12 May 2014: Australia most pricey in G20 and World bank's review of global poverty limits

Nice quote from editor Jennifer Hewett concernng the Oppositions opposition of the budget:

All care, no responsibility. It's one of the few joys of being in opposition these days.

There is a lot of attention on tomorrow's pending budget.  I expect I will spend time reviewing the impacts once the announcement is made to avoid speculation.  

There are always perceived winners and losers in business. A story about CabCharge notes how a couple of up-start businesses are threatening dominance in the taxi industry. Another story on JB Hi-Fi outlined how the chain's looking to be last man standing in the CD and DVD market. 

With all this focus on budgets and spending, I found the stories appropriate that highlight Australia as one of the most expensive countries while at the same time a review by the World Bank shows how good we have it in relation to global poverty.

Australia most pricey in G20

Australia is the most expensive G20 country to live in, and ranks the fourth most expensive economy out of 177 countries measured by the price level index. Major factirs pushing the price up include:

• the mining boom
• high exchange rate
• unbroken economic growth for 22 years
• oligopolistic major industries
• relatively low unemployment
• high labour costs for business.

Multifactor productivity, which measures how efficiently labour and capital are contributing to output, declined an average of 0.6% annually over the past five years. Australia's minimum wage is the highest in the developed world. Comparison of 2013 real minimum wage in US dollars:

• AU: $29,982
• NZ: $23,127
• CA: $20,285
• UK: $19,674
• US: $14,978

Data from the Purchasing Power Parities and Real Expenditures of World Economies report released by he World Bank's International Comparison Program.

World Bank reviews poverty line

New estimates of purchasing power parity - which corrects for exchange rate distortions to calculate the amount of goods and services that money buys in each country. New calculations show the number of people living below $1.25 per day fell from 1.2 billion down to fewer than 600 million. New calculations will inform discussions about objectives of the UN's Millennium Development goals which have shaped aid policy since 2000 and expire in 2015. Initial considerations are that the poverty line will be raised from $1.25 per day to $1.75 per day. Africa is now home to four in ten of the developing world's poor.  

We have so much. The more I read, the more I question whether we re doing the most with what we have.

9 May 2014: 457 Visa stats, Aurizon and Qantas cuts, and Candy Crush average spend

457 Visa crackdown

Applications for 457 visas have dropped by 36.3%, there has been a 23.2% slide in 457 visas granted in 12 months to 31 March 2014. The previous government raised English language benchmarks and required employers to pay 457 visa holders market rates. There is not a "look local first" condition in place. Employers have to prove they have advertised vacancies but have been unable to find someone locally. Despite lower applications and awards, there are 11,780 457 visa holders in Australia, which is 5.9% higher than this time last year. Cooks are most frequent recipients. Most visas are granted to Indians, followed by workers from the UK and Ireland. Drop in applications is said to be due to increase in fees from $85 to $330 in June 2013.

As both an American and Australian, I understand Nationalism. I am also conscious of the high price for Australian labor, which contributes to challenges with the case for local manufacturing particularly for multi-nationals deciding where to invest. I have supported a few 457s in my time and have never regretted it. 

Aurizon cuts

Aurizon is cutting another 480 jobs in Queensland maintenance operations and is looking to negotiate a new enterprise agreement with unions to allow compulsory redundancies.. It has cut over 2000 jobs (22% of the workforce) since late 2010 without forced redundancies. They are shrinking their locomotive fleet by 28%, and wagon fleet by 12% by fiscal year 208 to simplify its rolling stock,  which has included 59 kinds of locomotives and 297 kinds of wagons. Aurizon also plans to stop providing maintenance service to Queensland Rail and cut jobs in workshops in Redbank and Townsville.

Resource sector slow down, not sure what else to expect. Unions will talk about stopping "eroding job protections" but there are no protections in life. If demand is not there, then decisions are made.

A lot of Candy Crushing

King Digital, owner of Candy Crush, says popularity of the game has peaked in its first quarterly reporting as a public company. Players spent US$429 million,  down from US$493 million in the previous quarter. Amount spent across all their games rose to $US641 million, contributed by Farm Heroes Saga, whose daily users have doubled to 20 million since 2013. The growth of Farm Heroes Saga came at the expense of a 20% increase in marketing expenses since last quarter. 352 million people are playing its games, up 16% from last quarter. Number of users spending money declined from 12.2 million to 11.9 million, but average amount spent increased to $18 per month. King says barriers to new competitor entrants are increasing, since its large user base allows it to cross-sell content and analyse user data to improve gamer experience. It is also expanding into China.

What are we really investing in when we Candy Crush? Apart from time or money, our most valuable resource is our attention.  What else could we do with this investment?  What difference could we make?

Qantas targeting $1bn debt 

Qantas looking to achieve $800 million in cost savings and reduce debt by $1  billion by June 2015 to return to profitability. To cut capitall spending by a further $200 million to bring net capital spending to $800 million. Goal is to reduce annual cost base of $11.6 billion by 10% over next three eyars. Wants to lower cst gap with Virgin to about 5% to icnrease Qantas'margin advantage. Challenges include high competitive industry and an elevated Australian dollar fuel price. Expects international capacity growth into Australia will moderate from about 9% this financial year to 4% to 5% first hallf of the 2015 financial year. Domestic market growth exxpected to be about 3.5% and could moderate to 2.5% first half of FY. Expects to reduce number of full time employees by 2200 by en of June and another 1800 by end of June 2015, meaning only 1000 would remain for 2016 and 2017 FY. Other cost savings includ simplifying its fleet by retiring aging 767s and some older 747s for a combined annual cost benefit of $155 million. Also working througb pross and cons of selling the $2.5 billion frequent flyer business.

20133 reports had Qantas at 33,265 staff, which puts the total drop at around 12% of their workforce.  'That's a lot of change for a fair amount of people.

08 May 2014: Fighting among leaders, NBN versus water, and value of tech stocks

Fighting among leaders

Two stories.  In one, NSW police ore reviewing footage of a fight between billionaire gaming mogul James Packer and Nine Entertainment Co boss David Gyngeli.

In another, Clive Palmer is suing Qld Premier Campbell Newman for $1.1 million for defamation in aggravated damages.

How do we expect the next generation to behave if our commercial and political leaders cannot learn how to get along? Whether we throw physical or legal punches, I have to ask, how is it that we would choose to live and resolve our differences?  

Extra cost for NBN

The NBN is expected to cost between an additional $900 million and $1.4 billion to roll out to rural areas. This is based on a Boston Consulting Group report that found an additional 620,000 homes and businesses which will need faster broadband in the bush by 2021, up from the original 230,000 estimated.  This is included in the $41 billion budget. Ericsonn's $1.1 billion contract to build a wireless network is running about 12 months late.

Increase in scope, schedule and budget should not be a surprise, given that over 70% of all projects go over in one of the three variables. I understand the challenges, and the need, to bring connectivity to such a remote landscape. And yet I am challenged by the fact that even as we struggle with getting wireless to remote regions, other countries struggle in a similar way with getting clean water. If I were to think as a global citizen with a choice of where to spend $41 billion, would I choose wireless or water? And if I choose wireless, would I then have a responsibility to use that wireless for a common good? Even as I question, I type this using a 4G connection card on the train on my way home. Am I doing the most with what I have?

Twitter stocks plunge

Twitter stocks fell 18%, but still more expensive than Facebook or LinkedIn. Twitter stocks gained 23% from the IPO in November 2013. Market value is at $US19.2 billion. Monthly user activity in Q1 reached 255 million, 25% year on year growth compared to 30% in previous year.

I appreciate Twitter is an instant news source, but the majority of the traffic is noise. What would it look like if we values products based on the value they returned to humanity? I suppose there is a discussion about how you measure that value, but for the majority, when I consider the value of our time here on Earth and the contribution to that value from reading my Twitter feed... it does not make a compelling case.

Climate change affecting US

The Third National Climate Assessment, a 4- year 850 page report developed by 300 scientists and technical experts, outlines the impact climate change is having across eight geographical areas in the US and on key sectors in the economy including agriculture,health, energy, water, and transport. US carbon dioxide levels fell in 2012 to their lowest levels since 1994 due to a surge in natural gas use, yet current efforts to address climate change are insufficient.

I saw another link about a big sheet getting ready to fall off the Antarctic which is expected to cause escalating increases in coastal sea levels.  Parts of humanity are making some changes, but for the most parts I expect we will only change when it is on our front door.  

Culture with financial benefits

Former Commonwealth Bank Chief and Future Fund chairman David Murray emphasised the importance of strong corporate culture in promoting financial stability and claims analysts are not placing enough emphasis on people.

Why is it that this becomes a thing only when someone who is older and wiser says it is a thing? Saying "it is about the people" seems to be relegated to HR consultants and grey haired wisdom.  

07 May 2014: Starting up again

It has been eight months since my last post here on the FIN Review Review.  This has been a bit of an experiment over time. Originally, this was an email I sent out to my team and people I thought might be interested.  I later expanded it to this blog with the intent of tracking trends day by day.

It eventually got to the point of taking around an hour and a half every day, to the extent that I would take a week's worth of papers home with me and spend my Saturday mornings catching up. When I transitioned to a new Management Consultant role in September 2013, my attention focused on getting my feet under me both in a now company and a new career.

And yet, the FIN Review still calls me, even taunts me from the pile where it sits in my company's lobby. It beckons me with promises of patterns of commercial practices. I sense within its pages a clear articulation of the insanity of the capitalist mandate, the futility of our quest for success, and the faint hope of applying innovation and finite resources towards the benefit of humanity as compared to personal gain and corporate greed.

So today I pick it up again with a new refined focus.. Perhaps less details, with a bit more opinion and reflection. This blog, like my life, is just an experiment. I invite you to observe and take what you may find of value.