RBA new appointees for rates, AI takes hold in corporates, major oil spill off Russia

Published Dec 16, 2024, 5:00 PM

Tuesday 17 December 2024

Federal Treasurer Jim Chalmers announces a major shake-up for the Reserve Bank, appointing new members to the interest rate setting board. 

And more, including:

  • AI takes hold in corporate Australia

  • A major oil spill off the coast of Russia

  • Is bauxite the new iron ore? 

  • Heatwave conditions down the east coast

Plus don’t miss the latest episode of How Do They Afford That? - summer side hustles for adults and kids. Get the episode from APPLE, SPOTIFY, or anywhere you listen to podcasts.

Today on Fear and Greed, Federal Treasurer Jim Chalmers announces a major shakeup for the Reserve Bank, appointing new members to the Interest Rates Setting Board, AI takes hold in Corporate Australia and a major oil spill off the coast of Russia, plus is Bauk site the new iron ore and heat wave conditions down the East Coast. Welcome to Fear and Greed, daily business news for people who make their own decisions. It is Tuesday, the seventeenth of December twenty twenty four. I'm Michael Thompson and good morning Sean Aylmer.

Good morning Michael Sewan.

The main story this morning. Federal Treasurer Jim Chalmers has appointed an academic and a former bank boss to the new Reserve Bank Interest Rates Setting Committee, while two long standing board members will move off the committee. Australian National University professor Renee Frye mckibbon, who was an author of last year's independent review into the Reserve Bank.

Got a gig. She's got a very pressive resume, having been at the Crawford School of Public Policies at a and U for twenty years, as well as having had stints at the European Central Bank, the International Monetary Fund, the Bank of England, the Reserve Bank of New Zealand, and the Atlanta Fed. She's married to Warwick mckibbon, who's a former Reserve Bank staffer. He also sat on the board for a while and nowadays is probably better known as an occasional critic of the Central Bank. Anyway, congratulations to Renee Fry McKibben. Another person to get the night is former Bank of Bendigo and Adelaide boss Marnie Baker. A friend of the show we've had her on. She spent thirty five years with the Bank of Bendigo, including six as chief executive officer. What I like about Marne's appointment she brings real life experience around interest rates and what it means for customers. Two existing Reserve Bank board members, Telstra director Elina Rubin and businesswoman Carol Schwartz, will shift to a new separate governance committee that will oversee the internal operations of the Central Bank, but not set interest rates. Are reckoning be a bit dirty about that, Michael, Thank you reckon, Like you just shoft off the interest rates setting board looking after governance.

Off the rock Star board.

Yeah.

Really, that's what the interesting like. Those who've got to admit though, those two appointees coming on, Marnie Baker and Renee Fry mckibbon, they are very very well credentialed for those jobs.

Yeah. Absolutely, absolutely. There are four new faces on the governance boards. I remember the board's being split into two, one that sets interest rates, the other that looks after governance. In that second, the Governance Board, we've got four new people. Jennifer Westerncott used to be the Business Council of Australia CEO. David thirty, he used to run Telstra, among other things, Danny Gilbert, corporate lawyer Gilbert and Tobin we know that one, and Board Director Swatty Dave. The Governance Board will oversee human resources, internal finances, risk management, technology, corporate strategy and the renovation of this sbeciist riddled Martin place building. The interest rates setting board looks at interest rates. I know which one I'd rather be too, perfectly honest, Michael, Yeah.

Rather overseeing the renovation. That's an important job, and it's an important job, but but it's probably not going to get the headlines in the same way that being on the interest rates setting board is going to right.

The new structure kicks off in March, after the first meeting of the year in February.

Does it matter, Sean, Like, does all of this matter? I don't mean to be so skeptical about everything, but does it?

You are a cynic. I think Steven could Cools might be on your side. I don't think he's sure that's going to matter too much. I totally disagree. I actually think it really does matter.

Now.

We don't know what Renee Frye, mckibbon or Marney Baker think about interest rates. In fact, we don't really know what the other non Reserve Bank Board members still on the rate committee, Stephen Kennedy from Treasury, Ian Harper, an economist Alison Watkins, the company director Carol Houston saying, but Ian Ross, we don't really know what they think about rates, but under this new structure they definitely will get much more of a say. It just won't be the Reserve Bank bureaucrats presenting a bunch of slides saying this is what we need to do on rates now. I'm probably being a bit mean to the board members at the moment, but there's no doubt the Reserve Bank senior staff Michelle Bullock and her team have the biggest vote. The new structure and the spotlight that's been on the Reserve Bank will force individuals to have a view. Money Baker will definitely have a view. She's run a bank for six years, but she's in banking for thirty five years. Rene Fry mckibbon, she's the one that came up with the idea saying, hey, we need more outsiders inside the bank giving their view. So I actually think it really matters.

So I suppose better for accountability, better for real world insights into the impact of these decisions and the necessity of these decisions as well. So overall, it kind of probably does tick a fair few boxes.

Yeah, I think so, I think.

So, Okay, all right, let's take a look at local markets. How did things go? Yesterday?

The S and PASX two hundred close down a little over half percent to eighty two hundred and fifty points A. Local miners fell further after the Chinese government failed to deliver a decent stimulus package over the weekend. Tech stocks also suffered after Nasdak dropped over the weekend, while property groups were lower. Generally, banks were high, as were the retailers. Not a great day too for Digiko, listed on Friday, fell five percent that day dropped another five percent. Yesterday. Shares Inventi had dropped after executives at the infrastructure giant were named in a case over alleged price fixing brought by the hble C. Last week. The shares a down eighteen percent in the past five days. Another worth of mentioned corporate regulator has formally opened an investigation into oneline retailer Cogan after two of its most senior executives, including founder Rustling Cogan, struck a profitable options deal with the board, enriching them collectively by more than seventeen million dollars.

What's going on in international market? It's big week.

Well, mostly it's about the Federal Reserve this week with an interest rate setting meeting into straight setting meeting. I don't think that's proper English, Michael. They're going to meet and set interest rates? How about that?

Yes, it's slightly more words, the problem a little bit clunkier, but you know, let's roll with it.

The big economic news globally yesterday we're figures out of China retail sales were worse than forecast last month. This is we care about that because the Chinese consumer is a very powerful driver of global economic growth and they don't have their foot on the accelerator at the moment. There was also a drop in house prices in China, so generally the world's second largest nation is looking just a bit ordinary. That certainly hasn't helped Iron all prices which are lower, Hence the big miners, or that contributed to the big miners falling yesterday, the positive news, maybe it's positive or not. Maybe it's positive. Bitcoin hit the new record high yesterday of above one hundred and six thousand US dollars at a unit. Other cryptos benefited. The Gaussie dollar is trading just under sixty four US sets.

Now, Sean, I'm a little bit wary of this next story. You want to talk about bux Site. And the reason I'm wary of it is because you and I've been chatting about this off air, and you are You've taken to calling baux Site sexy. It is absolutely sick. Do you know what it is?

Even?

Well? Funny, funny story, Sean, baux Site has been introduced to a whole new generation because it is referenced in the TV show Bluey Is that right? Just randomly on one episode, baux site is mentioned several times. There's really no explanation as to what it is or why it's important or anything. But suddenly all of these preschoolers around the country and around the world in fact, are hearing the word baux site. It might be the first mineral they actually hear.

Wow, that's very good. It's a raw material for producing aluminum, so it's a very important natural product. Just occurs because of weathering. It's kind of a white degrade, a reddish orange brown crust you see sort of on rocks and that sometimes sometimes you break off a rock and there's like an orange.

Tinge and you crack off. Oh, that's a nice box site. That's where the creepiness starts to come into this where slinking box side is sexy. Please go on.

Did you know that Michael Australia is the world's largest book site producer.

I did not know that.

Now we're getting interested the benchmark price known as Guinea grade box site. That's because Guinea in Africa is the also one of the largest producers. Guinea grade box site it's hit one hundred and twelve US dollars a ton. Well, why should we get excited about that? Because it's at a record high and it's like double what was not long ago. It's also more expensive than iron ore. Suddenly, book site is sexy more so than iron or and Australia is the biggest exporter, well, no, biggest producer of box site. The main reason there's a supply crunch in Africa and Guinea is being crunched in that and there's a big jump in demand from China. Why is that? Well, I'm so pleased to ask me, Michael.

Do you just want me to step out of the studio say nothing? It feels like you are just on a roll here Axe. It's exciting element.

There's a bit of an aluminium verse steel thing going on at the moment.

There's a weird seoran box site thing going on at the moment, but please go on.

Steel obviously is really important in kind of big construction. That's what that's about, iron ore being a raw material for that. Aluminium is used in smaller products like solar panels, electric vehicles, batteries. Now, part of the reason for the price jump is that people think aluminium will do a lot better than steel, or the demand for aluminium will be greater on the demand for steel over the next year, at least as it pertains to China, which of course is the biggest, has a Biggs demand for both iron or and box heart. So what we're getting is this steal the aluminium thing. Aluminium seems to be winning, at least in the eyes of investors. Hence box Site is beating iron Or. Look, I'm blowing this up out of all proportion. Don't get me wrong, I understand that. But isn't this exciting and really exciting if you're a Rio Tinto investor because it is the country's biggest exporter of box heart. It may not be the world's biggest exporter, but it's very close to it.

You're done, Yes, yes, yes, let's get on with the show. Sorry off now, No, this is great. Look. If ever, if anyone ever encounters a baux Site trivia question at a Wednesday night pub trivia, I've got Sean Almer to thank for that. Thank you Sean for taking us through that quick mention of the interview that we have coming up after the show. We've still got plenty to go, so don't go anywhere yet. But coming up after the show, Dr David Stamler, who is the chief executive of ALTI Charity of Pharmaceuticals.

Fascinating company. They have a drug or an oral treatment which they hope we'll be able to treat multiple system atrophy. Now it's part of the Parkinson family. They're at stage two trial point. They're getting results out next month. In January, we talked about the whole process they've been through, why they are working on that drug, where they're up to. Really fascinating look into that company.

Yeah, it's coming up after the show. It is a really interesting conversation. Still plenty more to come. We've got some fascinating polls about the likelihood of a minority government next year. We're talking AI in the workplace, Russian oil spills. So much still to get through. Sean will be back in a moment with the rest of the day's business news. Sean. The majority of voters believe Australia will have a minority government after the next election, which is due of course, by the middle of May next year. That's not far away.

So the latest Financial Review Freshwater Strategy poll shows the Coalition ahead on a two party preferred basis fifty one forty nine. The primary vote's unchanged to ALP thirty percent, Coalition forty percent, Greens fourteen percent. It suggests a minority government with Anthony Albanesi in charge, although they actually asked respondents who they thought would run a minority government and they said Peter Dutton. Currently betting markets have Peter Dutton in front. The survey says that in a bunch of areas, Peter Dutton leads Anthony Alberesi. So we're talking about things like understanding the problems facing Australians, can get things done, has a clear vision for Australia. Strong leader shares my values. In fact, Anthony Albanesi was only in front in two one was would be easy to speak to and the second one is in touch with ordinary people.

Mentioned AI earlier in the show, Sean law firm Mintor Ellison says at least eighty percent of its lawyers and partners will have to use artificial intelligence tools in their daily work by March next year. So what three months time?

Mentors will provide three AI tools and give training for them. Firm leaders will have to hit AI metrics. As part of their performance hurdles. Partners and staff report that using co pilot has saved them, on average, about two to five hours per week of work, according to report in the fin Review. Now, not all tasks can be done using AI, there are certainly prescribed functions, but that whole sector professional services sector is embracing AI relatively quickly. Other companies who have reportedly jumped into AI and have seen it leading the pack on that's common off Banks, One, BHPS and other pro Medicus, the imaging group, Sonic Healthcare. There is no doubt AI is filtering through the economy very very quickly.

Yeah. Indeed, Now Treasurer Jim Chalmers Sean, it must be said, has been very very busy, apart from announcing new members for the RBA board, so downgraded the value of mining exports by one hundred billion dollars for this financial year.

That will hit the bottom line of my EFO, which is due for release tomorrow. Do you remember what my EFO stands for? Michael?

Oh? God, I do remember this mid year economic fiscal outlook?

Yeah, beautiful. We'll get all the details on MYIFO tomorrow. But yesterday he said, he, you know, he wasn't pessimistic about the mining sector, but the downgrade was reality of weaker demand out of China. MYFO will also include a downgrading company taxes by about eight point five billion dollars. It should actually include lower than expected outgoings in terms of unemployment benefits. Given the labor markets so strong. Market economists expect a budget deficit this financial year of between twenty five and thirty billion dollars.

I'm still sweating from you putting me on the on the spot, this instant sweat Sean and Victoria Treasurer Tim Pallas is leaving politics after nearly twenty years in Spring Street.

Expert in state politics, but to last twenty years in Victorian politics is a pretty good effort. Pallas said the state's economy is in a strong position, notwithstanding recent data and penny of criticism suggesting the opposite. The longest serving standalone state Treasurer Victoria has had said it's been an honor and privilege to serve the people of Werriby. He's electric staying local. Canberra Airport says Qatar Airlines will restart flights to the ACT next year after ceasing services during the pandemic that's cool.

The East coast Sean is experiencing an extreme heat wave, with temperatures in some locations pushing beyond forty degrees.

Yesterday was one of the hottest December days on records. Parts of Victoria, New South Wales and Queensland were expected to reach the high forties, while the Northern territory faces severe to extreme heat wave conditions for much of the next three days. Alice Springs and the northern territories expected to reach up to forty three degrees. Southwest Queensland's Birdsville forty five degrees. Melbourne expected to hit forty one degrees. That'll be its hottest day since January, hottest December day since twenty nineteen. Some locations in western New South Wales could approach December records temperatures of forty six forty seven degrees. Wil Kenya in the northwest is expected hit forty seven degrees.

That is hot. In international news Sean, a Russian tanker has broken a part during a heavy storm in the Black Sea over the weekend, spilling some of its forty three hundred ton cargo of fuel oil and what could potentially be one of the region's largest environmental disasters in several years.

The carrier came apart about eight klombers from the shore and its prow sank during bad weather in the Kirch Strait, which separates the east coast of the Russian annexed Crimean Peninsula from mainland Russia. At least one of its crew members was killed, according to emergency services. Another carrier with a similar cargo ran a ground after sustaining damage. Shortly afterwards, according to report in The Financial Times, Russian President Vladimir Putin ordered a working group to rescue the ship's crews and deal with the consequences of the spill. Officials told Russian newswire inter Facts that they were investigating a possible error by the crew and storm damage as the reasons for the breaching. The tankers were built in the early nineteen eighties. They're actually designed to be used on rivers. They're r only his based to venture into coastal waters during calm weather, and it wasn't calm weather.

And finally showing, several hundred people and possibly even thousands may have been killed when the most powerful cyclone in nearly a century hit the French Indian Ocean, archipelago of Mayotte.

A senior local French official said there will certainly be hundreds of people killed, maybe thousands. Cyclone Cheeto hit Mayote yesterday with winds of more than two hundred klmeters an hour, damaging housing, government buildings in a hospital. Stronger storm in more than ninety years hit the islands, which are situated three hundred kilometers northwest of Madagascar. Aerial footage shared by the French police show the wreckage of hundreds of makeshift houses strewn across the hills of one of Mayotte's islands. According to Reuters, it's a really interesting island. In the last few decades, thousands of people have attempted to make the crossing from Comos off the coast of East Africa to Mayotte, which has a much higher standard of living and access to the French welfare system. It is part of France. It's estimated that over one hundred thousand undocumented migrants live in Mayotte, to saying to be very difficult to work at. How many were killed?

Sean Up next is the Fear and Greed Daily Interview. Your guest today, doctor David Stanler, chief executive of Alterity pharmaceuticals, a great conversation well worth a listen. They're a good supporter of Fear and Greed as well. They are coming up next in the Fear and Greed playlist on your podcast platform or at Fearangreed dot com dot au, which is also Sean where you can sign up for the free weekly newsletter which comes out tomorrow. So there's never been a better time than right now to sign up for that one. Thank you very much, Sean.

Thank you, Michael.

It is Tuesday, the seventeenth of December twenty twenty four. Make sure you're following the podcast and please join us online on LinkedIn, Instagram, x TikTok and Facebook. I'm Michael Thompson and that was Fear and Greed. Have a great day.

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