IT price wars: government no white knight

The Asus Transformer Pad Infinity – $999 in Australia, $600 in the US. Lenovo’s ThinkPad X1 Carbon – starts at $1999 in Australia, $1299 in the US.
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A diagram explaining price discrimination.

Tech companies have given the proverbial middle finger to those complaining about high prices in Australia, leading the consumer group Choice to demand strong government action.

But despite firms showing little interest in reducing their prices based on political pressure from the likes of the Labor MP Ed Husic, a new submission to the parliamentary IT pricing inquiry by the federal Treasury warns any direct regulation of prices by government could do more harm than good.

Last week Lenovo launched its ThinkPad X1 Carbon in Australia, which it says is the world’s lightest 14-inch Ultrabook. It will start at $1999 here, compared with $US1299 in the United States.

Earlier this month ASUS released its Transformer Pad Infinity tablet in Australia at a recommended retail price of $999 – much higher than the US price of about $US600.

Lenovo said it priced its products to ensure they were “competitive with local market offerings” and that by buying Lenovo products in Australia consumers were “supporting local Australian jobs” as well as securing local support and warranty.

Asus trotted out the same line frequently used by vendors to justify gouging Australian consumers: smaller market, logistic and shipping costs, exchange rates, promotional costs and training. All of these excuses have been unpersuasive to consumer groups and the Productivity Commission.

Choice’s head of campaigns, Matt Levey, said the IT pricing parliamentary inquiry was a “great start” but wouldn’t amount to much if it did not produce “strong recommendations which prompt equally strong action”.

“Unfortunately aph.gov.au is littered with examples of detailed reports into significant issues which sit around collecting dust,” he said. “It’s not so much the inquiry which is the problem, but how the government responds.”

Huge mark-ups for Australians

Choice studied more than 200 prices for IT products and identified an approximate 50 per cent price differencebetween what Australians and US consumers pay for more or less identical products including music downloads, games and computer hardware. Dell computers were 41 per cent more expensive while Nintendo Wii games were up to 88 per cent more.

Since it conducted its analysis in July consumers have written to Choice with further examples; in some cases they could see the lower price on the US site but the sites blocked them from bypassing the Australian price when ordering:Norton Internet Security two-year subscription: $149 v $US79Roxio Easy VHS to DVD for Mac: $139 v $US79.99Asus laptop (same specs): $1400 v $US680Garmin GPS: $189 v $149

Choice wants the government to investigate whether tools to stop consumers accessing lower prices in overseas markets – such as “geo-blocking” on websites or region-coding – are anti-competitive.

In many cases, the wholesale prices charged to Australian retailers by multinational vendors are significantly higher than those offered to overseas retailers, meaning there is no way they can offer a competitive price. In the case of prices for music downloads, Apple blames the record labels while music industry sources say Apple’s market power gives it the ability to set the price.

The Labor MP Andrew Leigh wrote a submission complaining that Amazon’s range of books for the Kindle in Australia is hundreds of thousands of titles smaller than in the US, and the books that are sold in this market are significantly more expensive than everywhere else.

Monash University’s chief information officer, Dr Ian Tebbett, said high IT prices in Australia diverted resources from research and education, and particularly for students of low socio-economic backgrounds, “the costs of IT in Australia will add to their decision not to take up higher education”.

Price discrimination maximises profits: Treasury

Treasury wrote in its submission dated August 9 that price differentials that aren’t based on differential costs of supply will “generally decline over time, providing there is sufficient competitive pressure or low barriers to entry”.

But while the internet allows consumers to detect when firms are charging higher prices in one country – and buy from cheaper overseas markets – in general there were “incentives for suppliers, in the form of profits, to engage in price discrimination”.

Treasury said the evidence suggested Australian consumers pay higher prices for IT products than consumers in some other markets, but not necessarily the highest globally.

“To that end, improving local competition and increasing access to international markets are ‘no regrets’ measures that can assist in ensuring Australian consumers and business have access to goods and services at internationally competitive prices,” Treasury said.

But it warned against “more interventionist measures” that seek to dictate terms on which consumers and business transactions take place, saying this may stifle innovation and reduce competition further. It said firms should generally be free to set the prices they want

The Competition and Consumer Act (previously the Trade Practices Act) used to prohibit some forms of price discrimination by firms but the prohibition was repealed in 1995 because it reduced price flexibility and was detrimental to competition.

“Treasury considers that the current competition laws are capable of addressing anti-competitive conduct without the need for a specific price discrimination prohibition,” Treasury said.

Vendor excuses don’t hold water: Productivity Commission

The big tech companies, largely through the Australian Information Industry Association (AIIA), blamed retailers, market size, freight costs, warranty differences, rents, taxes, wages, penalty rates and importation and transport costs as some of the reasons why Australian prices are higher.

But the Productivity Commission, politicians and consumer groups have all said these cannot possibly explain the huge 50 per cent and higher mark-ups faced by Australians on some products.

The commission found that arguments made by international suppliers to defend regional price discrimination are “not persuasive, especially in the case, for example, of downloaded music, software and video where the costs of delivery to the customer are practically zero and uniform around the world”.

Adobe, one of the worst offenders when it comes to price discrimination on software products, has yet to contribute a proper justification for its pricing to the IT pricing inquiry, instead using its submission to state it had already provided feedback to the AIIA.

Other big tech firms like Apple and Microsoft refused to appear at the first public hearings for the inquiry late last month. Apple’s written submission to the inquiry was confidential and therefore cannot be published.

The Productivity Commission acknowledged that there were extra costs of doing business in Australia and the size of the market meant retailers in countries like the US – which buy larger volumes – were able to obtain goods for less.

“While Australia may be relatively close to manufacturing centres in Asia, costs can depend on trade volumes rather than distances travelled, meaning that Australia’s trade routes can be more expensive than those for other countries,” Treasury said in its submission.

Treasury also noted that the recent strength of the Australian dollar has meant the prices of goods in overseas markets are now cheaper in Australian dollar terms. And while exchange rate fluctuations occur instantly, prices of goods aren’t as easily or as quickly changed to reflect this.

This can cut both ways. In 2008, following the depreciation of the Australian dollar, Australia was the cheapest place in the world to purchase an iPod, the Commonwealth Bank has said.

Mr Husic said there would be another public hearing for the inquiry in the coming weeks.

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US masterclass: how to grow as a retailer

High-end homewares store Williams-Sonoma is a remarkable story of growth.ANALYSIS
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The launch or rumoured launch in Australia by an international fashion apparel retailer has become a numbingly regular event. Speculation about how badly the bully boys of global retail, like Zara and Topshop, will beat up the local retailers has become a favourite sport of the retail experts.

Now, Williams-Sonoma’s impending arrival switches the focus to a different kind of fashion – upscale home furnishings.

Williams-Sonoma, a retailer that has become ubiquitous in American shopping centres since its founding by Chuck Williams in Sonoma, California in 1956, is to move into a 2000 square metre space on a pedestrian mall adjacent to Sydney’s Bondi Junction early next year.

But rest assured that it has not come to Australia to set up just one store.

Anyone associated with the retail industry – especially a small retailer with growth aspirations – should make Williams-Sonoma one of their first case studies. It is a remarkable example of how a specialty retailer can grow from one humble store into a multi-concept, multi-channel international powerhouse.

It has accomplished this using a step-by-step process of market segmentation, concept incubation, brand launch via catalogue/e-commerce and then finally, a measured store rollout. By opening stores at a slow tempo rather than helter-skelter, it has ensured limited damage in a couple of instances where a concept has underperformed and needed to be shuttered.

Laura Alber, the CEO, reportedly gushed about the company’s prospects in Australia, observing, among other things, that there was only limited competition in the Australian market. This is a truly remarkable finding considering Australia’s affluence and high rate of home ownership.

It’s also an astute and correct one.

Alber doesn’t mean there aren’t a lot of home furnishings stores in Australia. She means that none are anywhere near as targeted to specific population segments and lifestyles as Williams-Sonoma is.

Williams-Sonoma has shown expertly over the years how to use catalogues and e-commerce for market research, and how this information can in turn be used to reduce real estate risk for retailers across the world. E-commerce is not just a sales channel but a way of understanding where the response to your product is strong enough to lob a chain of physical stores.

In this instance, Australia is Williams-Sonoma’s strongest e-commerce market outside North America. (The company has e-commerce in approximately 75 countries and 44 per cent of its $US3.7 billion revenues in 2011 were derived from e-commerce and catalogues.)

This knowledge doesn’t guarantee success for the company’s Australian stores but it does lower the probability of it having to exit with its tail between its legs.

But what makes Williams-Sonoma such a masterclass in growth for ambitious retailers is its ability to segment consumer markets and develop individual retail concepts and products for each.

Williams-Sonoma currently operates 579 stores under five different banners and a further in North America. Four of these concepts – the namesake Williams Sonoma, Pottery Barn, Pottery Barn Kids and West Elm – are to open cheek-by-jowl in the forthcoming Bondi Junction space.

While Williams-Sonoma itself sells upscale kitchenware, the other three sell furnishings to customers in different life phases. West Elm is the smallest of the four with only 40 stores, but possibly the most interesting and instructive from the standpoint of a retailer case study.

Initially launched as a catalogue in 2002, the first West Elm store opened two years later in the d.u.m.b.o (‘down under the Manhattan Bridge’) neighbourhood of Brooklyn, New York, where the local population included many aspirational, design-conscious, but not-quite-yet-affluent young professionals living in small walk-up apartments. The furniture was perfectly adapted to this lifestyle group – well designed, edgy, urban, compactly sized for small living spaces and priced accessibly for a professional household on the cusp of “making it” in New York without actually being there yet.

There’s a market for that in Australia’s biggest cities.

Williams-Sonoma will not open stores willy-nilly in Australia and it should not cause tremors among the existing home goods retailers in the market. But it will add design flair and choice for some underserved segments of Australian consumers.

And for entrepreneurs who want to understand how to grow a world-class specialty retail business – this is a great case study.

Michael Baker is principal of Baker Consulting and can be reached at [email protected]南京夜网 and www.mbaker-retail南京夜网.

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Gillard’s $4 billion dental fix

The $4 billion dental health package will begin in 2014.The federal government will pour $4 billion into a dental package to provide millions of children and millions of adults on low incomes or in rural areas access to government-subsidised dental care.
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Health Minister Tanya Plibersek this morning announced that more than three million children would be eligible for the scheme, which will begin in 2014.

For adults on low incomes, $1.3 billion to fund an additional 1.4 million services will be available in the six-year package.

The changes have been made possible with the support of the Greens, who have insisted on big expansion as grounds for axing the current Medicare chronic disease dental scheme costing about $1 billion a year.

The funding comes on top of the $515 million announced in the 2012-13 budget.

”Labor believes we have a responsibility to ensure Australians who are least able to afford to go the dentist, and particularly children, should be given access to government-subsidised oral health care,” Ms Plibersek said.

Greens health spokesman Richard Di Natale flanked Ms Plibersek when she made the announcement in Sydney.

Ms Plibersek said the ‘‘unprecedented’’ package would tackle increasingly poor dental health among low-income people.

Eligible children would be able to get basic dental treatment capped at $1000 a child over two years to address dental decay, which, she said, had been increasing since the 1990s in Australia.

The package includes $2.7 billion for the treatment of children.

“While Medicare and free hospital care have been a basic right for Australians for decades, millions of people in this country still go without adequate dental care,” Ms Plibersek said.

“Labor believes we have a responsibility to ensure Australians who are least able to afford to go the dentist, and particularly children, should be given access to government-subsidised oral health care.”

The government would also provide $1.3 billion to states and territories for expanded dental services for low-income adults but the funding would depend on them at least maintaining current levels of dental services.

There would also be $225 million for dental infrastructure and workforce expansion in outer metropolitan and regional and rural areas.

Ms Plibersek said the public dental scheme would now be able to focus on prevention measures.

‘‘Many more low-income Australians will be able to get not just crisis treatment, when their teeth are falling out or gums abscessing, but actually moving back to a period … of prevention and early intervention,’’ she said.

‘‘The investment today will bear rewards in 10, 20, 30 years’ time.’’

Senator Di Natale said for a wealthy country, Australians had poor oral health. ‘‘Poor oral health leads to a range of complications … one in 10 visits to the GP are because people can’t afford to see a dentist,’’ he said.

Ms Plibersek confirmed the government would close the Chronic Disease Dental Scheme, set up by Opposition Leader Tony Abbott when he was health minister under the Howard government.

‘‘It’s been one of the most widely misused schemes ever designed in our public health system,’’ she said. ‘‘I’m very pleased to see the back of it.’’

The scheme was initially estimated by the Howard government to cost $90 million a year, but massive over-servicing and rorting had led to it costing $80 million a month, Ms Plibersek said.

The Medicare teen dental scheme would also be closed and replaced by the broader scheme for children aged up to 18.

Ms Plibersek said the 2012/13 budget allocation of just more than $500 million would be spent first, before the children’s scheme started from January 1, 2014 and the adult scheme from July 2014.

Ms Plibersek said the changes would need new legislation but would be brought to parliament as a change of regulation, which had the backing of the Australian Greens.

Asked where the funding would come from, she said the government would find savings in the budget which would be outlined in the mid-year economic and fiscal outlook later this year.

‘‘We have a very good record of finding savings in the budget,’’ she said. ‘‘We found $30 billion of savings in the last one.’’

The government remained committed to delivering a surplus budget in 2012/13, she said.

Ms Plibersek predicted Mr Abbott would say no to Labor’s dental reform ‘‘like he says no to everything’’.

She said there were capacity restraints in the current system and that was why the reforms would come into effect in 2014.

‘‘There’s some parts of the country where you can’t find a chair and there’s some parts of the country where you can find a chair but not a dentist,’’ she said, adding it would take time to improve access to services.

‘‘This is a bedrock scheme. It can be built up over time.’’

with AAP

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Bible is the ultimate fairytale

PETER Dolan’s suggestion that ‘‘God dies’’ in the Harry Potter novels is laughable (‘‘Toxic messages of Potter books’’ Letters 28/8). Someone or something that never existed cannot die.
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But the suggestion that gruesome and frightening images are often the stuff of great literature is correct. Where would we be without such fictional images? No Shakespeare, Dante, Dickens or Umberto Echo. Life would be dull.

The Bible is the ultimate fairytale, just ahead of the Koran, the Talmud and all the other religious claptrap kids have had shoved down their throats for centuries.

Mr Dolan’s ‘‘cornucopia of false messages’’ described as contained in the Harry Potter novels, could perfectly describe the Bible.

Everything Mr Dolan says about the novels of J.K.Rowling can be applied to the Bible. It is largely a work of fiction, where everything and anything is said to justify the opinions and outlook of the authors, mostly a narrow, partisan view of the world written decades after the alleged life of Jesus.

When Mr Dolan talks about evil, I suggest he think about the many cases of child abuse committed by men and women of God.

Or the terror regimes in the Australian concentration camps where Aboriginal children were imprisoned, abused and battered under the ‘‘protection’’ of various religious organisations.

Or the genocides committed with church approval and supervision in South America and other places colonised by devoutly Christian conquerors.

It is beyond me why our society tolerates what I see as cults, such as the Catholic, Anglican and other churches, organisations with appalling histories of abuse and misogyny. Why do we fund them with our taxes?

Osieck sticks with Socceroos mainstays

SOCCEROOS coach Holger Osieck has named a squad of the tried and tested for next week’s friendly against Lebanon in Beirut and the subsequent World Cup qualifier against Jordan in Amman on September 11.
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Coming back into the squad is the Socceroos’ linchpin, Tim Cahill, who missed the recent friendly against Scotland as he settled into life in the USA where he has signed with MLS club New York Red Bulls.

Jade North, Nikita Rukavytsya, Adam Sarota and Matthew Spiranovic have also been recalled while midfielder James Holland, who hasn’t featured for the national team in 18 months, has been included.

However, Harry Kewell, who is still in the hunt for a new club after being turned away by Stoke City, has not been included in the 22-man squad.

Fellow veteran Mark Schwarzer shows no signs of slowing down and if he plays in either match will be come the first player to reach 100 caps for the Socceroos.

There is only one uncapped player in the squad, habitual third-choice goalkeeper Mitchell Langerak. Ryan McGowan and Jason Davidson, who made their respective debuts in this month’s 3-1 friendly defeat against Scotland, have again won selection.

Melbourne Victory defender Mark Milligan was not considered as he has to serve a one-match ban for being sent off against Japan.

Socceroos squad for Jordan and Lebanon matches: Mark Bresciano (Al Gharafa, Qatar), Alex Brosque (Shimizu S-Pulse, Japan), Tim Cahill (New York Red Bulls, USA), David Carney (FK Bundyodkor Tashkent, Uzbekistan), Jason Davidson (SC Heracles Almelo, Netherlands), Adam Federici (GK) (Reading FC, England), James Holland, (FK Austria Wien, Australia), Brett Holman (Aston Villa FC, England), Mile Jedinak (Crystal Palace FC, England), Robbie Kruse, (Fortuna Dusseldorf, Germany), Mitchell Langerak (GK) (B.V. Borussia 09 Dortmund, Germany), Ryan McGowan (Heart of Midlothian FC, Scotland), Matthew McKay (Busan I’Park, Korea Republic), Lucas Neill, (Al Wasl, UAE), Jade North (Consadole Sapporo, Japan), Sasa Ognenovski (Umm Salal SC, Qatar), Nikita Rukavytsya (Hertha Berliner SC, Germany), Adam Sarota (FC Utrecht, Netherlands), Mark Schwarzer (GK) (Fulham FC, England), Matthew Spiranovic (Al Arabi, Qatar), Archie Thompson (Melbourne Victory), Luke Wilkshire (FK Dinamo Moscow, Russia)

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Cashing in on an investment

Renos done . . . Leila McKinnon, who is selling her renovated investment apartment at Bondi. The Lilyfield home of Dorothy McRae-McMahon that sold for more than $1 million.
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The heritage-listed residence at Glenwood, Blacktown, that is expected to sell for more than $600,000.

The Channel Nine presenter Leila McKinnon, who is a co-host of Weekend Today, is selling her apartment at Bondi. McKinnon owns the two-bedder with her brother, Daniel McKinnon, and his Fairfax financial journalist wife, Nicole Pedersen-McKinnon.

Since it was last traded for $618,000 in 2005, the apartment has been renovated with an open-plan gas kitchen and jarrah floors. In a small block of seven apartments in Bennett Street, it has two queen-size bedrooms, a white-tiled bathroom and a large living and dining area opening to a balcony with views to the ocean in the distance.

Also on title is a garage with mezzanine storage. The property, which is expected to sell for about $700,000, is scheduled for auction on September 22 through Bradfield Cleary agent, Mark Daley.

The doctor is in

A former operating theatre building, which is part of the extensive redevelopment of the Prince Henry Hospital site at Little Bay, was snapped up for $1,385,000 last week by a doctor from the north coast who intends to restore it and use it as his Sydney residence.

The building, on an 840 sqm block in Darwin Avenue, was sold two weeks before its auction, which had been scheduled for early September through Morton & Morton agent David Licul.

Snapped before auction

The Lilyfield home of Dorothy McRae-McMahon, who worked in international aid and community development for the NSW Ecumenical Council, sold last week for just over $1 million through McGrath Leichhardt agent Stuart Norman. The three-bedroom, weatherboard bungalow, set on a 249 sqm block in Maida Street, sold 10 days before its scheduled auction.

In a quiet street near the Bay Run, it has large rooms with high patterned ceilings and timber fretwork. Now retired, McRae-McMahon was a minister with the Pitt Street Uniting Church in Sydney. She has won many awards including the Australian Peace Award and the Human Rights Medal.

Early booking for B&B

Belvedere, a former bed and breakfast establishment at Burradoo in the southern highlands, sold before its scheduled auction through three Bowral estate agents: Angus Campbell-Jones, Margaret McCauley and Ian Rayner. The 4453 sqm Werrington Street property has beautiful views across the Wingecarribee River. Surrounded by established gardens, the house has five bedrooms, a gourmet kitchen and large formal and informal living areas.

Last month, Belvedere was listed with $1.5 million price hopes but the agents could not confirm its sale price because of confidentiality agreements. The vendor, Geraldine Broderick, intends to downsize to a smaller property in the Bowral area.

A little piece of history

At Glenwood near the Norwest Business Park, a heritage homestead (listed by Blacktown City Council) is set for auction on September 22 through John Russell of Richardson & Wrench Baulkham Hills. Named Isabella, the house has been restored by Wayne Stein and Donna Malcolm, who both work for Australia Post.

The house, which is expected to sell for more than $600,000, stands on a 611 sqm block that originally was part of a 50-acre [20-hectare] land grant made by Governor Macquarie to a former convict, John Gray.

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China turns to more subtle monetary tools

China’s central bank is experimenting with more delicate tools to support bank liquidity and lending, showing an apparent reluctance to resort to blunter monetary policy instruments such as cutting the amount of cash banks must hold as reserves despite abundant signs of weakening growth.
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The central bank surveyed primary dealers about demand for 28-day reverse bond repurchase agreements on Wednesday, traders said, as policymakers seek alternatives to another cut in banks’ required reserve ratio (RRR).

It was the first time the People’s Bank of China (PBOC) has suggested it might use such a long-term instrument to inject liquidity into the interbank market.

As recently as two weeks ago, money market traders and economists widely believed the third RRR cut of 2012 was imminent, as evidence mounted that the world’s second-largest economy was slowing more sharply than expected.

But the current consensus is that the PBOC has decided to rely on reverse repos to ensure that banks have the liquidity necessary to support the flow of new loans and bond issues. The PBOC began issuing reverse repos regularly in May.

“My baseline scenario is that the authorities’ focus in 2012 is not on growth but in cleaning up the excesses that materialised from the 2009-10 stimulus,” said Tim Condon, head of Asian economic research at ING in Singapore.

“They simply don’t want to do anything that will risk rekindling the area of excess that they are trying to clean up. And therefore I see the 28-day repo as kind of a fine-tuning measure, that they don’t want to actually make a permanent injection via a RRR cut.”

China’s economy grew at its slowest pace in more than three years in the second quarter, and a factory survey last week showed China’s manufacturing sector contracted at its sharpest pace in nine months in August. Earlier data showed that exports, bank loans, and industrial output all grew more slowly than expected in July.

Why no RRR cut?

While the PBOC has used 28-day forward repos to withdraw liquidity, it has relied exclusively on seven-day and 14-day reverse repos for liquidity injections in recent years. In 2005, 21-day reverse repos were used on a small scale.

Extending the maturity of reverse repo operations offers an apparent compromise between shorter-term liquidity injections and an RRR cut.

Traders had complained that even if the volume of reverse repo fund injections is large, such operations have limited potential to bring down interbank rates. The short duration created uncertainty, since the market could never be sure whether the repos would be rolled over on maturity.

Beyond the issue of duration, however, traders are divided about the central bank’s fundamental motivation for choosing reverse repos over an RRR cut.

Some speculate that central bank is reluctant to take any major easing steps prior to the Communist Party congress likely to occur in October or November, when the Party will unveil its next generation of top leaders. The precise dates are not yet decided.

Such reluctance could reflect divisions within the leadership about how to balance the need for monetary easing with the risk of re-inflating a housing bubble and fuelling investment in industries such as steel and cement already sagging under the weight of overcapacity.

But other disagree, noting that RRR cuts have traditionally been viewed as a technocratic decision that the PBOC is free to make without consulting the State Council, China’s cabinet.

An alternate theory is that the shift to reverse repos represents a longer-term effort by the PBOC to re-tool monetary policy to bring it in line with advanced economies.

In the United States and European Union, central banks use short-term repos to achieve an explicit short-term rates target. Quantitative tools such as reserve ratios play little role.

Guiding the market

Traders point out that, unlike an RRR cut, reverse repos allow the central bank to explicitly guide interbank rates via the auction yield. This essentially sets a floor on the rate at which banks will lend to each other for a given duration.

“An increased number of tenors in PBOC reverse repos will make it easier for the central bank to adjust short-term funding costs,” said a trader at a major Chinese state-owned bank in Beijing.

“Signs are that the PBOC is recently strengthening its guidance of money market rates via its reverse repo rates. Its intention for now appears to be maintaining the stability of short-term funding costs.”

Even as the central bank has increased the volume of its fund injections in recent weeks, it has guided the rate on its seven-day reverse repos from 3.30 per cent on July 12 to 3.40 per cent for the past two weeks.

That suggests that while the central bank aims to ensure that banks have the funds they need to lend, they do not want the benchmark seven-day repo interbank rate to plumb the depths of 2009-10, during which it rarely exceeded 3 per cent and was often below 2 per cent.

By contrast, an RRR cut is a blunter instrument that simply floods the interbank market with funds and lets banks sort out the price at which they will lend.

China was forced to increase the RRR for much of the last decade as a way to sterilize the massive foreign exchange inflows created by its huge trade surpluses.

But the trade surplus has fallen sharply in recent years, and China suffered its first capital account deficit in the second quarter this year.

With the reserve ratio still high at 20 per cent, China must still eventually unwind it to more reasonable levels. But the more balanced flow of capital into and out of the country suggests that the RRR will play a less important role in monetary policy in the future.

Reuters

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Record means little against the rapidly advancing tide

Embattled Carlton coach Brett Ratten leaves the club this afternoon.CAROLINE WILSON: Last supper came early for RattenROBERT WALLS: Malthouse a big risk as Blues err in axing Ratten
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MANY factors can kill an AFL coaching stint. At Carlton, for Brett Ratten, it has been the convergence of several.

The high expectations of a club with as many premierships as any, and a bar raised to a top-four spot pre-season by the coach himself. A spate of crippling injuries that derailed the Blues’ season when, after three good wins to start the season, they were flag favourites.

The humiliation of a loss to a wooden spoon candidate that led to the club missing out on the finals. And the availability, and obvious interest, of a former revered coaching peer, Mick Malthouse, waiting in the wings.

If the end wasn’t coming already for Ratten, despite having a year left on his contract, last Saturday night’s shock loss to Gold Coast inflicted the fatal wound. And Malthouse’s clear interest in coaching again, as apparent as it’s ever been since last weekend, was the final nail in the coffin.

But Ratten will be one of the unluckier coaches to get the chop in recent memory. He took on a side, and a club, close to a basket case with six games to go in 2007 and, until this year, improved its position season by season.

From a finish of 15th in the first year, Carlton climbed to 11th in 2008 with 10 wins. In 2009, they reached the finals for the first time in eight years, only to be pipped on the post by the Brisbane Lions in an elimination final away from home.

It happened again in 2010, this time nutted on the line by Sydney. Last year, the Blues went one further, smashing Essendon in the elimination final before once again losing by less than a kick in an interstate final, this time in Perth to West Coast.

Even after this season’s less-than-sparkling performances from his team, Ratten has a winning percentage as coach of 50.8 per cent. That should have presented at least some sort of pass mark.

By way of comparison, Brisbane’s Michael Voss, approaching the end of his fourth season in charge, has a current strike rate of just 38.7 per cent. For Richmond’s Damien Hardwick, at the end of his third year at Punt Road, it’s 37.7.

That’s not to denigrate either man, both their sides seeming to have made significant strides this year. But it’s also fair to say their playing lists were in far healthier shape than was Ratten’s when he took over the Blues.

The arrival of Chris Judd certainly helped, so did some early draft picks, though the progress of the likes of Bryce Gibbs and Matthew Kreuzer has been one of a number of vigorous debates by the navy blue army, along with tactical acumen, recruiting and list development, both of those areas slammed by club greats such as Robert Walls and Mark Maclure in recent days.

The biggest question: to what extent should the senior coach be held responsible?

Ratten was seen to improve steadily over the course of his tenure in areas such as communication with his players. The balance of Carlton’s best 22 also became much improved.

The Blues at their best, seen as recently as the weekend before last, when they thrashed Essendon by 96 points, playing an attractive, attacking style, smart out of defence and potent up forward.

Yet Ratten never won the total approval of the famously impatient Carlton hordes and, more significantly, enough of his club’s board.

Those agitating for change at board level were grudging in their praise, even when the Blues began to rebound from their mid-season slump, unearthing young prospects such as Levi Casboult and Tom Bell, and hauling themselves back into finals contention

In the words of Carlton president Stephen Kernahan, before last weekend’s nightmare the Blues had won back respect. That might have saved Ratten’s bacon. Instead, the loss to the Suns fried it to a crisp.

Perhaps another coaching door might open, with Port Adelaide still on the hunt for a senior man for 2013.

Certainly, though, this one would have stayed open – as Ratten’s contract stipulated it would – had a certain triple premiership coach not been hovering in the background.

And that’s no consolation or comfort for a man who served Carlton with distinction in 255 games as a player, and at least helped haul the Blues back to respectability in 120-odd games as coach.BYE, BYE, BLUESBrett Ratten’s coaching tenure at Carlton

2007 Brett Ratten takes over as coach after Denis Pagan is sacked with six games remaining. The Blues lose all six. Carlton secures Matthew Kreuzer with the priority pick, and trades pick three and Josh Kennedy to West Coast for Chris Judd. Ratten signs a deal until the end of 2009. FINISHED: 15th

2008 Ratten’s first full season starts poorly, losing the first three games. He swings the momentum with two wins over Collingwood and Richmond. FINISHED:11th (10 wins, 12 losses)

2009 Carlton makes the finals for the first time since 2001 but squanders a big lead in its elimination final against the Brisbane Lions. The Blues are in crisis after Brendan Fevola’s Brownlow Medal night scandal and put him up for trade. The coach signs a contract until the end of 2011. FINISHED: 7th (13-10)

2010 The Blues are again bundled out in an elimination final, against Sydney by a goal. Ratten is told by players he needs to take more interest in them as people. FINISHED: 8th (11-12)

2011 Under pressure all season about his contract, but the Blues win their first final in 10 years and almost pull off a miracle victory against West Coast in Perth. Ratten earns a two-year contract extension. FINISHED: 5th (15-8-1)

2012 PRE-SEASON: Carlton loses all its pre-season matches but Ratten declares anything short of a top-four finish will be considered a failure. ROUND TWO: Ratten becomes the third person in Carlton’s history to play and coach 100 games. The following week, the Blues smash Collingwood and become premiership favourites. ROUND EIGHT: Carlton loses Marc Murphy to a long-term shoulder injury, escalating a horror injury run. ROUND 10: Media pressure and supporter backlash intensifies after the Blues lose to Port Adelaide. Links between Mick Malthouse and the Carlton job surface after Eddie McGuire declares the former Pies coach would be a perfect fit for the Blues. ROUND 15: The Age reports Ratten will coach for his future against Collingwood after a run of six losses in seven games to fall out of the top eight. Carlton upsets the Pies and wins four of its next six games to rekindle finals hopes. ROUND 22: A disastrous loss to Gold Coast ends Carlton’s finals chances. YESTERDAY: It is revealed Ratten’s coaching career at Carlton is finished, with a year to run on his contract. POSITION: Carlton currently 10th (11-10)

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

Elephant Man on show in Adamstown

The title character in The Elephant Man is based on a real-life person who was born with hideous deformities. But writer Bernard Pomerance calls for him to be performed without prosthetics or elaborate make-up.
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And that, as actor Timothy Blundell notes, is a challenge for the person playing John Merrick.

Blundell is cast as Merrick in a production of The Elephant Man that will be the first community work staged in the new 577-seat The Factory theatre at Adamstown’s St Pius X High School from September 7 to 15.

Merrick’s deformities, which are described by a surgeon early in the play, included an enormous head with a bony jutting forehead that almost hid one eye and a nose that was a lump of flesh. His right arm and legs were enormous and shapeless and as a child he suffered a hip disease that forced him to walk with a stick.

Amazingly, his left arm was perfectly formed.

Merrick, who was born in England in 1862, was christened Joseph but has come to be known as John. He became a carnival freak at an early age and was exhibited under the name the Elephant Man.

He was studied by a sympathetic surgeon, Frederick Treves, and lived the last years of his life in a London hospital, where he became a celebrity, with visitors who came to meet him including Alexandra, Princess of Wales. He died in 1890, aged 27.

Research still continues into the cause of his horrendous deformities.

Timothy Blundell, who has extensively researched Merrick to help him play the role, says it is important to play him without make-up because the records show there was a normal, clear-thinking person beneath the ugly exterior.

At the same time, he has to suggest Merrick’s deformities through his movements – but given those deformities his body movements are limited.

“The only parts I can use are my left arm and movements to the head,” he says. “Merrick also had a speech impediment, so that also makes it a bit harder.”

While the role is the most difficult he has played in physical terms, Blundell also regards it as one of the most important.

“I want audiences to see the human being behind the ugliness of his deformities,” he says. “We shouldn’t judge people by the way they look, their religion or other such factors. If we can stop and learn more about them, we might come to appreciate, as this play shows, the people who are different from us.”

The Elephant Man won the year’s major best production awards, including a Tony, when it was staged on Broadway in 1979.

Director Don McEwen has assembled a first-rate cast, many of whom play multiple roles. The actors include Wayne Jarman as Frederick Treves, Susan McEwen as actress Mrs Kendal, who befriended Merrick, and Rod Ansell, Alan Bodenham, Sue Hart, Maddison Molenaar and Richard Thomas.

The Factory is one of two amphitheatre-style venues in a $5 million redevelopment of a former Lustre Hosiery factory in the St Pius school grounds. The smaller theatre holds 70 people.

The idea of including a major theatre in the redevelopment was put forward by McEwen, who was teaching a vocational education training course at St Pius. He served as a technical adviser for the theatre.

The Elephant Man has many settings but companies staging the show generally opt for an all-purpose stage design.

McEwen is using the colourful backdrop of a circus tent. It symbolises the world Merrick grew up in, but which he put very much behind him in the productive last years of his life.

* The Elephant Man, an Adenau and 5 Minute Call production, can be seen at The Factory on Friday and Saturday at 8pm, from September 7 to 15, plus an 8pm performance on Wednesday, September 12, and a 2pm matinee on Saturday, September 15. Tickets: $38; concession $34; child/student $28. Bookings: Civic Ticketek, 49291977.The Factory is at the rear of the St Pius X buildings. There is a car park adjoining the venue. The entrance to the grounds is through a gate on Park Avenue near the street’s crossing of the former Belmont railway branch line that is now part of the Fernleigh Track.

THE ELEPHANT MAN: Will be performed without any prosthetics. Picture: Brock Perks

Hits and Mrs as Ann Romney steals Republican hearts

Ann Romney waves with her husband Republican presidential nominee Mitt Romney during the Republican National Convention in Tampa, Florida.Ann Romney, the wife of the Republican Party’s new candidate, Mitt, stole the heart of the Republican National Convention in Florida by telling the audience she wanted to talk about love, not politics.
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Appearing on stage in a dress in a bold shade of red, so popular among Republican women, to a roar and chants of “We love you!” Mrs Romney began by saying: “Tonight I want to talk to you about love.

“I want to talk to you about the deep and abiding love I have for a man I met at a dance many years ago. And the profound love I have, and I know we share, for this country.

“I want to talk to you about that love so deep only a mother can fathom it – the love we have for our children and our children’s children.”

It was immediately clear that the party, sections of which had to be cajoled – or even bullied – into backing Mr Romney, has readily embraced his wife.

Mrs Romney spoke about how hard mothers worked to sustain families.

“It’s the moms of this nation – single, married, widowed – who really hold this country together.

“We’re the mothers, we’re the wives, we’re the grandmothers, we’re the big sisters, we’re the little sisters, we’re the daughters.

“You are the best of America,” she said. “You are the hope of America.”

It was an effective if not subtle appeal to American women, many of whom have been disaffected by the growing hardline stance on women’s health issues within the GOP.

Crucially she celebrated rather than avoided Mr Romney’s record as the head and founder of private equity firm Bain Capital, which has been the subject of sustained attacks by the Democrats, whose ads describe it as a vessel of pirate capitalism.

She won another when she invoked the campaign’s unofficial slogan: “As his partner on this amazing journey, I can tell you Mitt Romney was not handed success. He. Built. It.”

All day, speakers had repeated the phrase, based on a very selective quote from off-the-cuff remarks by the President, who said of successful people, “you didn’t build that”, before detailing how society aids its members.In conclusion she reassured America that, “You can trust Mitt. He loves America. He will take us to a better place, just as he took me home safely from that dance.”

Some have already compared her speech to the address that propelled President Obama to fame in 2004.As the house band struck up a rendition of My Girl, Mr Romney appeared on stage behind her with a dewy-eyed smile, thrilling an audience that had not expected to see him until later in the convention.

The convention’s tough-talking keynote speaker, New Jersey Governor Chris Christie, took another tack.He all but denounced love as a stumbling block on the path to establishing a new US century.

Governor Christie scowled as he finished his half-hour speech about how America must learn the importance of respect over love if it is going to stake out a second American century.

“The greatest lesson Mom ever taught me, though, was this one: she told me there would be times in your life when you have to choose between being loved and being respected,” he said.

“I have learnt over time that it applies just as much to leadership. In fact, I think that advice applies to America today more than ever.

“I believe we have become paralysed by our desire to be loved.”

A great cheer.

He described the fights he had won against the teacher’s union.

Eventually he turned to Mr Romney’s role in rebuilding America.

“Mitt Romney will tell us the hard truths we need to hear to put us back on the path to growth and create good paying private sector jobs again in America,” he said to an ovation of the 20,000 strong crowd in the Tampa sports arena.

“Mitt Romney will tell us the hard truths we need to hear to end the torrent of debt that is compromising our future and burying our economy.

“Mitt Romney will tell us the hard truths we need to hear to end the debacle of putting the world’s greatest healthcare system in the hands of federal bureaucrats and putting those bureaucrats between an American citizen and her doctor.”

Throughout the afternoon speakers from across the new spectrum of the Republican Party – fiscal conservative through to social conservative – had addressed the increasingly excited audience.

Scott Walker, the Wisconsin Governor famed for surviving an election after a bruising battle against unions, received the first spontaneous ovation from the stands.

Later Rick Santorum, the fierce Catholic conservative who had been the last to concede defeat to Mr Romney, won another sustained ovation when he raised the social issues that have become so important to the Republican base, but an awkward wedge issue to its establishment.

He declared that the GOP was the one party that lifts up all children – “born and unborn”.

“I thank God that America still has one party that reaches out their hands in love to lift up all of God’s children – born and unborn, and says that each of us has dignity and all of us have the right to live the American Dream.”

Among addresses by the Republican tough guys, other women appeared on stage including governors of South Carolina Nikki Haley and the Governor of New Mexico Susana Martinez. Mrs Romney was introduced by Luce Fortuno, the Governor of Puerto Rico.

Not everything went to plan throughout the afternoon. Stubborn and vocal supporters of the libertarian Ron Paul chanted and booed during the early afternoon session when the Republican Party adopted rule changes that would make their sort of internal party insurgency more difficult.

And later during the day, as their colleagues hectored arriving delegates in the street with megaphones, Paul’s delegates refused to direct their votes to Romney, prompting more chanting and jeering during the roll-call of the states, an event the organisers had hoped would be a unanimous surge for Mr Romney.

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

Guinness Peat Group posts loss after copping fine

The once mighty Guinness Peat Group, a famed billion dollar corporate raider that could strike fear in the hearts of company directors across three continents, has fallen into the red after being whacked with a 110 million euro ($133 million) fine by a European court.
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The loss was announced as one of GPG’s biggest holdings, financial services group ClearView Wealth, received a revised takeover offer of 55 cents per share this afternoon from private equity-led consortium Crescent and which also includes a special dividend of 2.2 cents per share.

The improved offer has won the backing of ClearView’s board as well as GPG which owns 47.3 per cent of the wealth manager and stands to realise $122 million in proceeds if the bid succeeds.

Formerly the plaything of stockpicker Sir Ron Brierley but now in wind-down mode, GPG is looking to dispose of most of its assets after years of underperformance and shareholder disquiet.

GPG said it posted a first-half loss of £36 million ($55 million) due to a bigger than expected fine related to previous wrongdoing at its industrial threads business Coats, with that threads operation also stumbling due to a global downturn in underlying demand for clothing and footwear.

Coats, wholly owned by GPG, was slapped with a fine for market fixing that was considerably bigger than the sum GPG had originally provided for in its accounts. GPG said the provision held for the fine was based on judgments reached after taking external advice.

In his statement to shareholders GPG chairman Rob Campbell said proceeds from asset sales including disposals from its international equities portfolio hit £168 million for the year to August.

It made a profit of £37 million on asset sales, up from £35 million a year earlier. Total proceeds from asset sales since January 2011 now stand at £310 million. Group revenue for the first half fell by £66 million, or 11 per cent, to £533 million.

Mr Campbell said during the first half the company had focused on strengthening its Coats subsidiary for it to be the core of GPG by the end of the financial year, selling investments that had no long term value and setting out a clear plan for its legacy pension schemes linked to its operations.

Coats trading performance in the first half was behind plan and combined with adverse movements in exchange rates. The business saw revenue drop 5 per cent to $US819.3 million to record a first-half loss of $US109.4 million against a profit last year of $US36.9 million in the first half.

At the end of the first half GPG’s investment portfolio was worth £363 million, mostly consisting stakes in listed Australian companies. GPG did not declare a first-half dividend.

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

Goode’s exit fans Transfield takeover talk

Investors dump Transfield
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The decision by Transfield Services to put its non-executive director Graham Hunt into the role as acting chief executive makes for an interesting new phase for the company with speculation swirling that it could spark takeover activity.

The news of the current CEO Peter Goode’s sudden resignation on the same day it released its results – which were in line with expectations – took the market by surprise.

Within a few hours of trade investors had wiped almost 7 per cent off the share price. It follows news that the major shareholders in Transfield, the Belgiorno-Nettis family, which own 10.5 per cent of stock and have two brothers on the board, would step down and cut their seats from two to one.

This development has prompted at least one investor to question whether the family is about to reduce its stake in the company, which would result in an overhang of stock in the market.

In the past year, the company’s shares have fallen from $2.40 to $1.92, despite a buyback to help bolster the price.

Nervousness

The negative reaction to Goode’s announced departure speaks volumes about the nervousness of shareholders in a company that has had a string of downgrades.

When such a company then announces a changing of the guard that they had not seen coming, imaginations naturally run wild.

In Goode’s case his decision to leave came after being offered an equity partnership in British private equity group Arle – a company he has had an eight-year association with.

Goode will stay on until the end of September then take on a consulting role at Transfield.

The decision to appoint Hunt in the interim is not the first time a director has moved from non-executive duties to become the chief executive. Other examples include Foster’s and Lion Nathan.

Goode has done a number of positive things at Transfield, such as getting out of some assets that it overpaid for years earlier, and moving deeper into mining services. However, he also bought a business, Easternwell, that the market believed was over-priced and is taking too long to deliver a return.

The acquisition also needs to be fully integrated, something Transfield has struggled to do.

In the latest results Easternwell generated an EBITDA of $77 million, and forecast it would increase to $90 million to $102 million in 2013.

It issued the proviso “dependent on the strength of the mining sector.” With so much debate about whether the boom is over, this comment did not go down well by investors.

Lowered guidance

The group reported a net profit of $85 million and pre-amortisation earnings of $106 million, which met its April guidance. That goal, though, had been downgraded from its previous guidance because of bad weather and a $16 million provision for a legacy construction contract.

Whether the boom has ended or not, oil and gas construction remains at record highs, and Transfield has won some good contracts.

And in terms of the full integration at Easternwell, it is here that Hunt is well placed.

Hunt has a strong background in the mining sector, having spent 34 years at BHP in various roles, including president of its iron ore business, president of its uranium division, and president of its aluminium unit.

This choice, acting as it is, has prompted speculation that the company will continue to move into mining services, particularly as it appointed a headhunter last week to secure a North American business director for its oil-field services business in the US.

Hunt left BHP in 2009 and turned up at Lihir Gold as managing director, until it was swallowed up by Newcrest mining in late 2010. The merger resulted in shareholders getting a 50 per cent premium on the price at which he joined.

Whether Hunt’s tenure at Transfield becomes notable for takeover activity – whether as prey or predator – remains to be seen.

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

Europe carbon links potentially a boon for local traders

The government’s decision to link Australia’s future carbon price with Europe’s could be a boon for carbon-trading services in Australia, particularly as the market for the nascent commodity expands in the Asia-Pacific region.
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The connection to Europe’s established emissions pricing market will break down barriers between the two regions. Australian businesses competing in such a market will have an advantage as more Asian nations begin pricing greenhouse-gas emissions, industry representatives said.

The government’s move to hitch Australia’s future carbon price to the world’s biggest emissions trading market came as it decided to ditch its previous plan to set a minimum $15 price per tonne of carbon dioxide emitted once the fixed rate – currently at $23 a tonne – ends in 2015. The carbon tax kicked in on July 1 with the aim of prodding the biggest emitters to reduce emissions of the gas which is contributing to warming global temperatures.

Andrew Grant, managing director of CO2 Group, said the effort to connect emission trading links between Australia and Europe by 2018 “the most profound” aspect of yesterday’s announcement.

“If schemes aren’t linked, we can’t trade internationally so this is so much more beneficial,” Mr Graham said.

Regional push

The change will also give an edge to Australian clean energy firms in Southeast Asia, a region where Europe had dominated until the financial crisis had forced them to scale back their efforts, he said.

Australia had been “a Johnny-come-lately” into that region, but now that it was effectively in the same market, more business could flow, said Mr Grant.

CO2 Group, which provides carbon advisory and other related services, already has business in Singapore and New Zealand. Additional international links give the group an “ability to optimise our assets,” said Mr Grant.

Clean Energy Council deputy chief executive Kane Thornton said short-term price fluctuation around carbon pricing will give way to longer term consistency as Europe’s market is opened up.

“Even though removing the carbon price floor potentially opens us to greater volatility in the market, the link to a larger market covering some 530 million people will help to protect our emissions trading scheme from sudden changes in the price of carbon,” said Mr Thornton.

He sees a potential inflow of $20 billion in investment in low- or carbon-free energy projects that could generate 30,000 jobs over the next decade as a result of the Renewable Energy Target (RET).

Political risk

The chief risk for the renewable energy sector, he believes, is any watering down of the 20 per cent cut in carbon emissions to be achieved by 2020 through the government’s RET review.

“Any perceived benefits from tinkering with the scheme would be undermined by the signals that it sends to investors,” said Mr Thornton. The review concludes at the end of the year.

“We still have the political risk around government and a drastic change of policy,” he said.

Many large companies in Australia want an established market for their carbon exposure said Rob Fowler, who represents the International Emissions Trading Association in Australia and New Zealand.

Links with Europe will expand options for Australian companies to hedge their carbon pricing positions, Mr Fowler said. Further, it will expand opportunities for Australian carbon trading and carbon-offset businesses.

“If Australia can establish and maintain a European link and start to create relationships around carbon that reflect our trade relationships in Asia Pacific, we act as a real interesting pivot in the international carbon environment,” he said.

“Australia as a service provider in these sorts of professional areas has a good history,” said Mr Fowler. “It’s likely we’re going to create a useful financial services industry around that.”

Mr Fowler said Australia also benefited from having a well-regulated financial sector in the eyes of the global investors.

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