forecast in November.


It has predicted a net profit of 780bn yen ($8.6bn; £5.4bn) for the financial year to 31 March 2013, up from its earlier of forecast of 760bn yen.

Potential pitfalls

However, the carmaker does face some potential hurdles, not least from the continuing territorial dispute between Japan and China.


China is the world’s biggest car market and is seen as key to future growth of firms such as Toyota.


However, the dispute centred around a group of islands in the East China Sea, which flared up late last year, has hurt relations between the two countries and seen Japan’s exports to China decline.


The dispute is still unresolved and some fear that it may blow up again in the coming months and further hurt trade relations between the two countries.


The fear is that any such move may see anti-Japan sentiment rise and hurt sales of Japanese brands in China.


Analysts said that any such decline was likely to have a negative impact on Toyota’s growth.

Wonga goes international

Wonga logo at St James' Park Some Newcastle United fans are still very unhappy that Wonga now sponsors their football club The online money lending business Wonga is beginning to expand internationally.


The company, which is regularly attacked by its critics for its lending practices, has started offering short-term loans to customers online in South Africa, Canada, Poland and soon it will set up in Spain.


Here in the UK it has now lent £2bn to more than one million customers since it started back in 2007.


And last year’s launch of a business lending money to small businesses, for up to one year, is doing well, says the chief operating officer Niall Wass.


“I’m not really ready to share too many statistics about it right now, but what I can tell you is that we think there is a very large market both in the UK and other territories,” said Mr Wass.


“The user case there is really for short-term cash flow needs.


“Two-thirds of the UK small businesses we see have had working capital issues over the last year, and we think this is pretty ripe for those guys,” he adds.

Business loans

The continued reluctance of banks to lend as freely as before has given Wonga a good opportunity.


The firm says its key appeal is being able to make a decision on a business loan in 15 minutes, rather than the usual bank approach of asking a borrower to come to a meeting in a few weeks’ time, with a written business plan, to try to justify the loan.


But Mr Wass says Wonga is still fine-tuning its online credit scoring system, which makes the decisions about the credit-worthiness of potential business borrowers.


“We are still refining our algorithms [the arithmetical rules underlying the lending decisions] all the time, so we are still declining a large number of people who are applying, and over time as we learn more we will open up what we call our “accept rates” and take a lot more,” he says.


As its business loans are for £3,000 to £15,000, for up to a year, its would-be borrowers are typically small businesses which need some quick cash, for instance to buy stock at a discount, not to build a factory or an entire business.


Looking abroad, the company has its eye on the opening up in the US.


“The economy is massively driven by small, privately owned businesses, so that makes a lot of sense, they are early adopters of technology, so that is one that we are considering,” says Wass.

Foreign habits

Lending money in foreign countries can be a completely different kettle of fish to operating in the UK.

There are different rules and regulations surrounding money lending, and cultural attitudes to borrowing vary enormously.


For instance, Wonga is not going to try setting up in either France or Germany because people there are much less reluctant to borrow in the first place.


Meanwhile in Canada, where the company has now started operating, people are typically paid every two weeks rather than once a month.


So the lender has had to adjust.


“We changed to a 45-day product, so people could borrow for up to three pay cycles; there is legislation in each of the different provinces that can limit the cost of borrowing to $21 per hundred dollars borrowed, so we have to work within that framework,” Wass says.


“There are different sources of data in every market which drive the compilation of our algorithms and it takes us some time to learn the consumer habits, learn what data is predictive and learn how customers want to use our products.”

Hire purchase

Back in the UK, Wonga has also started offering loans via some retailers’ websites.


For example you can buy a bed online for, say, £269.50 from the Cotswold Company and instead of paying in one go via a credit card, you can pay a transaction fee upfront of £18.86, followed by three monthly instalments.


This “pay later” system is the online version of hire purchase, the once standard method that most people used to use to pay for domestic items like furniture and white goods and which is still often used to finance car purchases.


Why is this a big deal for Wonga?


“The pay later product has application not just in the UK, but particularly in many developing markets where forms of consumer credit are not just there,” says Wass.


As for personal loans, its iPhone app is being downloaded by a thousand people a day, indicating the growing popularity of its business.

Apology

What is intriguing about Wonga is that it seems to be impervious to an awful lot of bad publicity, which continues to dog the business.

Niall Wass Niall Wass says the standard APR interest calculation is ridiculously misleading

A row with some disgruntled fans of Newcastle United is still rumbling on, following last year’s deal in which Wonga become the club’s main sponsor.


The lender had to apologise to one of its most high-profile critics, the Labour MP Stella Creasy, last November when a Wonga employee called her “nuts” and “a raving self-publicist” on the social media website Twitter.


And earlier last year the firm received a public slap in the face from the Office of Fair Trading (OFT) because it had used over-aggressive debt collection methods when trying to get its money back, a few years ago, from some borrowers it had suspected of fraud.


Wass says its strategy is to engage with critics and he points to a part of its website “Open Wonga” which publicises business data about itself, which some other firms would probably keep confidential.

Interest charges

The most common charge against the firm is still that its interest rate is extortionate,


Although it is a low sounding 1% a day, it amounts to an annualised percentage rate (APR) of 4,214%.


Wonga says this is a ridiculously misleading statistic with which to compare it to other lenders such as banks.


Its loans have an initial ceiling of £400, are short-term only with a maximum length of 40 days, and there can be no more than three renewals or roll-overs, assuming the extensions are approved by the company in the first place.


Meanwhile 62% of all first-time applicants are rejected and Wonga’s interest charge is capped at 60 days if someone fails to repay.


With a default rate of 7% among borrowers, similar to that of credit cards, the business has become very profitable, making £46 million in 2011.


But the issue of interest charges will not go away.


The OFT has been investigating the payday loan industry, again, and when its report is published later this year it may be another challenge to Wonga’s way of doing things.


Niall Wass says even if it recommended a cap on interest charges, Wonga would still thrive in the UK.


“There are other regulatory regimes around the world that have different pricing mechanisms, in which we are operating,” he says.


“There are different ways of doing it, we can adapt to that; but we fundamentally don’t think that price capping is the right way to go, we think it constrains consumer choice.”

Call for soft-drink sugar tax

 Michelle Roberts Health editor, BBC News online Fizzy drinks Excess sugar raises the risk of obesity Leading medical bodies are calling for a 20p-per-litre levy on soft drinks to be included in this year’s Budget.


More than 60 organisations, including the Royal College of Paediatrics and Child Health, are backing the recommendation by food and farming charity Sustain.


They say it would raise £1bn a year in duty to fund free fruit and meals in schools to improve children’s health.


The soft drinks industry says raising taxation is unnecessary.


The British Soft Drink Association (BSDA) says companies are already playing their part in the fight against obesity.


The BSDA’s director general Gavin Partington said 61% of soft drinks “now contain no added sugar and we have seen soft drinks companies lead the way in committing to further, voluntary action as part of the government’s Responsibility Deal calorie-reduction pledge.”


He said 10p from every 60p can of drink already goes to the government in tax.


“Putting up taxes even further will put pressure on people’s purses at a time when they can ill afford it,” he said.

Continue reading the main story Sugary foods and drinks can only make us gain weight if overall we eat more calories than we use for energySugary drinks are potentially hazardous because they do not fill us up, meaning we can easily consume too muchA 330-millilitres (half-pint) sugary drink typically provides 35g (0.17oz), or nine lumps of sugarThe British Dietetic Association says some research suggests sugary drinks may be contributing to obesity in childrenIn the UK, one in four adults is classified as obese and one in three children is already obese or overweight before they finish primary schoolIf you want to cut down, try switching to drinking pure juice diluted with fizzy water, diet fizzy drinks, milk, no-added-sugar squash or waterBut Sustain says the tax is a simple measure that would help save lives by reducing sugar in our diets and raising money to protect children’s health.


It says the UK consumes more than 5,727 million litres of sugary soft drinks a year. Adding a 20p tax for every litre sold would raise more than £1.1bn.


Mike Rayner, of the department of public health at Oxford University and chairman of Sustain, said: “Just as we use fiscal measures to discourage drinking and smoking and help prevent people from dying early, there is now lots of evidence that the same approach would work for food.


“This modest proposal goes some way towards making the price of food reflect its true costs to society. Our obesity epidemic causes debilitating illness, life threatening diseases and misery for millions of people. It is high time government did something effective about this problem.”


A Department of Health spokeswoman said: “Our primary responsibility is to help the nation to be healthier.


“We keep all international evidence under review. But we believe the voluntary action we have put in place is delivering results.”


Shadow Health Secretary Andy Burnham disagrees and says it is clear that a voluntary approach is not working.


He said: “Labour is consulting on whether new limits on sugar, salt and fat content in food aimed at children would be a better way forward. This would help parents protect their children from foods which contain excessive levels of sugar, salt and fat in a way that a tax wouldn’t.”


Over the past 10 years, the consumption of soft drinks containing added sugar has fallen by 9% while the incidence of obesity has increased by 15%.

Christmas shop boom creates returns headache

A pair of Diamond and Platinium shoes modelled by Heidi Some online shoe retailers have seen up to every one in three shoes returned “If the shoe fits, wear it,” is a simple enough metaphor – but for Jessica Hodkinson, from Daniel Footwear, it is at the root of an uncomfortable problem.

Her company, like many others, is struggling to build a strong presence on the internet, as online sales boom and the High Street shudders.


“Everyone has a different size of feet – it’s impossible to make one style of shoe that fits everyone and that makes shoes one of the hardest things to sell online,” she says.


Like many retailers, Jessica’s company has benefitted from online sales – one of the few bright spots on the retail landscape.


But as online shopping grabs an ever-bigger slice of the retail market another problem presents itself – an exponential growth in returns.

Holiday hangover

Daniel Footwear sees about one in every three pairs of shoes bought online returned, a lot more than when they are bought in the company’s outlets, says Jessica.


The rate of online return differs based on industry and location, but analysts say anywhere between 25% and 50% is commonplace.


An online sales spike over the recent festive period might have merited a celebratory drink, but January is hangover time as items come flowing back through the door.


Dealing with returns is an age-old issue for retailers, but the boom in online sales presents new dilemmas that would not have troubled traditional shops.


Most obvious is the very nature of online shopping.


“You cannot try, touch or smell the product,” says Eric Abensur, group chief executive of Venda, a provider of e-commerce solutions.

Daniel Footwear screenshot Features such as panoramic viewing help minimise returns, Daniel Footwear says

“And people are getting more sophisticated in their shopping online. Once they bought one item, now they buy two and return the one they don’t like,” he adds.


“This makes the level of returns online significantly higher.”


Other problems include regulations specific to online sales, such as those relating to distance selling in the EU, which dictate retailers have to offer cash for returns rather than just store credit.


There is a cultural element to the problem as well, as another shoe seller has found.


“Returns levels for Germany are considerably higher than other countries across Europe – up to three times the level seen in France and Spain,” says Dave Elston, head of eCommerce, Europe, at Clarks shoes.


“This can largely be attributed to Germany’s catalogue shopping heritage,” he says.


“We see a very high number of multiple pair orders in Germany, and these multiple orders more often consist of colour or style variations, as opposed to multiple sizes.”

Picture perfect

Some companies now release trading figures that exclude anticipated returns, particularly in the wake of the period covering Christmas.


This allows them to manage investors’ expectations as they gauge actual levels of online returns.


To stem the tide, many firms are working hard to make their websites offer as accurate a picture as they can.


“We have started to introduce new photography online, such as 360-degree views,” says Jessica, from Daniel Footwear.


“This enables customers to spin a chosen product around, zoom in and take a closer look before purchasing,” she adds.

Eric Abensur, group chief executive of Venda Online shoppers tend to buy more products than they actually want, says Venda’s Eric Abensur

“Product descriptions have also been improved, giving customers an in-depth summary of the products bought online.”


Others use augmented reality to allow customers see themselves interacting with items online.


But even Jonathan Chippindale, chief executive of augmented reality firm Holition, warns this technology has its limits at this stage of its development.


“Augmented reality is very good with hard items,” he says.


“For example, we are very good at tracking faces to show you what you would look like wearing a particular make-up, or perhaps holding a handbag on your arm.


“But a lot of this is about making people feel and look beautiful – and the technology has to live up to that,” he adds.


“In terms of clothes, the way the cloth maps the body has to look as realistic as possible. I’ve seen technology where people are ‘trying on a shirt’ and it looks like body armour.”

Big data

One benefit companies have with online retail is that is generates a vast amount of data in terms of shopping habits.


Using analytics programmes, companies can use the reams of statistics they gather to predict when and where returns will come.

Continue reading the main story
Retailers need to fundamentally understand whether they believe returns are good or bad”

End Quote Chris Biggs Boston Consulting Group If someone buys two identical items but in difference sizes, for example, it’s a good bet that one will be coming back.


Some firms use this data to second-guess customers, offering them items they think will suit their patrons – hoping to minimise returns at the same time.


But there can be a sting in the tail of this strategy, says Andrew McClelland, the chief operating officer for IMRG, a membership group for the e-retail industry.


“Whatever my behaviour has been in the past is not an indicator for the future – in this way data can be fairly two-dimensional.


“What if they’re buying for someone else, or have perhaps changed size?


“Once you get into saying, ‘We’ve seen you buy this size, here’s what you should want,’ you’re getting into spooky territory,” he says.


A fact of the e-retailer’s life is that for all the items that rush off the shelves and down the internet superhighway, a fair few will only stop for a comfort break before dashing back again.


But making this journey as comfortable as possible is a key facet in turning what appears to be a negative, into another sales opportunity.

Tissot's augmented reality shopping Augmented reality helps give shoppers an added perspective on how their product will look on them

“Retailers need to fundamentally understand whether they believe returns are good or bad,” says Chris Biggs, partner in the retail practice at The Boston Consulting Group.


“If companies minimise returns through tough policies, costs are kept down, but customers can be turned away.


“Some leading retailers now use super-easy returns as a key part of their customer proposition – and are finding the economics work.


“Free, simple returns mean customers can safely over-purchase, and they often end up keeping more items than they had originally planned.”


If this approach works, then the cost of returns could conceivably even become part of the marketing budget.


Online retailers have to address all these issues if they are to make customers feel like Cinderella rather than the Ugly Sisters when Prince Charming (well, the postman) comes knocking – whether they are in the shoe business or not.

Career warning about social media

Newsbeat reporter  Kelly Doherty, 26, skipped work and her boss saw her Facebook pictures Recruiters across the UK are warning too many young people are risking their career opportunities because of what they post on social network sites.


The Recruitment Society and The Chartered Institute of Personnel and Development (CIPD) say most employers now search job candidates online.


Katerina Rudiger from the CIPD says it is important to check your privacy settings on sites like Facebook.


“We all have nights out but it is best not to advertise it,” she said.

Continue reading the main story

1. Check your privacy settings. Keep your private life private.


2. Do have a presence on social networks. If not you may be at a disadvantage.


3. Monitor your channels. Check what friends are posting about you.


4. Maximise the potential – search employers, and connect.


5. Ask “would my mum or gran approve of what I am posting?” If not, don’t risk it.


Simon Bracewell from the Recruitment Society oversees the processing of thousands of applications for graduates, interns and apprentices.


He says he has seen more and more worrying cases.


He said: “I have seen so many of them where people have posted naked pictures.”


Kelly Doherty called in sick at work for two days. She said: “My boss phoned me up two days later and asked, ‘Did I have a nice time?’


“My workmate had grassed me up and all my pictures were over Facebook.


“I should have set my privacy settings.”


The Recruitment Society and CIPD are seeing more cases of inappropriate photos or comments which are public on sites like Facebook and Twitter.


Both are warning it is legal for employers to search social media sites.


Provided they do not discriminate on things like race and gender, they can choose not to give you a job based on what they find online.


Both groups also say you need to be careful once in work.


They are concerned some people don’t realise they can be sacked if they post negative comments about their company.

Continue reading the main story
I had two days off work sick, I called my boss. Two days later he called and asked did I have a nice time? My workmate had grassed me up and all my pictures were over Facebook

Kelly Doherty, 26

Dan, 17, who didn’t want to be identified, said he lost out on a job after joking about a cafe chain on Twitter.


He thinks the decision should have been made on his skills.


“It’s frustrating I have to be very careful now and can’t always say what I really feel,” he said.


Dan is now being followed by his prospective university on Twitter.


Follow @BBCNewsbeat on Twitter

My first Davos – what I learned

Reporter Anthony Reuben Our reporter had to cope with seriously cold weather My first trip to the World Economic Forum in Davos is coming to an end, which makes it a good time to reflect on what I have learned from four days in a Swiss ski resort with a vast selection of world leaders and business bosses.


Here are my key findings:

Badge colour is important

Two of us have been in the Swiss ski resort of Davos for the BBC News website.


It was the first time for both of us, but my colleague got the white badge and I got an orange one.


You’d think that wouldn’t make much difference, but you’d be wrong.


Davos runs an almost caste-like system of badges.


A white badge means you’re one of the delegates – you might be the chief executive of a company or the leader of a country (although that would also get you a little holographic sticker to add to your badge), or a senior journalist.

Delegates at Davos As you would expect of a ski resort in January, Davos can be a very cold place

An orange badge means you’re just a run-of-the-mill working journalist.

We’re not in the dotcom era any more

I was told that I didn’t need to wear a suit and that “business casual” dress would be fine.


This was not true – almost every man attending the forum was wearing a suit, either with or without a tie.


The only people at the whole event wearing a jumper were Financial Times editor Lionel Barber and me.

That badge colour thing really is important

There are other badges for staff, security personnel, partners of delegates, volunteers, technical staff and the entourages of people important enough to have them.


Walking down an icy road, I heard a snippet of conversation from a passing group of women.


One of them said, “and then this orange badge just came and sat down right next to me!” as if she was talking about some sort of social outcast.

Orange pass The orange pass was socially unacceptable

And it’s not just about the contempt – there are practical differences too.


My colleague emailed a major car company to see if he could get to interview its boss during the week.


The press officer replied asking what colour badge he had!

Swiss plugs are different

The BBC’s coverage was almost scuppered by my failure to bring a Swiss adapter.


Swiss plugs are different to those from everywhere else in the world, and contrary to the advice of colleagues, using a normal European adapter and pushing it in a bit harder does not work.


Fortunately I was saved by the technical support desk of an international consultancy firm, which lent me one for the week.


On the down side, it turned out that a Swiss adapter attached to a European adapter looks like a small gun through an X-ray machine, according to the Davos security, which held me up for some time.

It’s pretty cold

I know it goes without saying, but this ski resort in January is quite cold.

Delegates at Davos The dress code at the World Economic Forum is business casual

On a few days it was sunny and not too bad for some of the time, but when returning to the hotel after dark or setting off for a breakfast meeting it was brutally, nose-hair freezingly cold.

White badges really are better than orange ones

My colleague and I had to enter the conference centre through different entrances. He was allowed to attend many more sessions and events than I was, and his photo and biography appeared in the enormous directory of delegates, while I was just one of the huddled masses of nameless reporters.


I suppose I shouldn’t complain. I got to spend a week working in a posh ski resort and mingling with leaders of countries and companies alike.


I had a meal with Malaysian ministers and cocktails with company chiefs.


But my colleague did rub it in terribly.

QE ‘raising firms’ pension costs’

Mark Hyde-Harrison Mark Hyde-Harrison says that regulations are not flexible enough for businesses Companies are having to fill pension deficits resulting from the Bank of England’s policy of quantitative easing (QE) instead of growing their business, MPs have been told.


QE has reduced the returns on pension investments, helping to push final-salary schemes into large deficits.


The pension funds trade body said QE had caused a £90bn effect on these defined benefit schemes.


MPs also heard that QE was an “utter disaster” for savers.

Economic ‘strength’

Under QE, the Bank of England has so far pumped £375bn into the economy by buying government bonds currently in issue.


This has driven up their price and reduced their return, or yield. The knock-on effect is an increase in the estimates that pension schemes must make of the assets they need to hold, in order to pay all their future pension payments in the future


Mark Hyde-Harrison, chairman of the National Association of Pension Funds (NAPF), told the Treasury Committee that regulations were not flexible enough for companies to avoid having to fill these deficits, rather than use the money elsewhere.


“A strong economy and strong companies produce good pension funds,” he said.


Pensions expert Ros Altman later suggested to MPs that the devaluation of pensions had been “overlooked” in the QE programme. The long-term savings schemes had been distorted in the short-term by QE.


And Simon Rose, of the Save our Savers campaign group, said that QE and low interest rates had reduced the interest rates paid to savers, although those with stocks and shares Isas (Individual Savings Accounts) would have benefitted.


The Bank of England has defended its QE policy on several occasions.


It has argued that without QE, savers, including pension funds, would now be worse off because their other assets such as shares would probably be much lower in value than is the case.


The Bank has also argued that QE has been the main factor staving off a much deeper recession than the one the UK has experienced since 2009.

John Williams to be PGMOL chairman

Former Blackburn Rovers chairman John Williams is to be the new chairman of Professional Game Match Officials Limited.

PGMOL is the referees’ body which officiates across all Premier League, Football League and FA competitions.

Williams will support PGMOL general manager Mike Riley.

Williams said: “It’s incredibly important to continually build the co-operation and communication between players, managers and match officials.”

Williams was chairman of Blackburn Rovers from 1998 until he resigned in 2011 and joined the football operations team  at Manchester City.

He will take up his new position at the end of the season, succeeding Peter Heard.

He said: “I’m looking forward to building on the excellent work of Peter Heard, Mike Riley and the PGMOL Board, who can be rightly proud of the high standards of officiating in this country.

“My involvement will primarily be at a strategic level but I expect to have some tactical engagement with the wider stakeholders groups involved in refereeing.”

Riley added: “We are excited about John’s arrival. He is a hugely respected figure in boardrooms across English football and has an excellent knowledge of both the opportunities and challenges of modern football.

“We are certain he will improve the standards of PGMOL further.”

Burma gets $952m in fresh loans

Jonathan Head says “50 years of isolation and military misrule” have left Burma “far behind”.

The Asian Development Bank (ADB) and the World Bank have approved fresh loans for Burma to aid the social and economic development of the country.


The ADB granted $512m (£325m), while the World Bank approved a $440m credit.


The loans were made possible after Burma cleared overdue arrears to the two banks with the aid of Japan.


Burma, also known as Myanmar, has been implementing economic and political reforms, resulting in various sanctions against it being lifted.


“Myanmar has come a long way in its economic transformation, undertaking unprecedented reforms to improve people’s lives, especially the poor and vulnerable,” said Annette Dixon, country director for Myanmar at the World Bank.


“Much work remains to be done. We are committed to helping the government accelerate poverty reduction and build shared prosperity.


“The Bank’s engagement, together with the ADB, the Government of Japan and other partners, will help attract investment, spur growth and create jobs,” Ms Dixon added.

‘Tipping point’

Burma, one of the poorest countries in Asia, has been hurt by decades of international isolation in wake of the sanctions imposed against it.

However, it has huge growth potential, not least because its rich in resources such as natural gas reserves.


At the same time, it has a big agricultural potential as well as the availability of low-cost labour.


The World Bank expects Burma’s economy to expand by 6.3% in the financial year 2012-13, up from 5.5% in the previous 12 months.


However, many analysts have said that for the country to be able to translate that potential into actual growth it needs increased investment in key sectors.


Stephen Groff, vice president of ADB said the bank’s loan will help Burma lay the foundation for sustainable growth “which will ultimately lead to major investments in road, energy, irrigation and education projects, as well as investments in other sectors”.


“This is a historic tipping point for Myanmar,” he said.


The bank added that its aid will also help the country “develop a strategy to make banking services more widely available”.


The ADB’s loan to Burma is the first such credit it has approved in almost 30 years.


Last year, the World Bank started lending to Burma after a gap of 25 years.

Further aid

In a further boost to Burma, the Paris Club of creditor nations has agreed cancel almost half of its debts to member countries.

Kyat notes The World Bank and ADB have resumed lending to Burma after sanctions against the country were lifted

It has also agreed to reschedule the payment of the remaining loan over a period of 15 years.


According to a press release on the state-run New Light of Myanmar, Norway, which is a member of the club, has cancelled all of its claims amounting to $534m.


Meanwhile, another member Japan has committed to a cancellation of its arrears worth over $3bn.


The release said that the overall agreement with the club “results in a very favourable debt relief of nearly $6bn or over 60% of total debt immediately in effect.”


“Meanwhile, other bilateral donors are expected to follow suit and more debt cancellation is coming on the way in the next six months,” it added.


The Paris Club is an informal group of creditors that helps countries, especially poor nations, restructure or reduce their debt.


According to its website, it has 19 permanent members including the US, UK and Australia.

Pinball tables offer new tricks

Pinball machines Stern Pinball and others in the industry say demand for their tables is on the rise Twenty years ago it was almost impossible to avoid the sounds and flashing lights of pinball machines in pubs, student bars and amusement arcades.


Competition from electronic arcade machines and fruit machines helped drive them close to the brink of extinction. But now these giant mechanical tables could be set to enjoy a renaissance.


New pinball companies are springing up to reintroduce the world to the physical pleasure of flipping “the silver ball.”


What’s behind the apparent resurgence? Ironically it’s computer games, according to Andrew Heighway, managing director of Heighway Pinball, a UK-based company that plans to release its first machine shortly.


“There’s been a huge boom in pinball smartphone and console games over the last few years,” he explains.

Heighway's Pinball machine Heighway Pinball’s machines are designed to minimise breakdowns by tracking balls with collision-free sensors

“Many of the kids that play them have probably never seen a real pinball machine. A whole generation has missed out – but thanks to these video games, there are plenty of kids that have been primed for the real thing.”


Gary Stern, president of Stern Pinball – the only company that has been manufacturing pinball machines continuously over the last decade – confirms the trend.


“We’ve seen sales up by 30% in the last year, so there is absolutely a resurgence in interest,” he says.


Used machine prices have also shot up in price.


That doesn’t surprise Andy Netherwood – a pinball repair man known in UK pinball circles as The Legend for his ability to bring almost any broken-down machine back to life. He says that the number of machines in private hands has also been growing lately.


“Twelve years ago, when I started, I used to do one or two repair jobs each week, and later it became a steady one or two day per week job,” he says. “But recently I’ve been out doing repairs four days a week or more.”

Heads-down display

Those opting for a new machine are being promised a range of innovations.


Heighway’s first title features a colour LCD screen built into the playing area, or “playfield”. For its second it plans a 46in (117cm) transparent video screen built into the glass tabletop.

Continue reading the main story image of Martin Ayub Martin Ayub UK’s top-ranked pinball player

Enthusiasm and demand for pinball is undoubtedly enjoying a marked resurgence.


The popularity of computer pinball emulations on phones and tablets has led many in search of the real thing – both to play and to own.


From having virtually no pinball tournaments just a few years ago, the UK now has a plethora of competitions and leagues of assorted sizes, formats and skill levels.


The International Flipper Pinball Association started in 2009 with 500 registered players competing in 50 tournaments worldwide.


Now there are 16,500 players and 430 tournaments.


While the silver ball may have disappeared from many pubs, bars and arcades over the years, don’t make the mistake of thinking it has stopped rolling.


It’s picking up speed again, and this time it’s multiball.


Martin Ayub is the UK’s number one ranked pinball player. He is also a computer graphics designer for BBC News.

The screen will work like the heads-up display (HUD) used by military pilots – except it will work heads-down: explosion effects and other graphics will be superimposed over users’ views of the playfield.


Heighway, Stern and Jersey Jack Pinball – another new company that’s about to launch its first machine – all have plans to imitate video games by adding an online social component to their machines.


Players will be able to register themselves at a website, and then identify themselves to a pinball machine, perhaps logging on with a username and password.


“You’ll be able to compete with other people over the internet, record your scores and compare them with other people’s at local, national or international levels” says Mr Heighway.


“Machines will also be able to post your score on Facebook like online games.”


Players will be able to pay for games using credit previously added to their online account, or by sending a text message from their phone, Mr Heighway adds. That could solve the problem of running out of coins – although it’s not clear what would happen to the tradition of placing a coin on a machine to stake a place in the queue to play.

Pinball wizard

Some pinball machines have bewilderingly complex rules that govern how to win extra balls and jackpots.

Wizard of Oz pinball machine Jersey Jack Pinball’s machine shows Wizard of Oz film clips on its backbox

In the past players were expected to learn them by watching others play or through trial and error, but Stern Pinball has introduced QR codes on its latest machines which can be scanned with a mobile phone to bring up instructional videos.


Jersey Jack Pinball is led by an irrepressible games industry veteran called Jack Guarnieri. He wants to widen its appeal beyond its male core audience to include women and children.


His firm’s first machine, due to launch in early spring, is called The Wizard of Oz.


It incorporates a giant colour LCD screen in the backbox that sits at the end of the playfield. It takes advantage of the processing power built into the table to display custom animations and clips from the film as the game progresses.


“I think it’s very important to keep people who are watching the game as well as the players entertained, so adding a big video screen was important,” Mr Guarnieri said.


“These days young people won’t respond to static images on a backbox, no matter how striking they are.”

Wear and tear

If pinball is to enjoy a new golden age there’s another problem manufacturers must tackle: in a pub, a table that’s out or order takes up space but earns nothing for its owner. That means reliability is a big issue.


But these are complex machines with hundreds of moving parts, and every moment that they are in use, they take a pounding from the steel balls bouncing around the playfield.

Quetzal Pinball Qeutzal allows users to make changes to the software that powers its machines

Most existing pinball machines use mechanical microswitches to keep track of where the ball is. The problem is that these switches wear out, they get crushed by flying “air balls”, or they are knocked and bent out of position.


Heighway Pinball’s solution is to introduce inductive switch technology: solid state sensors beneath the playfield, well out of the way of flying steel balls, which are triggered when a ball passes by without any physical contact.


Another new pinball manufacturer, Spain-based Quetzal Pinball, has made the software that controls its first game open source. That means that as well as adding or changing the rules, anyone with the necessary programming skill can modify the software to correct any bugs that may make the machine malfunction.


There are also simpler ways to improve reliability: most pinball machines have more than 100 or so incandescent bulbs that need to be replaced regularly, but new machines like The Wizard of Oz are equipped with LED lighting that should last longer than the machine itself.


Regardless of any innovation, pinball machines will never be completely reliable – in a contraption made from up to 3,500 parts connected by half a mile of wiring, there’s just too much to go wrong.


But a new generation of pinball players brought up on digitally identical video games may find this quirkiness actually adds to the attraction of the machines. After all, as an old industry adage goes: “If it ain’t broke, it ain’t pinball.”

Carmakers agree fuel cell pact

Nissan FCEV on display at a car show in Brussels in January So far, fuel cell electric vehicles (FCEV) have largely been confined to motor shows Ford, Renault-Nissan and Daimler have agreed to jointly develop a fuel cell system to try to speed up the availability of zero-emission vehicles.


The carmakers hope to launch “the world’s first affordable, mass-market fuel cell car” by 2017.


A common hydrogen electric fuel system will be created that will be used in different vehicles.


The three companies want to encourage others to push on with developing the necessary refuelling stations.


Fuel cell electric vehicles generate their power from hydrogen and oxygen, and emit only water.


“Working together will significantly help speed this technology to market at a more affordable cost to our customers,” said Raj Nair, group vice president of global product development at Ford.


“We will all benefit from this relationship as the resulting solution will be better than any one company working alone.”


The statement from Ford, the Renault-Nissan alliance and Daimler stressed the geographic spread of the firms. It also said it hoped their co-operation would help “define global specifications and component standards, an important prerequisite for achieving higher economies of scale”.


Dr Anthony Baxendale, manager of Future Transport Technologies & Research at Mira Ltd, a UK firm focusing on creating advanced vehicle and systems technology, said this type of fuel cell had been “bubbling under” for a while.


But the main problem in the past had “been how to get production volumes up in order to get prices down”.


“The production cost until now has been prohibitive, so by collaborating and joining forces they will be hoping to accelerate development,” he said.


“The technology is there – it has been the costs that have not been viable until now. The time is right too – it plugs into a growing market for electric cars,” he added.


The fuel cell development work will use existing facilities, including the site of a joint venture between Daimler and Ford to develop fuel cells in Vancouver, Canada.


Renault-Nissan and Daimler have been forming an increasingly close partnership since 2010. Last year, they announced an engine-sharing agreement.


BMW and Toyota are also working together on electric hybrid and hydrogen fuel cell technology,

Banks face ‘decisive’ two years

says that 2013 and 2014 are going to be decisive years for financial sector reform

The incoming governor of the Bank of England has said the next two years will be “decisive” for bank reform.


Mark Carney, current governor of the Bank of Canada, said “shadow banking” and the issue of “too big to fail” would be tackled.


The 2008 crisis would be repeated if unregulated financial activities – blamed for amplifying the meltdown – went unchallenged, he said.


He also warned that central banks alone could not eliminate “tail risks”.


He said that, contrary to some reports, tail risks – essentially worst-case scenarios – in Europe and the United States remained.


Shadow banks are companies that operate like banks but fall outside current oversight.


“The next two years will be decisive on ending ‘too big to fail’ [for banks] and addressing shadow banking and over-the-counter derivatives, that absolutely amplified the last crisis – and will do so again if we don’t complete our agenda,” he told an audience at the World Economic Forum in Davos.

‘Monetary toolbox’ Continue reading the main story

The calm mood in sunny Davos is open to interpretation. It might be tempting to see it as a reflection of hope that the global economy is back on track and picking up pace.


But equally, it could be taken as a sign of exhaustion, bringing pause to an economic crisis that has been long and tiring.


Nobody here expects a sharp and sudden recovery, especially not in the US or the eurozone.


But these days, politicians and business leaders seem happy as long as they are not in the eye of a storm.

Over-the-counter derivatives – unregulated because they are privately negotiated between two parties – were blamed for exacerbating the financial crisis.


Mr Carney takes up his new position at the Bank of England in June.


His comments could hint at what is to come when he succeeds Sir Mervyn King at the Bank, which has seen its financial regulatory powers increase since the financial crisis.


Mr Carney also rebuffed criticism that countries had “maxed out” all monetary policy options by major economies.


“Part of the point is to ensure that as the economy gains traction, stimulus will continue to be provided appropriately.”


International Monetary Fund managing director Christine Lagarde, who was present on the panel alongside Mr Carney, also said that the European Central Bank had to keep its monetary toolbox open.

‘Risks of relapse’

“Those tools that are in the toolbox have to be operational. It doesn’t necessarily mean they have to be used… but they must be operational,” she added.


Unconventional monetary policies pursued by the ECB have brought some respite to markets recently.


Operations including its Outright Monetary Transactions (OMTs) and the Long-Term Refinancing Operations (LTROs) helped bring down yields on eurozone sovereign bonds, making it less expensive for governments to borrow on international markets and pay off their interest payments to creditors.


Meanwhile Ms Lagarde warned against the “risks of relapse”, urging countries to keep up with reforms, especially in the eurozone, to pursue banking and fiscal union while keeping pace with structural reforms.


She said 2013 was “not going be a walk in the park” for the euro area but would be far better than last year.


With regards to the US, she said the government should change its debt trajectory and “indicate promptly” how to cut debt.

India rates cut after nine months

A vendor selling vegetables in India Rising food costs have seen India’s central bank resist calls for cutting interest rates India has cut its main interest rate for the first time in nine months in an attempt to revive economic growth.


The Reserve Bank of India (RBI) has lowered its key rate to 7.75% from 8%.


It also lowered the amount of money that banks need to keep in reserve, a move it said should provide 180bn rupees ($3.4bn; £2.1bn) of extra cash for them to lend.


India’s growth has fallen to a three-year low and the RBI has been under pressure to stimulate the economy.

Easing inflation

The slowdown in India’s growth had resulted in calls from both the government and business for the central bank to lower the cost of borrowing.


It had resisted the calls saying it had to keep inflation in check. However, the pace of consumer price growth has slowed in recent months.


India’s Wholesale Price Index, the country’s main gauge of inflation, eased to an 11-month low of 7.18% in December.


Commenting on its most recent move, the RBI said in a statement that the slowdown in the rate of inflation “provides space, albeit limited, for monetary policy to give greater emphasis to growth risks”.


The RBI added that it expects inflation to slow further in the coming months.


It said that it expects the rate of inflation to dip to 6.8% in March, compared with its earlier projection of 7.5%.

Further cuts? Continue reading the main story
The Reserve Bank of India is definitely less hawkish in its statement, and we think it will remain in the easing mode in 2013”

End Quote Sujan Hajra Anand Rathi Securities India’s economy grew by 5.3% from a year earlier in the July to September quarter, the slowest pace of expansion in three years.


The Asian economy has been hurt by a variety of factors.


The slowdown in the global economy has hurt demand for its exports and affected its manufacturing sector.


Meanwhile, domestic demand in the country has also remained subdued and foreign investors have been wary of entering the country amid a delay in key reforms.


That has led to concerns that India’s growth rate may slow further in the coming months.


On Tuesday, the central bank lowered its full-year growth forecast for the financial year 2012-13 to 5.5%, from its earlier projection of 5.8%.


Analysts said that the RBI may cut its interest rates further in an attempt to try and sustain long term growth.


“The Reserve Bank of India is definitely less hawkish in its statement, and we think it will remain in the easing mode in 2013,” said Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai.


Mr Hajra said that he expected the RBI to cut rates by 0.5% over the next five months.

Online growth boosts William Hill

Continue reading the main story Shares in William Hill have risen following a trading update that showed more growth from its online business.


Britain’s largest bookmaker said it expected to report operating profits for the full year of £330m, up from £276m the previous year.


Its profit from online activities was up 36% from the previous year. Full year results will be released on 1 March.


William Hill shares rose 4% in early trading in London.


The company is trying to boost its online presence by buying the Australian arm of online bookmarker Sportingbet and an option on Sportingbet’s Spanish business for £454m.


“Performance was robust in retail and profits continued to grow strongly in online, with sporting results going in our favour in both channels,” said chief executive Ralph Topping.


The company is currently considering whether to buy out the 29% stake in William Hill Online held by Playtech.


“The market continues to reward those companies which have embraced online business and William Hill is no exception,” said Richard Hunter at Hargreaves Lansdown Stockbrokers.


“The company’s progress has been reflected in a share price which has risen 62% over the last year.”

SPL clubs content with shake-up

 By Chris McLaughlin Senior Football Reporter, BBC Scotland Scottish football is edging closer to reconstruction after the country’s top 12 clubs backed proposals for a new league model.


SPL clubs agreed on a new setup that would see the current format replaced with two leagues of 12 and one of 18.


The plans will be put in place for next season if ratified by Scottish Football League clubs at a meeting on Thursday.



“The clubs were united in their view about the need for change”

Neil Doncaster Scottish Premier League chief executive “The clubs were united in their view about the need for change,” said SPL chief executive Neil Doncaster.


“I firmly believe that any change can only come from consensus and there’s one consensus model for change going forward.


“The SPL clubs have been clear today that they, in principle back this being taken to the next stage.”


Doncaster insisted the mood of the meeting had been positive.


“It was a good discussion,” he said. “It’s always a robust discussion between SPL clubs, but a positive one.


“It’s now for the Scottish Football League clubs to give their views on Thursday.”


Follow Chris McLaughlin on Twitter