Hastie asset sale hopes dim, creditors told

The administrator of the collapsed Hastie Group engineering empire has dashed lingering hopes of substantial returns for creditors, signalling that few businesses will find new owners following the company’s collapse.
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Speaking after a creditors’ meeting in Melbourne, Ian Carson of PPB Advisory said Hastie’s enormous debt bill included $100 million owed to “many thousands of creditors”, with rural and regional suppliers particularly hard hit. This amount is in addition to the half a billion dollars owed to banks that funded Hastie’s acquisition binge.

Many creditors had travelled from regional Australia for the “sombre” meeting, Mr Carson said. These included labour hire firms, and suppliers of plastic fittings and guns for fastening.

“They’re really normal, ordinary businesses…and a lot of them are locals. You know, Albury and Shepparton, regional areas,” Mr Carson told a media conference after the meeting.

Mr Carson said of the 44 businesses under its control, just five had been sold for a combined sum of less than $30 million, and another one or two might be sold for modest amounts.

Receivers and managers McGrathNicol, appointed by Hastie’s banks, have taken charge of Hastie’s better-performing assets, but Mr Carson was downbeat on the prospect of substantial returns from the sale of those companies.

“It’s hard to imagine there’ll be a material return even after McGrathNicol,” Mr Carson told BusinessDay.

Asked whether he had greater insight into the cause of Hastie’s collapse, Mr Carson said: “There have obviously been some failures. Whether it’s corporate governance or other things.”

He estimated that about 1,200 jobs had been saved across Hastie’s local workforce now under PPB’s remit, of the 2700 stood down at its collapse. This tally excludes the 1800-odd workers employed by companies taken over by McGrathNichol.

The stood-down workers are being urged to apply for the federal government’s GEERS program, which provides payments to people who are owed entitlements by their bankrupt or insolvent employer.

Mr Carson said it was difficult to determine exact numbers of job losses as some workers had simply taken on work with rival contractors.


Hastie had about 7,000 workers across the globe when it collapsed in late May, after the discovery of a long-standing accounting “irregularity” scared off a recapitalisation plan.

Its investors included Lazard Private Equity and Thorney Holdings, the Pratt family’s investment fund, which had supported an equity raising for the Sydney-based company last year.

Hastie’s chief executive Bill Wild said after the collapse that Hastie had a culture of “no bad news” and told staff members they had been let down by management. The collapse has also been blamed on overpriced acquisitions before the financial crisis that the company had failed to integrate.

On the prospect of legal action related to the collapse, Mr Carson said this course had not been his focus so far but he would be meeting with directors and shareholders in the months ahead.

Listed litigation funder IMF (Australia) and law firm Slater & Gordon have confirmed they are following developments closely.

There’s also been a 150-day extension period sought for the convening period before the second creditors meeting, Mr Carson said.

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Marine reserve compensation ‘a drop in the ocean’

Commercial fishermen are set to receive compensation of about $100 million to help them adjust to the establishment of the world’s largest network of marine reserves around Australia, Prime Minister Julia Gillard said this morning.
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But the industry has swiftly poured scorn on the figure. Brian Jeffriess of the Commonwealth Fisheries Association told the National Times the government ”were kidding themselves” if they though that was enough.

Ms Gillard told ABC radio that the 44 marine reserves, covering more than 3 million square kilometres of Australian waters, would affect only about 1 per cent of commercial fishing.

She added: ”There will be assistance available in the vicinity of $100 million.”

Environment Minister Tony Burke announced the massive expansion of marine protection – the world’s most comprehensive – in Sydney this morning, ahead of next week’s Rio+20 summit on global sustainability.

The plan offers differing levels of protection, ranging from full-blown national parks that prohibit mining and most types of fishing, to multi-use zones, which will still allow oil and gas exploration as well as some types of commercial fishing.

Conservationists welcomed the announcement, though many expressed concern that more of the areas should have been marked as national parks.

But the plan puts the Gillard government on a collision course with the fishing industry.

Mr Jeffriess said the Great Barrier Reef Marine Park – a relatively small area compared with today’s announcement – alone had cost $250 million and rising in adjustment assistance.

While praising Mr Burke’s lengthy and close consultation with the industry, he criticised the fact the government had revealed the plan without announcing compensation at the same time.

”If you’re sitting there as a small business in a regional area dependent on the fishing industry, what are you supposed to do? For those who don’t know whether they can stay in business at all, their staff will desert in droves. We’re bitterly disappointed.”

Imogen Zethoven, a Coral Sea campaigner from the Pew Environment Group, said the announcement was a ”historic moment” in protecting the unique tropic waters beyond the Great Barrier Reef, which are home to sharks, tunas, and marlin, as well as healthy coral reefs, atolls, cays and islands.

Wilderness Society marine campaign manager Felicity Wishart said the announcement was a ”welcome first step” but included ”some major omissions that undermine the effectiveness of the overall system”.

Mr Burke said the plan would take the success of Australia’s national parks on land and apply them to the sea.

”Our oceans have been such a missing piece of that jigsaw and this now allows us to fill that in,” he said.

”For generations, Australians have understood the need to preserve precious areas on land as national parks. Our oceans contain unique marine life which needs protection too.”


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MPs call on Fairfax to abandon NZ plan

The NSW upper house has passed a motion calling on Fairfax management to abandon plans to outsource local production jobs to New Zealand.
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Fairfax – the publisher of this website – on Tuesday confirmed plans to move regional editorial production jobs, including page design, layout and sub-editing roles, to Fairfax Editorial Services in New Zealand.

On Thursday, the NSW upper house unanimously backed a motion of support for Fairfax workers.

“Fairfax’s proposed changes will undermine the quality of news and current affairs reporting in the Hunter, the Illawarra and the rest of NSW,” Greens MP John Kaye said in a statement.

Mr Kaye, who moved the motion, accused Fairfax of “stubbornly pushing ahead with these changes”.

“The NSW upper house calls on Fairfax management to put quality news and current affairs reporting in this state ahead of budget considerations and to abandon its outsourcing plans,” he said in a statement.

Paul Murphy, director of media at the journalists’ union, the Media Entertainment and Arts Alliance (MEAA), will meet Fairfax representatives at 1pm (AEST) on Thursday.

The meeting has been described as a fact-finding mission.

It follows the passing of a no-confidence motion in Fairfax Media CEO Greg Hywood on Wednesday by staff at The Newcastle Herald and The Illawarra Mercury.

Mr Hywood has maintained the New Zealand plans won’t have any negative impact on the quality of the affected dailies or associated community titles.

Comment is being sought from Fairfax on the NSW upper house motion.


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Little hope for creditors as Hastie debts top $600m

Ian Carson, Head of Partners for PPB Advisory.THE administrator of Hastie Group has dashed lingering hopes of substantial returns for creditors, signalling that few businesses of the once-sprawling engineering services company will find new owners.
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Speaking after a creditors’ meeting in Melbourne, Ian Carson, of PPB Advisory, said Hastie’s debt bill included $100 million owed to ”many thousands of creditors”. This is in addition to more than $500 million owed to banks that funded Hastie’s acquisition binge.

Many creditors had travelled from regional areas to hear it was unlikely they would receive ”any extensive” return, given the amount owed to the banks. Mr Carson said some of them were owed ”serious amounts” of up to $500,000.

”They’re really normal, ordinary businesses … and a lot of them are locals – you know, Albury and Shepparton, regional areas,” he said after the meeting. He described the mood of the meeting as ”sombre”.

Mr Carson said that of the 44 businesses under its control, only five had been sold for a combined sum of less than $30 million, and another one or two might be sold for modest amounts.

Receiver and manager McGrathNicol, appointed by Hastie’s banks, has taken charge of Hastie’s better-performing assets, but Mr Carson was downbeat on the prospect of substantial returns from the sale of those companies.

”It’s hard to imagine there being a material return even after McGrathNicol,” he said.

Asked whether he had greater insight into the cause of Hastie’s collapse, Mr Carson said: ”There have obviously been some failures,

whether it’s corporate governance or other things.” He estimated about 1200 jobs had been saved of the 2700 stood down at its collapse. The tally excludes about 1800 workers employed by companies taken over by McGrathNicol.

A spokeswoman for McGrathNicol said yesterday there was no update on its sale process for Spectrum Fire and Safety, Hastie Services, industrial refrigeration systems company Gordon Brothers Industries or Austral Refrigeration. Austral was already for sale when Hastie collapsed.

Earl Setches, secretary of the Plumbing Trades Employees Union, said most of its members had held on to work and their entitlements in Victoria. He said that of the 600-odd Hastie workers in the state, only a handful were now out of work. ”It rocked people’s lives for a week or two, but we’ve had a good outcome,” he said.

Hastie had about 7000 workers around the world when it collapsed late last month, after the discovery of a long-standing accounting ”irregularity” scared off a recapitalisation plan.

Chief executive Bill Wild said after the collapse that Hastie had a culture of ”no bad news” and told staff members they had been let down by management. The collapse has also been blamed on overpriced and badly integrated acquisitions.

On the prospect of legal action, Mr Carson said this had not been his focus so far but he would be meeting directors and shareholders in the months ahead. Listed litigation funder IMF (Australia) and law firm Slater & Gordon confirmed they were monitoring the collapse.

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Aboriginal groups back off WA claim

ABORIGINAL groups at odds over the James Price Point site marked for a $35 billion gas hub have withdrawn a move to splinter into separate native title claims.
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The West Australian government and the project operator, Woodside Petroleum, had threatened to suspend more than $1 billion in benefits.

It is believed there are long-standing differences over the cultural significance of the site, which includes James Price Point, between the Goolarabooloo and the Jabir Jabir people of the Kimberley region.

But the two groups had remained in the one native title claim group since the 1990s until an application was filed last week to withdraw the claim, which would have allowed separate claims to be registered in time for the next round of land acquisition talks.

It is believed this would have entitled the two groups to participate separately in negotiations over the Browse hub proposal.

But moments before going to court yesterday, those behind the decision to splinter buckled under pressure from the WA government and Woodside to withdraw the application, leaving the groups to remain as a single negotiating body.

The hub at James Price Point is one option for processing gas from the Browse Basin, off the WA coast. Woodside is not expected to make a final investment decision until early next year.

Representing the joint claim group, lawyer Vance Hughston told the Federal Court in Perth that both sides had received letters from Woodside and the state government since the application to end the claim was lodged last week.

They were served with default notices in relation to the previous Browse Precinct Agreement, estimated to be worth about $1.5 billion, as well as being served with notices to suspend their benefits under the agreement.

”The applicants are no longer prepared to push ahead with this discontinuance,” Mr Hughston said by vidoeolink.

”The applicants find themselves in an impossible situation, where the stakes are so high that they’re not prepared to take this matter any further without instructions from the broader group.”

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Perpetual fends off rumours

Buyers in motion.TAKEOVER fever has gripped the sharemarket without a single bid being made.
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Echo Entertainment and Fairfax Media could soon be in play as billionaires James Packer and Gina Rinehart increase their stakes. Just yesterday rumours swirled that Mrs Rinehart had lifted her share in Fairfax to 15-16 per cent.

But after heavy falls on the market in the past three months, cashed-up raiders appear to be preparing to launch attacks on other weakened companies struggling with the downturn. Following Qantas’ announcement of a defence mandate for a yet-to-be-announced offer, and news of a possible privatisation of Whitehaven Coal, speculation about the intentions of suitors has put a rocket under their weakened share prices.

Yesterday Perpetual Investments became the third company in as many weeks to fall victim to rumours that a private equity firm was circling for a buyout.

Its shares climbed 9.8 per cent, the biggest gain since August 26, after newspaper speculation that Perpetual’s board might be approached with an offer in the $30 range.

Its shares shot to $23.77 in the morning, up from $21.64 the day before.

The unusual price movement prompted a letter from the Australian Securities Exchange demanding to know if the company was aware of information that ought to have been announced to the market.

”Is the company aware of any information concerning it that has not been announced which, if known, could be an explanation for recent trading in the securities of the company?” the letter said.

”In answering this question, please address today’s press report about a private equity firm preparing to approach the company.”

But Perpetual told the ASX it was not aware of any information relevant to the article and that it had no reasons to believe that the article was ”anything other than mere speculation”.

A spokesman later reiterated that point: ”We have nothing to add to the statement we issued to the stock exchange today.”

In late 2010, Perpetual knocked back a takeover offer worth $38-$40 a share from private equity firm KKR.

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Watchdog has bite at big supermarkets

THE competition watchdog is considering laws to limit the steady increase in market power of the leading supermarket chains.
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In his strongest comments since taking over as the chairman of the Australian Competition and Consumer Commission nearly a year ago, Rod Sims has signalled concern at creeping takeovers by Coles and Woolworths that may be leading to reduced consumer choice and competition.

Existing competition legislation does not put a cap on market share or allow the ACCC to assess the cumulative impact of previous acquisitions when studying new acquisition proposals.

His disquiet comes at a time when the big chains are boosting their position in liquor, grocery and home improvement, ”which raises competition concerns”, he said.

”Barriers to entry for other chains or buying groups to replicate the strong market position of Wesfarmers [Coles] and Woolworths are becoming increasingly high,” Mr Sims said yesterday.

”Added to this often are local barriers associated with, for example, access to sites.”

The ACCC is concerned to ensure further acquisitions do not lead to retail or wholesale industry structures that reduce market competition or choice for consumers.

”Because of these concerns the ACCC has been paying increased attention to incremental acquisitions to identify which acquisitions require review and, of those, which raise competition concerns,” he said.

”I don’t think any other country in the world has an effective law here, which just shows it is difficult,” Mr Sims told journalists yesterday of any legislative response to creeping takeovers.

”It is not an easy area of law, to actually construct a law that works effectively in the marketplace in all circumstances, because if you had a creeping acquisition law it would apply to all sectors. So, doing something that does more good than harm is difficult to construct.

”We’re going to be thinking about it. I do acknowledge the difficulties.”

The ACCC would be in a better position in the next six months to judge the problem of creeping takeovers and rising market power, Mr Sims said.

As an interim step the ACCC is to speed up its review of acquisition proposals in the retail sector by seeking earlier disclosure of plans by retailers, which will then be reviewed by a special team to provide a quicker decision.

”Our processes can be streamlined,” Mr Sims said. ”This can, however, only occur with appropriate notification, co-operation and upfront information.”

The acquisition of smaller retailers was giving the major chains ”substantial economies of scale and scope in, for example, distribution logistics centres and advertising, as well as brand promotion”, Mr Sims said.

This was making it more difficult for competitor groups to emerge, which, together with the difficulty of gaining access to sites, was entrenching the market power of Coles and Woolworths.

”When the major supermarket chains acquire an independent player they remove an alternative from the market, with potentially a different product range and service offering. That competition is unlikely to be replicated by either a chain or new independent given local and/or national entry barriers.”

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Rinehart dressed for success

CONTROL by stealth is the new black in corporate fashion.
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And the world’s richest woman, Gina Rinehart, is parading the catwalk. Having amassed at least 15 per cent of Fairfax, she is dressed up to get at least one seat on the media group’s board.

There is an expectation that she will move to the 19.9 per cent takeover threshold, but there are no suggestions this will be followed by a full takeover bid.

She picked up at least 42 million shares – or about 2 per cent – yesterday. Given the volume through the market, Rinehart could now have up to 17 per cent of the company.

Regardless of this flurry of share activity, the dial on the company’s share price barely moved – testament to the fact that the market does not see the company as being in play.

Until this week, Rinehart had been sitting on 13 per cent of Fairfax and unsuccessfully agitating for two seats at the board table. Fairfax chairman Roger Corbett had stood firm and some would say provocatively appointed an independent director, James Millar.

But it now appears likely that Rinehart will get board representation.

Her case has been bolstered by support from another of Fairfax’s large shareholders, Allan Gray Australia. With a 9 per cent stake, its boss, Simon Marais, said of Rinehart’s move, ”I don’t have a problem and I think it’s good for the company to have people [on the board] with their own money invested – they tend to be more careful.”

From the Fairfax board’s perspective it seems like a fight it no longer wants to have.

It is believed that neither Rinehart nor her representatives contacted Corbett before wading into the market yesterday and she has visited the company only once since taking her initial holding.

It remains to be seen whether Rinehart, once on the board, will attempt to exercise influence over the company’s evolving strategy or the newspapers’ editorial content.

For Marais and the other shareholders sitting on the register and hoping for some corporate takeover action, including Maple Brown Abbott and Colonial, they could be waiting a while.

Rinehart is the latest in a list of entrepreneurs who have used the cheap control option of taking a stake in a company and placing their people on the board. Kerry Stokes took de facto control of West Australian Newspapers using this play and, more recently, James Packer has been attempting to do the same at Echo Entertainment – the owner of Sydney’s Star Casino.

Echo’s chairman, John Story, resisted the move but was ousted by his own board last week after relentless pressure from Packer.

Packer has only 10 per cent of Echo and does not yet have a seat at the directors’ table. But he plans to increase this when he gets a regulatory green light.

Rinehart has already experienced some success at this game. She was offered a seat on the board of television group Ten, having picked up a 10 per cent holding.

The boards of these targeted companies understand that the predators can move beyond 19.9 per cent by legally creeping up the register by 3 per cent every six months without the need for a takeover.

Using what is called the ”creep” provisions, a suitor can move to near 26 per cent in a year in order to gain a controlling shareholding.

Fairfax, which owns The Age and The Sydney Morning Herald, has been under serious financial pressure as advertising leakage to the lower margin digital businesses and a poor external environment for advertising have crimped profits across all its newspapers – particularly the metropolitan dailies.

But the company’s chief executive, Greg Hywood, this week announced the board expected earnings before interest, tax, depreciation and amortisation of $500 million for the full year.

While this was $20 million below analysts’ forecasts and 18 per cent below last year’s result, there were predictions it could have been worse.

Marais, who did not sell any Fairfax shares yesterday, said he was relieved by the news.

Expectations for a downgrade had been building among some analysts following major profit downgrades from Ten in February and Seven West Media in April and amid continuing gloom about the sector.

But the announcement left the share price unmoved at 60¢, above last week’s record lows of 57¢.

Hywood said revenue for the second half would be about 8 per cent below last year, after the 7.5 per cent fall in January revenues revealed at the company’s half-year results in February, and that ”the difficult trading environment” had continued, as predicted.

However, cost savings under the ”Fairfax of the Future” project were ahead of schedule, he said, ”with the 2012 run-rate exceeding the targeted $40 million and accelerating”.

There are expectations that if Rinehart has a say in the company’s operations, she will be looking to step up the cost-savings target – although this can’t be confirmed given that the mining magnate plays her cards very close to her chest.

She might also be seeking a break-up of the business. Some analysts suggested that a break-up play would only stack up if the Fairfax share price was well below its current levels.

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Myer chief retails ‘tale of woe’

Down at heel: Retail has a hard road ahead, Myer’s boss says.MYER boss Bernie Brookes has described Australia’s retail landscape as a ”tale of woe” where sector growth will remain below 3 per cent for the next few years due to consumer angst over rising energy prices, steeper healthcare and education costs and the carbon tax.
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The chief executive of the country’s biggest department store also warned that higher penalty rates and the current industrial relations framework would lead to many shops shedding staff and reducing their trading hours.

Speaking at a Financial Services Council lunch in Melbourne yesterday, Mr Brookes said the pain was being felt across the discretionary retail industry and that he feared further company collapses following a string of failures in the past two years. ”What we are seeing in retail is really a tale of woe, we are seeing the most difficult time I have encountered in nearly 36 years that I have been involved in retail. I have not seen it as difficult, as consistently difficult, than what it is today,” Mr Brookes said.

While the strong dollar was encouraging shoppers to surf the web for better deals overseas, a weakening of the currency could trigger a new round of corporate collapses. ”There is no doubt a lot of stores are hanging on, they have got high levels of inventory and are hanging on despite the high level of the Australian dollar being generous to them in their buying prices,” he said. ”If we see the Australian dollar come off, [it is] going to be more expensive for them [shops] to purchase the product, and therefore we could see quite a few more stores go into significant issues.”

Asked about future growth rates, Mr Brookes said he remained sceptical about the discretionary retail sector squeezing out even 3 per cent growth in the short term.

”I think if the discretionary retail sector grew by 3 per cent, it would be a fantastic opportunity to get back into some of the metabolism of good growth and good profitability and, more importantly, good prices for the consumer.

”I don’t see 3 per cent growth in discretionary retail in the next year and perhaps the year on. This is a tough market and it isn’t going to improve overnight.”

Myer has already trimmed its forecasts, warning that its full-year profit will be as much as 15 per cent below last year’s performance, while rival David Jones has warned of drooping sales and profitability this year. Mr Brookes said data flowing from the company’s 4.1 million MyerOne club card members showed they were worried about higher energy prices as well as the rising costs of healthcare and education. The carbon tax was also holding back spending.

He said the Fair Work Act meant stores would be forced to close early in the face of massive penalty rates that staff had to be paid. ”There will be stores closing on Sunday,” he said. ”With the reintroduction of penalty rates, you are going to see not only stores close but also shopping centres close.”

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TV ads sway more than online: survey

ADVERTISING on TV continues to be far more influential than ads online, with many people complaining about the intrusiveness of digital ads and their potential to invade privacy.
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According to research by Deloitte, which surveyed people in eight countries, television advertising was the most influential on consumer decisions in Australia, followed by newspaper ads and online.

But online advertising is catching up to traditional media with the fast-growing influence of online reviews. The survey found that 56 per cent of people learnt about a new product online for the first time and 43 per cent bought something based on an online review or recommendation.

The report also found that many shoppers, 41 per cent, checked competitors’ prices on their smartphones while in a shop. Dubbed ”word of mouth in the 21st century”, the researchers concluded that checking prices online had become everyday behaviour.

The survey results provide an interesting dilemma for advertisers, with people concerned about the potential for invasion of privacy with online ads, but also interested in more targeted online marketing. Many of those surveyed said they would click on more ads if they were targeted to their needs.

Researchers said that the online advertising community needed to provide more reassurance to consumers regarding the collection, use and security of personal information, in order to overcome people’s privacy concerns and boost effectiveness.

Among the types of advertising available online, Australians preferred search engine advertising, interactive advertising and advertising on apps on mobile phones. But video-based pre-roll and post-roll ads were not very influential on buying decisions, ranking fifth and 10th in terms of influence.

Deloitte Technology, Media and Telecommunications partner Clare Harding said the research also showed that while TV was the preferred form of entertainment for most Australians, 60 per cent of those surveyed were multitasking on other electronic devices.

”Opportunities exist for newspaper publishers and advertisers to connect with consumers across multiple platforms and provide an integrated content or brand experience. Advertisers should also take the opportunity to rethink ad design and incorporate the ‘small screen’ of smartphones, tablets and laptops into the ‘big screen’ viewing experience of the TV,” Harding said.

The report, undertaken between November 2011 and March 2012, surveyed around 2000 consumers in each of the eight countries surveyed, with those interviewed spanning four generations. This is the first year Australia has participated.

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Mojo names former ninemsn head as chief

FORMER ninemsn chief executive Joe Pollard is set to become the most senior woman in Australian advertising as she takes over as head of Publicis Mojo Australia.
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Ms Pollard joins the company at a time of huge change for the industry, with the softening of advertising markets and the rise of digital.

Publicis Worldwide earlier this year also took over ownership of the Australian company.

Publicis’ blue-chip clients include Coca-Cola, Toyota, LG, Qantas and Goodman Fielder.

The executive chairman of Publicis Worldwide, Jean-Yves Naouri, flew to Australia to make the announcement, praising Ms Pollard’s leadership experience in marketing communications, creative, media and digital. Ms Pollard has been chief executive of ninemsn for three years. Under her leadership, ninemsn showed strong growth in audience engagement, revenue and profitability. Two offshoots, Cudo and Bing were also launched.

Mr Naouri said Ms Pollard had a wealth of experience in all aspects of marketing and communications.

”Given her time on agency side, client side and recently running the largest digital publisher in Australia, I believe she brings a unique set of skills to Publicis Mojo,” he said.

Ms Pollard was at Nike for 10 years, including time as chief marketing officer.

Ms Pollard said Publicis Mojo had an amazing roster of world-class clients facing complex business challenges in a changing environment.

Publicis Mojo’s executive chairman, Graeme Wills, and chief executive Nicholas Davie, both set to step down from their roles, will stay on in the short term to help a smooth client transition.

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Demand, not carbon, drives expansion

It’s the timing of the Olympic Dam expansion that is being reviewed and, despite what the opposition may say, the carbon tax and mining tax are not decisive.EVEN taking into account the fact Canberra’s spin cycle is in overdrive ahead of the July 1 start of Labor’s carbon tax, Tony Abbott and Christopher Pyne have been a bit hyperbolic this week.
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During a whistle-stop tour of South Australia, Abbott said BHP Billiton’s $30 billion Olympic dam expansion project was ”hanging in the balance”. Axing Labor’s carbon tax and mining tax and reining in ”union militancy” were three major incentives that a Coalition government would deliver, he said, adding that in the meantime the Labor government should guarantee that its mining tax won’t be extended to gold, copper and uranium.

Pyne said BHP was reconsidering the timing of the Olympic Dam expansion because of heightened political risk, adding: ”I directly blame the Gillard government for that.”

The truth is more complex, as usual. It’s the timing of the Olympic Dam expansion that is being reviewed, and the carbon tax and mining tax are not decisive.

BHP chief executive Marius Kloppers, the group’s chairman, Jac Nasser, Rio Tinto chief executive Tom Albanese and Glencore chief executive Ivan Glasenberg have all warned recently that Australia is becoming a more expensive place to invest in, and a more regulation-heavy one.

But as BHP reacts to softer commodity markets by re-sequencing its lengthy line-up of potential resources developments, Australia’s carbon tax and mining tax are not front of mind: hardly surprising really, given that Kloppers is a supporter of carbon pricing and helped negotiate a watered-down mining tax after Julia Gillard pushed Kevin Rudd aside in June 2010.

Kloppers said in September 2010 that BHP accepted that climate change was a reality and added that, because the multilateral push for a carbon pricing regime had been derailed, Australia would be best served by going alone, and going early.

The BHP view at that time was that carbon pricing was inevitable, but that it needed to be simple, transparent and predictable, revenue neutral and broadly based, but also designed to protect trade-exposed industries.

He has subsequently criticised the structure of the Australian carbon-pricing regime, saying for example that the imposition of a carbon tax on the coal industry makes it more costly, and therefore less attractive as an investment destination than it was compared with coal-producing countries, including Indonesia, that have not yet introduced carbon pricing.

Nasser has called for a slower introduction of carbon pricing here and he has also said he thinks Labor’s Fair Work Act should be redrawn to reduce ”disproportionate union influence”.

And yes, getting the go-ahead for a mine development in this country is a regulatory marathon. It took more than five years to negotiate it in Olympic Dam’s case and more than 8300 people, 38 government departments and service providers, 55 non-government organisations and 60 industry groups had a role in the development of the project’s environmental impact statement.

We can do better than that.

It’s worth noting that BHP’s consistent message has been that it understands that careful and open planning and consultation is needed to build a lasting consensus around a development of the size of Olympic Dam, the world’s biggest uranium deposit and fourth-largest copper deposit.

BHP has also not stepped back its overall support for carbon pricing. In fact, it’s been loading a price for carbon into its investment decisions for years. The structure of the tax here is not its ideal, but BHP believes it can live with it.

The key forces behind BHP’s rethink about major expansions, including Olympic Dam, are commodity demand and commodity prices.

Both have softened as the northern hemisphere sovereign debt crisis and the economic slowdown it has induced depresses China’s growth, and as the hangover from last year’s over-zealous attack on inflation in China endures.

The price of copper, Olympic Dam’s main product, leapt by 257 per cent between December 2008 and mid-February last year for example, but has since slid by 27 per cent.

Kloppers and Nasser have been pretty clear on this, with Nasser flatly answering ”no” to a question in mid-May about whether BHP was going to stick to a previously announced five-year $US80 billion capital expenditure budget, and Kloppers stating that iron ore demand will grow strongly but less rapidly in the next decade than it has in the past 10 years. He also predicted that after 2025 it will move into a ”protracted period of low to negative growth”.

BHP has 22 major project developments and expansions under way, and they will soak up the group’s spending power in the 2012 and 2013 financial years. Thereafter, BHP would have ”flexibility” on project sequencing, Kloppers said last month, and it will be running the slide rule over new prospects very carefully.

The sums on projects here, including Olympic Dam, will include the cost of the mining tax and the carbon tax, and BHP will also be comparing labour productivity.

Commodity prices are the big variable, however – if they stay off the boil, projects like Olympic Dam will proceed more slowly regardless of what party is in power in Canberra.

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This story Administrator ready to work first appeared on Nanjing Night Net.

Sydney Airport to land more tourists

Low-cost airlines like Scoot are providing extra lift for Sydney Airport.SYDNEY Airport was ”stepping up its role” in the tourism space, said chief executive Kerrie Mather, and there had already been wins with the arrival of low-cost Asian airlines AirAsiaX and Scoot.
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At a business lunch yesterday in Sydney, Ms Mather signalled closer co-operation with Tourism Australia and New South Wales Tourism.

She said she had travelled to India as part of the NSW Tourism delegation and was hopeful that direct flights to India from Sydney would eventuate. She had also just returned from China, which was a ”market with potential for us”.

Ms Mather said last year 640,000 passengers from China came through the airport and this year China would move to second place, behind New Zealand, as the dominant country for the airport’s visitors.

She reiterated that Sydney Airport Corporation welcomed the federal government identifying a future airport site for a second Sydney Airport and securing transportation corridors, but said the existing airport could deal with demand through until 2045.

Last week the corporation issued legal proceedings against the federal Minister for Transport, Anthony Albanese, after the government brought forward to mid next year a deadline for the airport to produce a draft master plan.

Ms Mather said the airport was consulting about a new plan it announced in December last year, which will see a reconfiguration of the airport, including moving the jet base and air traffic control tower, and integrating domestic and international flights from the same terminals.

”We are halfway through that period of consultation so we were on track delivering our master plan by 2014,” she said. ”It is important we incorporate [this vision] in the master plan, so we need time to work through.

”So we have asked for the reasons why the master plan has been bought forward.”

The airport had discussed with Qantas buying back its long term leases for its jet base and terminal, which were not due to expire until 2019, considering that the Qantas sites took up 30 per cent of the airport’s footprint, she said.

Discussions had already resulted in some suggested improvements, which dealt principally with productivity issues, she said.

Ms Mather said the train station access fees on the privately owned Airport Link remained an impediment and she wanted to see both the removal of the fee and improvements on the line, such as better provision for passengers carrying luggage. The NSW government has said it will release later this year a discussion paper on transport for the airport and Port Botany area.

This story Administrator ready to work first appeared on Nanjing Night Net.