by Alan Thornhill
The High Court has just sent a shiver throughout Australia’s boardrooms.
It ruled that seven former James Hardie directors had issued a misleading statement, in 2001, declaring that a compensation scheme, for asbestos victims, was fully funded.
Just two years later, the scheme found to have been underfunded by more than $1 billion.
Meredith Hellicar, a former chair of James Hardie Industries – and six colleagues - now face penalties, to be decided by the NSW Court of Appeal.
That court will consider issues of liability, penalty and disqualification, at the direction of the High Court.
The corporate watchdog, the Australian Securities and Investments Commission took the latest case to the High Court, after a rash of legal actions, lasting years.
ASIC Chairman Greg Medcraft welcomed the High Court’s decision, saying it reinforces the behaviour expected of company directors and other market gatekeepers.
‘We made it clear when launching these proceedings that the action was in the public interest,” he said.
‘The case brought into sharp focus the fundamental responsibilities of both executive officers and non-executive directors who are ultimately responsible for significant public company decisions, and the release of information concerning those decisions, to the share market, employees, creditors and the public, Mr Medcraft added.
by Alan Thornhill
Wayne Swan says the Coalition has “questions to answer” about its role in the Slipper affair – and he has accused the Opposition Leader, Tony Abbott, of giving “slippery answers” on the scandal.
The Treasurer’s attacks follow a report that Coalition frontbencher, Christopher Pyne, met James Ashby “for a drink” a month before the scandal broke.
The affair, which forced Peter Slipper to stand down as Speaker of Federal parliament, broke after Mr Ashby made two serious allegations against Mr Slipper.
The former staffer in Mr Slipper’s office, accused his his previous employer of misusing Cabcharge documents and sexual harassment.
A journalist asked Mr Swan today about the report of a meeting between Mr Ashby and Mr Pyne, who is also manager of opposition business.
Mr Swan said he believes both Mr Pyne and the Opposition Leader, Tony Abbott, still have questions to answer about their roles in the affair.
The Treasurer alleged that Mr Abbott, in particular, had given unsatisfactory replies to questions about his part in the matter.
“I think when you have listened to Mr Abbott’s slippery answers he has not fully answered that (question),” Mr Swan said, adding:”I think Mr Pyne has many questions to answer.”
by Alan Thornhill
Wayne Swan says the budget surplus he will produce next month will keep the pressure off prices.
The Treasurer also said it would give the Reserve Bank more room for further cuts in Australia’s interest rates.
He said the planned surplus will “ensure we’re not adding to price pressures in the economy.”
“This would give the Reserve Bank the maximum flexibility to cut interest rates if it thinks that’s necessary,” Mr Swan said, in his weekly economic note.
Meanwhile, the National Australia Bank says it is expecting the Reserve Bank to cut rates again, when the RBA board meets on May 1 to review its marker rate.
The NAB also admits, though, that the March quarter inflation figures, that the Bureau of Statistics is expected to produce on Tuesday, will be a key factor.
“We expect a fairly soft core inflation reading of 0.6 per cent in the March quarter,” the NAB said.
That would leave Australia’s underlying inflation rate at 2.3 per cent over the year, a level well within the Reserve Bank’s target range of 2-3 per cent, over the course of a business cycle.
However the NAB does not expect any further rate cuts this year.
“In the longer run, we remain unconvinced that further rate cuts will be necessary in 2012, unless activity and the labour market weakens by more than we expect.”
Mr Swan said price stability will be important for families and businesses that are now “under financial pressure.”
But he said the government’s good economic management, in the wake of the global financial crisis, had already produced results.
“After back-to-back rate cuts at the end of last year, a family with a $300,000 variable mortgage is now paying around $3,000 a year less in repayments since Labor came to office,” he said.
“ That’s proof of the benefits of sound budget management,” Mr Swan said.
by Alan Thornhill
Julia Gillard has made two popular announcements this week.
Firstly, that most of our troops in Afghanistan will be coming home earlier than expected.
Secondly, that the Reserve Bank will have room to cut interest rates.
Nothing unusual about that, you might think.
Prime Ministers like making popular announcements.
That’s right, of course, except for one odd thing.
The media management.
Both times, the announcement was made in newspaper stories which contained a strange phrase.
“In a speech to be delivered today…”
That kind of thing.
This is worth watching.
It shows that the Prime Minister’s is now on the offensive.
Leaking information, in a way that makes sure it gets the maximum exposure.
As an old reporter, myself, I can assure you that journalists like nothing more than a leak.
Tomorrow’s news today.
Even if the price is repeating the story in tomorrow’s paper, after the speech has actually been delivered.
Just for the record
The fact that the Prime Minister’s office has started doing this now is no accident.
If the polls are right, Ms Gillard must turn things around very smartly, if she is to have any chance of survival in next year’s Federal elections.
And they usually are.
The Queensland elections showed that.
Publicity wise, the Prime Minister has had a wonderful week.
“Yes,” she said, “your son will be home from Afghanistan sooner than you thought.”
“And yes,” she added, “your home loan payments will be cut, too.”
Tony Abbott and Joe Hockey aren’t quaking in their boots yet.
But they are sitting up, taking notice.
There are limits to this kind of thing, of course.
There are, after all, only so many popular announcements to be made.
Julia’s office, though, is finally showing some skill in handling such matters.
by Alan Thornhill
The HSBC bank will change advertising, which a financial watchdog has called “potentially misleading.”
In a statement today the Australian Securities and Investments Commission said the bank’s ads had headlined a claim that consumers could get “up to 0.95 per cent off” a HSBC Home Smart Loan.
“The campaign was widely promoted using online, print and outdoor advertising,” ASIC said.
But, in the fine print, the bank disclosed that only loans of $1,500,000 or more would be eligible for the full cut.
ASIC said the bank had agreed to change the wording of its ads.
by Alan Thornhill
Wayne Swan is now talking of a “balanced” budget.
“This will be a balanced Budget,” he said in a paper just published.
“Balanced in that it charts a responsible middle course and balanced,” he added.
“ In that it gets us back in the black well before our peers.
“Most importantly it’s a Budget right for the challenges we face today and right for building on our unique strengths for a future in the most dynamic region in the world.”
Mr Swan is still promising to produce a surplus in his Federal budget, next month.
Even though he did use the s-word only twice, in his weekly “economic note.”
“ Returning to surplus will also ensure the Reserve Bank has the flexibility for further interest rate cuts if it thinks that’s necessary,” Mr Swan said.
Treasurers never choose their words more carefully than they do in the weeks leading up to a budget, when pre-budget speculation peaks.
Mr Swan is an old hand at all that, now.
So what, really, is his message here?
Elsewhere in his note, Mr Swan warns, yet again, that revenue will be below already forecast levels in the new financial year.
“Since the global financial crisis struck, we’ve been forced to write-down government tax revenues by $140 billion, and as I’ve indicated there will be more write-downs in next month’s Budget.,” he admits.
He declares, too, that job creation is still a prime target for the government.
Mr Swan knows, very well, that there are conflicting elements in his note.
He is inviting his readers to interpret what he is saying.
Our guess is that his underlying message goes something like this.
“Yes, there will be a surplus.
“But it won’t be big.
“Our approach will be balanced.”
Nice word, that.
by Alan Thornhill
More than one Australian in five is poor – and their incomes are still falling further behind the rest of the community.
This is shown in figures the Bureau of Statistics has just released.
Co-incidentally these figures, reflecting the extent of poverty in Australia, were published on the eve of the annual conference of the Australian Council of Social Service.
ACOSS has been arguing vigorously for higher pensions and allowances.
In a report entitled Life on Struggle Street, the Bureau reported that 4.9 million Australians – 22.6 per cent of the population – live in low income households.
That is an average of 2.9 people, living in households with incomes of no more than $465 a week.
That was less than half of the average – of $1,033 a week – for other Australians.
And the poor are still falling further behind.
The Bureau reported that., after adjusting for inflation, the incomes of poor families had risen by 21 per cent between 2003-04 and 2009-10.
The rest, though, had enjoyed an average rise of 27 per cent, over the same time.
Inequalities in wealth, though, are even sharper.
The average wealth of low income families was just $53,000.
For the rest, the average was almost 10 times greater, at $509,800.
Technically, though, the poor are not getting poorer.
The Bureau reports that, after adjustment for inflation, the average level of their wealth had remained flat, in the six years to 2009-10.
Relatively, though, the poor were, indeed, worse off.
Over the same time, the average wealth of other Australians had risen by 29 per cent.
by Alan Thornhill
Wayne Swan has renewed his attack on three mining billionaires, accusing them of using their wealth to push their vested interests.
Addressing the National Press Club, the Treasurer insisted that he was speaking in defence of the Australian concept of “a fair go.”
“If we don’t grow together,” he said, “we will grow apart.”
Mr Swan said he was disturbed by Gina Rinehart’s purchase of media shares, to increase her influence.
Ms Rinehart, the daughter of mining magnate Lang Hancock, recently sought a big stake in Fairfax, which publishes The Sydney Morning Herald and the Melbourne Age.
When a reporter reminded Mr Swan him that the family of another mining billionaire – Andrew (Twiggy) Forrest – had decided to devote $50 million a year to “deserving causes,” Mr Swan responded with a biting line.
“Charity is not a substitute for paying taxes,” he said.
Mr Swan also criticised Clive Palmer, who reportedly said his responsibilities were to his shareholders and his workers, and that he did not have a public responsibility.
Mr Swan said no one grows wealthy alone.
“That is a clear example of what I am talking about,” Mr Swan said.
Then he repeated his central warning.
“I think we are on the cusp of losing a fair go, if we are not careful,” he declared.
Senior Coalition figures have attacked Mr Swan over his campaign, on this issue, accusing him of promoting class warfare.
However the Treasurer dismissed their attacks, noting that Mr Palmer is a big contributor to the Liberal party.
He then accused the Opposition Leader, Tony Abbott of “singing for his supper.”
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Wednesday March 12
The Dow Jones index fell 68 points to 16,351
Labor would win a Federal election held now, according to a new Morgan poll. The poll showed that the ALP’s lead jumped 3 per cent, over the past two weekends, to 53.5 per cent, on a two party preferred basis, while the Coalition’s support fell to 46.5 per cent.
However the poll also showed that the Coalition still leads Labor in South Australia and Tasmania, where State elections are to be held next Saturday
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|Bhp Blt Fpo||35.680||-0.250||-0.70%|
|Bramb Ltd Fpo||9.570||-0.060||-0.62%|
|Qbe Insur. Fpo||12.840||-0.030||-0.23%|
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