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Business

Qantas boss Alan Joyce predicts Virgin and Rex won’t both survive post-pandemic battle


Qantas boss Alan Joyce says Australia still only has room for two major airline groups and it is unlikely both Virgin Australia and new rival Regional Express (Rex) will survive the post-pandemic aviation dogfight.

Mr Joyce said in an interview on Wednesday that country airline Rex launching flights between Sydney and Melbourne in March would spark fierce competition on the busy route.

Rex will start Sydney-Melbourne services in March.

Rex will start Sydney-Melbourne services in March. Credit:Robert Pearce

“My personal view is that this market has never sustained three airline groups and it probably won’t into the future,” he told an online event hosted by Reuters.

“You can be guaranteed that Qantas will be one of them – it’s who else is going to be in the market place post this and into the future is going to be interesting.”



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WiseTech boss buckles up for the new normal


“I think corporate travel will be a very different thing in the future, I think people will think twice about going overseas for at least a few years, and people will realise that they’ve been able to have their enjoyment in their homes.”

This is reflected in the continuing demand for goods like home gym equipment and the fact that WiseTech, a $9 billion company, is seeing sustained trade growth for its major freight forwarding customers like DHL and Aramex.

According to WiseTech, which offers logistics companies a cloud-based platform to manage all of their operations, shipment volumes for the December quarter are tracking above last year’s highs.

“Everybody across the physical goods supply chain is seeing it’s a goods-led economic recovery … people have decided that various social activities are no longer viable,” White says.

The rising trade volumes have been a factor in helping WiseTech sign up six new global customers in 2020. In a normal year the company would sign two and White says the sales outlook for the new year is also encouraging. However, he adds that it will be a while before the financial benefits of the new customer wins flow into WiseTech’s books.

“That’s a long term play, those things won’t hit the revenue line particularly this year, they will start to come on next year and the year after,” he says.

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Playing a long game has been a defining feature of White’s leadership at WiseTech, which started life in 1994 but waited until 2016 to land on the ASX. It’s approach to growth, through buying a host of global peers, has drawn criticism from some quarters.

WiseTech was hammered in 2019 over its acquisition spree in a short seller report by Beijing-based J Capital that sent WiseTech’s share price plunging. It has since sporadically come under fire from short sellers but analysts are broadly willing to give WiseTech a chance to deliver on its promises.

Citi’s Siraj Ahmed says the company is “transitioning from being acquisition driven to being organic driven, which we see as a positive.”

He also points to the stronger than expected recovery in shipping volumes, and customer rollouts as the big drivers , which have led to Citi upgrading its price target on WiseTech by 25 per cent to $27.70. However, Citi has maintained its Sell recommendation given the share price has stayed above $30 and lingering concerns about WiseTech’s ability to digest more than $400 million worth of acquisitions.

“With the stock trading at 20x FY21e revenue, we think that the market could be underestimating the risk that the conversion and integration of WiseTech’s acquisitions into the core Cargowise platform could take longer than expected and not deliver expected returns,” says Ahmed.

A shipment of Pfizer-BioNTech Covid-19 vaccines is unloaded from a DHL Worldwide Express cargo plane at Athens International airport, in Athens, Greece.

A shipment of Pfizer-BioNTech Covid-19 vaccines is unloaded from a DHL Worldwide Express cargo plane at Athens International airport, in Athens, Greece.Credit: Yorgos Karahalis/Bloomberg

But the integration of acquisitions isn’t the only thing on WiseTech’s agenda, with a new product, Cargowise Neo, shaping up to play an important role for the company in the new year.

It is a web portal that will extend Wisetech’s footprint in the logistics market, connecting it with companies like Kogan, Bunnings or Woolworths that may deal with freight forwarders but might also do the logistics work themselves. It is a segment of the market that’s not covered by WiseTech’s flagship product Cargowise One.

“We want to make sure that our existing customer base is enhanced by giving our new customers and our existing customers a connected platform that works for both of them,” says White.

In Citi’s words, Neo should help WiseTech’s edge closer to fulfilling its vision of being the operating system for the logistics ecosystem represents “a step change in revenue potential for WiseTech and represents a key upside risk to our medium-term growth forecasts.”

Meanwhile, COVID is far from the only structural issue on White’s radar, as trade tensions between China and number of western countries continue to cast a shadow over the global economy.

White says China’s importance to global trade is likely to remain undiminished despite political sabre-rattling. According to White, removing China as the centre of the world’s manufacturing supply chains will take years, given its role as the top producer of goods and services for as many as 120 countries.

“It’s got very strong manufacturing capabilities, a well-educated workforce, available labour, and very strong logistics chains that lead into the inner parts of the country.

“So you can get things from the manufacturing (bases) all across the country to the major ports and airports and that is continuing to flow,” he says.

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Gender diversity is ‘mission critical’, BHP boss declares


BHP chief executive Mike Henry says the mining giant has made significant advances in its push to break the industry’s acute workforce gender imbalance, lifting the number of women it has hired or promoted.

The nation’s largest miner set an industry-leading goal four years ago to improve diversity and achieve gender balance across its 30,000-strong direct workforce by 2025. Company statistics reveal female representation increased by two percentage points in 2019-20 and has now hit a new high of 26.5 per cent.

BHP has set ambitious targets to lift workforce inclusion and diversity across its global operations.

BHP has set ambitious targets to lift workforce inclusion and diversity across its global operations.Credit:Rob Homer

The increase, up from 17 per cent when BHP set the target, was described as “good progress” and reflects a sizeable shift in the context of the Australia’s mining industry, which has been trying to shake its image of being a “boys’ club”, but consistently ranks as the most male-dominated workforce in the country.

“An inclusive culture and diverse workforce is mission critical for BHP,” Mr Henry told The Age and The Sydney Morning Herald.



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Business

QBE boss ‘disappointed’ as adverse conditions pummel its books



Catastrophic weather events, low investment yields and climbing reinsurance costs have burned a $2 billion hole in the global insurance giant’s pocket.



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Business

Google Australia boss says proposed new laws would ‘break how search engines work’


Google Australia boss Melanie Silva has claimed newly proposed laws to make the tech giant pay news outlets for use of content would “break” the search engine and change the experience for its users.

Ms Silva has rejected a final version of the federal government’s news media bargaining code, which was tabled in parliament last week, arguing it remains unworkable and fails to understand how the search engine operates.

Google Australia boss Melanie Silva is arguing against proposed laws to make the tech giant pay for content remain unworkable.

Google Australia boss Melanie Silva is arguing against proposed laws to make the tech giant pay for content remain unworkable.Credit:Louie Douvis

“Unfortunately, while the Government has made some changes, the legislation still falls far short of a workable Code,” Ms Silva said in a blog post posted on Friday morning. “As the legislation goes to a Senate committee for inquiry, it has serious problems that need to be worked through.”

Under the proposed laws, if the tech giants cannot reach commercial agreements with news businesses within three months, the parties must enter a “final offer” arbitration process. A panel will be given the power to pick one of the parties’ respective offers for payment or find a more reasonable offer. The panel will take into account a range of factors including the value Google and Facebook given to news outlets through referral traffic. Inclusion of this value in arbitration was considered a major concession for the tech giants by the government.



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Optus boss takes aim at Netflix’s ‘free go’ on data usage


“At the moment they see bandwidth usage as a free go.”

Netflix was the first service in Australia to reduce the data its streaming service consumed in a bid to reduce broadband congestion at the start of the lockdown and Ms Bayer Rosmarin said the measure highlighted the role streaming services were playing in shaping traffic on networks.

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“When those players have that kind of ability, there should be collaboration in the industry to set the right parameters and participation in the infrastructure capital to make sure that isn’t abused and we chart a course forward where all players, and importantly customers, win.

“And we don’t land up in a situation where we have a small number of consumers that are generating a huge infrastructure cost that has to be borne by the Australian public,” she said.

Getting the federal government to put more pressure on OTT players is part of a broader reform agenda highlighted by Ms Bayer Rosmarin, which includes reducing the wholesale costs imposed by NBN Co, an improved NBN connection process and a fair allocation of 5G spectrum.

She said the measures would go a long way in helping telcos plot a path out of an environment where telcos were struggling to make sustainable returns on their investment in 5G spectrum and technology.

“Structural shifts are stripping profitability out of the sector: The NBN, growth of the tier-two MVNO market, and the OTT providers, who contribute little, if anything, to the infrastructure they rely on, yet drive increased usage and continued investment for telecommunications providers.”

Optus posted a net loss of $27 million for the half year to September 30, 2020 compared to the $235 million in profit posted for the comparable period in 2019. Revenue for the period dropped 9 per cent to $4.1 billion.

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Nine boss Hugh Marks resigns


However, the Nine board also held meetings last week to discuss human resources issues including Mr Marks’ relationship with Nine’s former managing director of commercial, Alexi Baker, according to sources familiar with the discussions. Mr Marks told The Sydney Morning Herald and The Age, in an article published earlier on Saturday, that his relationship with Ms Baker began when the pair were working together and she reported to the chief executive. The article said the relationship began in recent months.

Nine declined to answer questions about whether Ms Baker had received promotions or bonuses while working for Mr Marks.

Nine chairman Peter Costello was also asked at the company’s AGM this week about an article in The Daily Telegraph from May which suggested Mr Marks was in a relationship with his executive assistant, Jane Routledge. Mr Costello said Mr Marks had not breached any company policies. Mr Marks has declined to comment further on the article other than to say “a lot of gossip is out of control”.

Mr Marks’ departure has already sparked widespread speculation about his replacement with an executive search firm likely to be appointed to identify internal and external candidates. Industry sources said Stan chief executive Mike Sneesby and Nine publishing boss Chris Janz were the leading internal candidates.

Both Stan and the publishing divisions have performed strongly under their respective bosses. Nine sources who did not want to go on the record said chief sales officer Michael Stephenson and managing director of group and local markets Lizzie Young might consider applying for the top job.

Mr Marks was in charge of Ms Baker’s salary and any bonuses she received before she resigned on October 1. Nine does not have a policy regarding relationships between staff.

Some Nine sources who did not want to go on the record claim the relationship with Ms Baker had nothing to do with Mr Marks’ departure and that he always planned to leave after five years. Other sources close to Mr Marks said he believed some directors did not support him. Nine confirmed that the board was made aware of the relationship.

Mr Marks’ thanked Nine chairman and former Liberal Treasurer Mr Costello in his note to staff “for the extraordinary support he has given to me and to the entire business over the past five years”. The paragraph about Mr Costello appeared to be formated differently to the rest of the note.

The announcement of Mr Marks’ resignation took place at the end of a week filled with coverage about whether relationships and affairs between colleagues is appropriate. ABC’s Four Corners made allegations about allegedly inappropriate behaviour of Attorney-General Christian Porter and population minister Alan Tudge with female staffers on Monday.

Mr Marks is not the first television executive to resign amid scrutiny about relationships with staff. Seven West Media boss Tim Worner was embroiled in a scandal involving a former employee, Amber Harrison. He did not leave Seven until August 2019.

Mr Marks will continue in his role until a new chief executive is appointed, with some Nine sources saying this process could take months. Nine sources speaking on the condition of anonymity said that in the last few weeks Mr Marks has not been in the office because of persistent bad headaches. He was described as “emotional” in the Herald article in which he revealed his relationship with Ms Baker.

“Everyone wants to be happy,” Mr Marks told journalist Andrew Hornery. “People think you should be superhuman in these roles, but you are still just a person.”

As the first chief executive of the merged Nine and Fairfax Media business, Mr Marks will be remembered as one of the more influential media executives of the past decade. He took over the role of chief executive in November 2015 from long-standing Nine boss David Gyngell after two years as a non-executive director of the company. In the five years Mr Marks has run Nine, the business has changed dramatically.

After media ownership laws were relaxed, Mr Marks and then Fairfax boss Greg Hywood struck one of the biggest media deals of the decade, combining newspaper, online real-estate listings, radio and free-to-air television into a single organisation. Nine’s brands include Domain, stations 3AW and 2GB and Pedestrian Group.

Mr Marks also led the company as it ended its four decade relationship with cricket and bought the broadcast rights to tennis tournaments such as The Australian Open. He has been one of media executives to lobby government and push for legislation to make tech giants Google and Facebook pay for the existence of news articles in the search engine and newsfeed.

“We have gone from being three separate, legacy media businesses in Nine, Fairfax Media and Macquarie Media, each with their own structural challenges, and created a business that now has a diversified revenue base across both advertising and subscription, and that has a clear growth strategy for decades to come,” he said in his note to staff.

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“We have demonstrated the importance of great content, be that in the powerful and unique journalism we create every day, across all platforms, or in entertainment, where the shows we build become household names and engage Australians in their millions. Because at the end of the day, we are, and will remain, a content business.”

Nine was the only media organisation that cut costs without large redundancy rounds, renegotiating with banks or putting all staff on JobKeeper. Nines shares were trading at $1.55 when Mr Marks was appointed in November 2015. They closed at $2.44 on Friday. The company has outperformed its media peers in recent years.

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Local News - Victoria

Health Department boss Kym Peake resigns after hotel quarantine bungles


Ms Peake was considered a leading candidate to replace Mr Eccles before the Coate inquiry.

She will be replaced by Professor Euan Wallace, the chief executive of Safer Care Victoria, who has been seconded to the Health Department to jointly manage contact tracing and outbreak management.

Both Ms Peake and fellow Victorian public service high flyer Simon Phemister, who as secretary of the Jobs Department also came under scrutiny during the hotel quarantine inquiry, were handpicked by Mr Eccles in 2015 to act as his deputies in the Premier’s Department.

In his statement, Premier Daniel Andrews thanked Ms Peake for her work and said she “decided to step down from the position to pursue other opportunities”.

“Ms Peake has led significant reform that has touched the lives of many Victorians including the relief and recovery from recent bushfires, the establishment of the Mental Health Royal Commission, and the delivery of many of the recommendations from the Family Violence Royal Commission.

“We thank Ms Peake for her dedicated service to Victoria and for her tireless commitment throughout the pandemic and her time with DHHS. We wish her well for the future.”

Former health minister Jenny Mikakos.

Former health minister Jenny Mikakos.Credit:Getty

In evidence to the hotel quarantine inquiry, Ms Peake said she had not briefed her minister, Ms Mikakos, on safety concerns with the program, even after a suspected suicide and a delay in transferring a COVID-19 positive quarantine detainee to intensive care.

In their evidence, Ms Peake and Ms Mikakos emphasised the quarantine program was managed by several departments and the Health Department was not solely in charge.

Mr Andrews, in evidence that prompted Ms Mikakos to quit, said the Health Department was accountable for the program.

More than 99 per cent of Victoria’s second wave of coronavirus can be linked to returned travellers, genomic sequencing shows.

The inquiry will hand down its final report by December 21 and former judge Jennifer Coate, chair of the probe, is set to make findings about the actions of public servants and other individuals involved in the program.

The Health Department was forced to hand over additional emails to the inquiry after it concluded its hearings. The emails related to Chief Health Officer Brett Sutton’s knowledge of the decision to use private security. The non-disclosure was one of the reasons the inquiry required additional time to complete its final report.

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Ms Mikakos resigned over the hotel quarantine scandal in September. Mr Eccles, who ran the Department of Premier and Cabinet, resigned in October.

One of Ms Peake’s deputy secretaries who played a key role in hotel quarantine, Melissa Skilbeck, was stripped of her responsibilities in July.

Opposition Leader Michael O’Brien said Ms Peake’s was “the latest head to roll in Daniel Andrews’ desperate attempt to avoid responsibility for the hotel quarantine scandal”.

“The heath minister resigned in disgust and now two departmental secretaries have gone,” he said.

“But the blame for hotel quarantine and the second wave it caused lies with the Premier. No amount of sacrificial lambs will let Daniel Andrews avoid responsibility for the damage done to this state.”

Professor Wallace will start as departmental secretary on November 17.

An academic obstetrician and gynaecologist by training, Professor Wallace is professor of obstetrics and gynaecology at Monash University.

Mr Andrews said Professor Wallace was a widely respected health sector leader who is “well-placed to lead the department through its next phase of pandemic response and recovery”.

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CFMMEU boss John Setka ordered by court to stop poaching members


The Federal Court has ordered controversial union boss John Setka to stop poaching members from the rival faction of recently resigned national secretary Michael O’Connor.

Mr O’Connor, who remains secretary of the CFMMEU’s national manufacturing division, went back to the courts after failing in his initial bid to stop about 200 glaziers, cabinetmakers and floor workers from joining Mr Setka’s construction division to shore up his numbers.

Former CFMMEU national secretary Michael O'Connor resigned from the position last week.

Former CFMMEU national secretary Michael O’Connor resigned from the position last week.Credit:Alex Ellinghausen

In an appeal judgement handed down on Wednesday, Justices Debra Mortimer, Darryl Rangiah and Richard White ordered Mr Setka, the state secretary of the union’s construction and general division, to cease and desist from “inducing, encouraging or advising” members of the manufacturing division to switch sides.

The dispute arose in about August last year when, according to the court judgement, the respondents – including Mr Setka – began to encourage members of the manufacturing division in Victoria to resign and join the construction division instead.



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ASIO boss Mike Burgess’s warning to MPs


Federal politicians could be targeted by foreign intelligence services via “an unwitting relative, friend or business partner”, according to the nation’s top intelligence chief.

ASIO chief Mike Burgess has written to federal MPs, warning the scale of foreign interference remains high, and “multiple countries are undertaking these activities here in Australia”.

In the letter, Mr Burgess writes MPs were particularly “attractive targets” for foreign spies, who look to create “a sense of indebtedness” using donations and business opportunities.

While he concedes attending community events is an “important part” of a politician’s role, MPs are urged to “operate under the assumption that what you say could be conveyed to a foreign power”.

Australian intelligence also “cannot rule out a proxy trying to get access to you through an unwitting relative, friend or business contact”, MPs are cautioned.

The two-page letter cites requests to politicians to reveal political secrets or change position on a sensitive matter as examples of when “influence can become interference”.

Mr Burgess warns the threat of foreign interference also comes from Australian citizens.

The letter comes after a 65-year Melbourne man became the first Australian to be charged with a foreign interference offence since national security laws passed in 2018.

The man faces the possibility of 10 years in jail if convicted.

The 65-year-old appeared in Melbourne Magistrates’ Court on Thursday after a year-long investigation by the Counter Foreign Interference (CFI) Taskforce into his alleged relationship with a foreign intelligence agency.

“The CFI Taskforce has taken preventive action to disrupt this individual at an early stage,” AFP deputy commissioner Ian McCartney said.

“Foreign interference is contrary to Australia’s national interest; it goes to the heart of our democracy.

“It is corrupting and deceptive, and goes beyond routine diplomatic influence practised by governments.’’

The matter remains an ongoing investigation.



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