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Daily Archives: June 11th, 2009

ELIZABETH KNIGHT
June 11, 2009 – 11:57AM
The Chinese cannot be accused of being slow to learn their lessons.

Minmetals would have watched very closely the unfolding disaster that fellow Chinese-owned Chinalco suffered last week at the hands of the board of Rio Tinto.

Chinalco had a once in a lifetime opportunity to get its hands on some unparalleled resource assets in Australia.

It was in the box seat to double its stake in Rio Tinto and take direct stakes in highly sought after assets but it blew it. It got greedy.

Had it delivered a drop dead price on day one the outcome could have been very different.

Minmetals last night and at the 11th hour increased its offer for the OZ Minerals assets it is able to buy, by 15 per cent to $US1.386 billion ($1.75 billion).

The sale of these assets has been one of the most contested deals in recent corporate history.

Macquarie Bank was the primary rival to Minmetals – the Australian bank’s plan involved a recapitalisation for which it would receive some hefty underwriting fees.

But in the end Macquarie’s deal was too risky – given that it would need to provide bridging finance until an issue had been undertaken.

Only a very brave – or foolhardy – organisation would extend finance to an overgeared company like Oz Minerals whose existing bankers are already holding a gun to its head.

Going into this morning’s OZ Mineral shareholder meeting to approve the Minmetals the board made it clear that the banks had cocked the trigger and were ready to squeeze in the event that investors voted against the sale of assets to Minmetals.

It could be argued that on this basis – and given the proxies received indicated that it would be approved – that Minmetals didn’t need to raise the offer.

But there is nothing like certainty – even if it comes at a price.

Lobbing a better offer – and one that sits inside the independent experts range of values – is probably cheap insurance.

eknight@smh.com.au

Phillip Coorey
June 11, 2009
EVEN if unions succeed in changing Labor policy to abolish the building industry watchdog, the Government will not adopt the change, Kevin Rudd says.

Refusing to take a backward step before Labor’s national policy conference in July, Mr Rudd said the Government would stick to its policy, regardless of what happened at the conference.

Unions are hostile about there being a separate set of laws for building workers. The Howard government established the Australian Building and Construction Commission, which has strong powers of coercion to investigate militant behaviour on building sites.

Labor promised to replace the ABCC by January 2010 with a new organisation. It is yet to decide whether the new body will have the same powers as the ABCC but is hinting they will be similar.

The unions believe there should be no such body at all.

But Mr Rudd said the pre-election commitment to establish a new body was explicit. “We did not say at the time that we would be abolishing the function altogether,” he said.

A senior Government figure said there was exasperation at the national secretary of the Australian Workers’ Union, Paul Howes, for backing the push against the ABCC.

The Opposition workplace relations spokesman, Michael Keenan, said the whole exercise was a charade. “If Labor was serious about ensuring law and order is maintained in the building and construction sector, Kevin Rudd would retain the ABCC,” he said.

Kirsty Needham Workplace Reporter
June 11, 2009

THE Rees Government is resisting ceding industrial relations powers to the Federal Government.

It is seeking assurances of a role for NSW Industrial Relations Commission members and support for small business in a national regulatory system.

On the eve of a meeting between state ministers and the Deputy Prime Minister, Julia Gillard, in Sydney today, the NSW Attorney-General, John Hatzistergos, said a decision on whether to join the national industrial relations system affected 200,000 small businesses and their employees.

“The decision to refer is not one that ought to be taken lightly,” he said.

“NSW is looking to ensure that there are adequate support services in place for small businesses and small business employees”. The state also wanted “to secure an ongoing role for members of the Industrial Relations Commission”.

The director of the University of NSW’s Centre of Public Law, George Williams, said NSW should not hand “a blank cheque” to the Rudd Government.

South Australia and Tasmania this week joined Victoria in handing over industrial relations powers for the private sector to the Federal Government, while retaining coverage of public service workers.

Ms Gillard said yesterday that a national workplace relations system for the private sector was “vital” and “one of the key productivity reforms the Rudd Government is pursuing”.

However, Mr Hatzistergos said NSW would not make any decision until all fair work legislation was passed in the Senate – an associated bill would be debated in the next fortnight.

A report by Mr Williams for the NSW Government recommended the IRC be wrapped into the new national regulator, Fair Work Australia. Referring state powers “could lead to a sizeable loss of work and restructuring of [the IRC] if it were to only deal with public sector employees”, he said.

The secretary of Unions NSW, Mark Lennon, said NSW had traditionally had a strong IR jurisdiction and there was concern that community workers would be more vulnerable under a national system.

Unions also wanted to ensure local government workers and associated entities remained in the NSW system.

The NSW Business Chamber said it supported a “national system for a national economy” and wanted clarity for sole traders and partnerships.

Print Patricia Karvelas, Political correspondent | June 10, 2009
Article from: The Australian

TRADE unions are demanding that Julia Gillard step in and ensure Fair Work Australia reviews wage deals that impose a non-union collective agreement and that have been deliberately rushed in before Labor’s workplace laws take effect next month.

The call comes amid union complaints that several employers across the country are asking workers to sign up to new deals before the July 1 changes.

CFMEU secretary John Sutton said Ms Gillard should ask Fair Work Australia to investigate the cases. “We believe that anything that is rushed through at the last minute warrants examination. If there’s no deficiencies, then the employer would have nothing to hide from,” he said.

“We are seeing across all our sectors employers that are rushing forward with hasty agreements and wanting to get them executed before the July 1 cut-off.

“Inevitably, things get through the net and Julia Gillard said Labor’s about restoring a strong safety net, so I’ve got no doubt that some employers will be standing over their workers in the next couple of weeks with threats and promises and inducements and I think it makes a lot of sense for her to ask the commission to examine those documents.”

Mr Sutton said there had been several examples in the mining industry, including one involving the labour hire company ResCo, which last month had a hasty agreement rejected.

ACTU secretary Jeff Lawrence said the rush to last-minute deals was of major concern.

“We are concerned that unscrupulous employers are using the final days of Work Choices to put their workforce on to contracts that will lock them into inferior pay and conditions for up to five years,” he said.

In a submission to the government, the ACTU said it was concerned that in the period to June 30, unscrupulous employers “will rush to make employee collective agreements … with their low-paid employees in order to ensure they cannot ever be subject to a special low-paid bargaining determination. In order to deal with this problem, we submit that FWA should have a discretion to ignore the effect of agreements initiated by employers with the intention of avoiding the low-paid bargaining stream.”

But a spokeswoman for Ms Gillard said agreements could no longer strip away basic terms and conditions without compensation. “If any person feels that their employer is not acting in compliance with their obligations under the legislation, for example, by forcing employees to vote without having proper access to the proposed agreement, then they should contact the Workplace Ombudsman,” she said.

http://www.theaustralian.news.com.au/business/story/0,,25613588-36418,00.html

Reko Rennie
June 11, 2009 – 11:45AM

Australian aircraft engineers have blasted Jetstar and Qantas for using cheap maintenance facilities overseas after a Jetstar plane’s cockpit caught fire and forced an emergency landing in Guam early this morning.

The engineers union has disputed claims by Jetstar management that the aircraft had been maintained in Australia, saying its last major maintenance check occurred in the Philippines.

The Jetstar A330-200 aircraft – flight JQ 20 – left Osaka’s Kansai International Airport for the Gold Coast just before 11pm last night (AEST) carrying 186 adult passengers, four infants and 13 crew including 9 cabin crew and 4 pilots.

Jetstar in forced landing
A cockpit fire has forced an international Jetstar flight carrying 203 people into an emergency landing on the Pacific island of Guam.
Jetstar chief executive officer Bruce Buchanan said a computer error message identified a fault with a heating element in a cockpit window that caused a small fire.

The pilot managed to extinguish the fire and send out a mayday call before conducting an emergency landing at Guam airport.

The Australian Licenced Aircraft Engineers Association is angry about comments by Jetstar management that link the latest cockpit fire incident to Qantas engineering within Australia.

Jetstar spokesman Simon Westaway stood by his statements and told The Age the less than two-year old plane was checked in Australia only last month.

“The last major check on that aircraft is what’s called an A-check was undertaken in May of this year and it was undertaken by Qantas engineering in Australia,” Mr Westaway said.

But Steve Purvinas, the engineers association’s federal secretary, said the Jetstar A330 last underwent major maintenance in Manila in December 2008.

He said this was the second emergency landing forced by cockpit smoke in 18 months.

“Qantas group A330 aircraft have never undergone major maintenance in Australia,” Mr Purvinas said.

“This is the second cockpit smoke emergency landing on a Qantas group aircraft in 18 months and in both cases the aircraft had undertaken maintenance in the cheaper overseas facilities.

“The previous incident occurred in February 2008 on a Boeing 747 and resulted in an emergency landing in Sydney.”

He said Qantas and its subsidiary Jetstar were lucky the two cockpit incidents occurred in an area of the aircraft that was easily identifiable and accessible.

“Qantas are blessed that these incidents didn’t occur in cargo holds or electronic equipment bays,” he said.

“Qantas need to come clean about the high level of overseas maintenance on Australian aircraft or better still, bring the full workload back to Australia where aircraft maintenance over a long period of time has proved to be second to none.”

The Australian Transport Safety Bureau has sent investigators to Guam to examine the aircraft, while the US-based National Transportation Safety Board and Qantas would also investigate the incident, Mr Buchanan said this morning.

“It’s no human error.”

Mr Buchanan said the aircraft went into service in August 2007 and the window was one originally fitted by the manufacturer.

Passengers – most of whom were Japanese nationals except for 44 Australians – were unaware of the incident and there was no smoke or fire in the cabin. No one was injured.

“He’s (the pilot) called a mayday and diverted into Guam and all passengers and crew are safe,” Mr Buchanan said.

“In fact most of the passengers were unaware until they got onto the ground and the captain informed them of what actually happened.”

The flight landed safely without incident at Guam International Airport at 2.20am (AEST).

Mr Buchanan commended the crew’s quick actions in putting the fire out. He said the chief pilot had 14 years’ experience flying with Qantas.

“I’d just really like to commend the pilots … they’ve reacted swiftly and in a very professional manner,” Mr Buchanan said.

Jetstar will send a plane from Sydney at 11am today to collect the passengers and crew, who are being accommodated in hotels in Guam. The plane is then due to depart from Guam at 6pm to fly back to Brisbane.

The island of Guam is a US territory, located in the Pacific Ocean about 2100 kilometres east of the Philippines.

The aircraft is the same model as the Air France flight which disappeared over the Atlantic Ocean earlier this month.

A team of ATSB investigators, including operations, electrical engineer and licensed aircraft maintenance engineers, will travel to Guam this morning to commence the investigation.

A passenger on board the flight, Adam Power, told 3AW he could smell something for two hours before the plane descended.

“I think their main aim was to just keep us calm. There were no bumps or anything like that, just a heavy smell. I wouldn’t say it was a fire smell, it was like someone was cooking or something like that. A different sort of smoky smell … it was a weird smell.”

He said they were told there were “technical difficulties” while they were in the air, with the passengers being told there was a fire after they had landed.

He said that the jet landed about half an hour after the announcement, but the smell was present for about two hours before that.

Mr Power, a musician, said the worst thing was he had to cancel a gig schedule for tonight in Brisbane. “I’ve got to call the manager of that bar. Hopefully he’ll believe me.”

Follow Traveller on Twitter.

http://www.theage.com.au/travel/travel-news/cockpit-fire-forces-jetstar-emergency-landing-in-guam-20090611-c3vo.html

June 11, 2009 – 3:45PM

More than 17,000 jobs could be created in the geothermal energy industry by 2050, a new report says.

The geothermal industry, which involves extracting heat stored in the earth to generate power, is growing in Australia with almost 400 tenements for projects and around $1.5 billion in projects underway.

WWF and the Australian Geothermal Energy Association (AGEA) on Thursday released a report, Power to Change: Australia’s Geothermal Future.

Paul Toni from WWF says the report is the first in a series looking into the potential of geothermal energy.

“The energy stored in hot rocks near the earth’s surface in Australia is a thousand-fold what we use each and every year,” Mr Toni said.

“We must reshape our economy and our energy sector if we are serious about tackling climate change.

“Capable of running 24 hours a day, seven days a week, geothermal energy is one of the vital clean energy resources needed to make this transformation.”

He said the Cooper Basin, which overlaps the borders of Queensland, NSW and South Australia, holds enormous potential for geothermal electricity.

AGEA chief executive Susan Jeanes says Australia has the chance to be a world leader in geothermal technology.

“This industry provides opportunities for workers to move from industries like coal, oil and gas, into clean energy jobs as much of the technology and expertise is transferable,” Ms Jeanes said.

Jacob Saulwick
June 11, 2009

THE average first-home loan in NSW has risen more than $50,000 in just over a year, climbing to $300,000 on the back of low interest rates and generous government grants.

The success of the boosted first-home owner grant in stimulating the market has drawn applause from the Government, but experts warned of the potential danger of a housing bubble as young couples take on loans they will struggle to maintain.

First-home buyers are taking out a record 28 per cent of the value of all home loans, Bureau of Statistics figures released yesterday showed.

But the surge in borrowing runs the risk of overinflating the lower end of the housing market. “We have just got to make sure that we don’t get a recovery on the back of over-extended young couples,” said Julian Disney, an affordable housing expert from the University of NSW.

The Reserve Bank Governor, Glenn Stevens, cited similar concerns last week, saying it would be counterproductive if low interest rates encouraged marginal borrowers to take on large debts. Yesterday’s release came alongside a rise in consumer confidence, attributed to the resilience of the economy amid global recession.

When the Government doubled the first-home owner grant in October as part of its response to the financial crisis, the average loan to new buyers was lower than that taken out by non-first-home buyers.

Since then, the average loan for first-home buyers across the country has increased $50,000 to $283,000 – about $25,000 more than loans to buyers who already have a foothold in the market.

For NSW home buyers, the average first mortgage is $299,000, against $276,000 for existing home owners. Before October, there had been little increase in the average first mortgage for about four years.

Asked if the the market had been inflated by grants, the Treasurer, Wayne Swan, said yesterday’s figures showed the benefits of the Government’s economic stimulus packages.

“It has played a very important role in supporting employment in the Australian housing and construction industry.”

Professor Disney, the director of the social justice project at the University of NSW, supported the supersized grant as an economic emergency measure. But he said the Government should consider winding back the original $7000 grant to prevent a new housing bubble.

“Every month the risk of inveigling people into a dangerous situation increases,” he said.

Loans to owner-occupiers increased for the seventh consecutive month in April, after falling in each of the eight months before the grant was doubled. Overall, the value of housing finance rose 0.9 per cent in April.

Banks have already responded to a crush of demand from first-home buyers by making it more difficult to get a loan. The big banks are only writing loans up to 90 per cent of the value of the property, and insisting on at least 5 per cent genuine savings for a deposit. Borrowers are complaining of waiting up to a month to get a loan approved from the big banks.

But Mark Haron, the principal at the mortgage broker aggregation group Connective, said the market had quietened in the past couple of weeks.

There remained plenty of enthusiasm among first-home buyers, Mr Haron said, but they were having to spend longer looking for houses because prices kept going up.

In October, the $14,000 grant for existing homes will fall to $10,500, before dropping to $7000 in January. The $21,000 grant for new properties will drop to $14,000 in October, and $7000 next year.

Bill Evans, the chief economist at Westpac, which published the consumer confidence index, called this month’s increase a “truly remarkable result”.

“It is the second largest recorded increase in the index since the survey began in 1974,” said Mr Evans, adding it was likely due to the small increase in economic growth figures released last week.

Unemployment figures released today are expected to show an increase in the jobless rate.

http://business.smh.com.au/business/housing-fears-as-loans-hit-new-high-20090610-c3mh.html?sssdmh=dm16.381331

June 11, 2009 – 3:24PM

Chinese exports plunged sharply in May, posting the seventh straight monthly decline, customs authorities said, highlighting the continued impact of the global economic crisis.

The world’s third-largest economy posted exports worth 88.8 billion US dollars last month, a fall of 26.4 percent from the same month last year, the customs data showed.

Meanwhile, Chinese imports totalled 75.4 billion US dollars, a drop of 25.2 percent, officials said.

The trade surplus in May stood at 13.4 billion US dollars, according to the authorities, who did not provide a percentage change compared with the same month last year.

Despite the steep year-on-year decline, the figures represented an increase month-on-month, with exports up 0.2 percent from April, and imports up 4.4 percent.

China has been severely impacted by the global economic crisis, with traditional markets in North America and Europe taking fewer of its products.

Since the export sector is a big employer in China, the government has been forced to come up with solutions to ward off hard times.

Most startlingly, it unveiled a 580-billion-dollar fiscal package late last year, aimed at lifting the economy mainly through investment in large infrastructure projects.

http://news.theage.com.au/breaking-news-world/china-imports-exports-sharply-down-in-may-govt-20090611-c4kd.html

Third state signs on for national IR laws

Ewin Hannan | June 10, 2009

Article from: The Australian

TASMANIA has joined South Australia and Victoria in handing over its industrial relations powers to the commonwealth but NSW and Queensland remain non-committal about embracing uniform national workplace laws.

Ahead of a meeting between Julia Gillard and state ministers tomorrow, the Tasmanian cabinet yesterday gave in-principle approval for the state to refer the balance of its private sector industrial relations powers to the Rudd government.

Tasmania’s Workplace Relations Minister, Lisa Singh, said the cabinet decision was a vote of confidence in federal Labor’s Fair Work Act.

“The Howard government, under Work Choices, took all constitutional corporations into the federal industrial relations system,” she said. “However, sole traders and partnerships continued to be covered by state-and territory-based jurisdictions, causing confusion for workers and employers. These changes remedy that.”

The referral applies only to the private sector, and the Tasmanian public service will not be affected by the decision.

“For workers, access to modern awards means simpler, nationally consistent wages, loadings and penalty payments that will be revised on a regular basis,” Ms Singh said.

“For employers, participation in the national system will also slash red tape as well as simplifying and streamlining compliance measures.”

The South Australian government earlier announced it had joined Victoria in referring its industrial relations powers to the commonwealth. Queensland and NSW are yet to declare their positions, while Western Australia appears unlikely to refer its powers, having set up its own review of state workplace laws.

Queensland Industrial Relations Minister Cameron Dick said a national industrial relations system would be a key agenda item at tomorrow’s meeting.

“The commonwealth government is pursuing a clear national agenda, and each jurisdiction must consider what model will deliver the fairest and most efficient system for both workers and businesses in their jurisdiction,” he said. “Queensland is committed to working co-operatively with the federal government, within the context of the Fair Work legislation passed by the federal parliament, to ensure that we achieve the best outcome possible for Queensland workers and the Queensland community as a whole.”

A spokesman for NSW Industrial Relations Minister John Hatzistergos said the state government would not finalise its position until all of the Fair Work legislation had been passed by the Senate.

http://www.theaustralian.news.com.au/story/0,,25613591-5013404,00.html

Ewin Hannan | June 10, 2009
Article from: The Australian

INFLUENTIAL union leader Joe de Bruyn has declared Labor does not have a “mandate” to scrap the coercive powers of John Howard’s building industry watchdog in its first term, contradicting construction unions, which are leading a national campaign to have the powers abolished.

While the ACTU has declared the abolition of the powers its No1 issue, Mr de Bruyn said the Rudd government did not promise before the 2007 election to scrap them. The national secretary of the right-wing Shop Distributive and Allied Employees Association also refused to commit to supporting a motion to next month’s ALP national conference demanding the powers be scrapped immediately.

“Our position is very clear: there should be one law for all workers, but the government doesn’t have a mandate for that in its current term of office because it didn’t say that to the people of Australia when it went to the polls,” Mr de Bruyn told The Australian.

He said Labor went into the last election promising to replace the Australian Building and Construction Commission with a new body within Fair Work Australia in 2010. “It was elected and therefore that is its mandate, and I would expect that it is going to continue to say that,” he said.

“I think, long term, the government should do something different but I don’t expect they will change their view in the current term of office. Everything that was in its industrial relations platform is part of its mandate. There can be no argument about that.”

Mr de Bruyn’s comments will be welcomed by the Rudd government, which has spent the past week rolling out a succession of cabinet ministers, including Julia Gillard and former ACTU presidents Martin Ferguson and Simon Crean, to reject the union push to weaken the ABCC.

As Kevin Rudd stood firm on the issue yesterday, Labor strategists are also likely to use Mr de Bruyn’s comments to try to undermine the union campaign to confront Labor’s political wing at the ALP conference.

Responding to Mr de Bruyn last night, ACTU president Sharan Burrow urged the government to negotiate with unions to settle the dispute over the ABCC.

“Unions acknowledge the new Fair Work laws starting on July 1 are a major step forward for workers and we welcome the government’s other achievements for working families in relation to maternity leave and safeguarding jobs in tough economic times,” she said.

“However, the ACTU believes that the laws covering construction workers are unfair and have no place in Australia’s industrial relations system. We urge the government to sit down and discuss a resolution to the issue.”

Urging unions and cabinet ministers to stop their public brawling and “take a cold shower”, Mr de Bruyn drew a distinction between the party platform agreed at the last ALP national conference and the promises taken by the then opposition to voters at the subsequent election.

“What Labor says in its platform, adopted at its last national conference, is what it was aspiring to do,” he said. “What the Labor government has a mandate to do from the people of Australia is what it said in its election promises, and the two areas are a little bit different.”

He said the report by the Wilcox inquiry, which said the ABCC’s coercive powers should be retained for five years, “is one of the factors that has to be taken into account and cannot be ignored”. Building unions have criticised the Wilcox findings.

“I would expect that the government will seek to implement the Wilcox recommendations, but the unions will say, ‘Yes, but we want to go further’, and I think that is what the discussions need to be about,” Mr de Bruyn said.

“The government at the moment doesn’t have a mandate from the people to go further, but the unions do want it to go further and I think that’s the issue that needs discussion.”

The Prime Minister yesterday reaffirmed Labor’s position on the ABCC, and stared down Australian Workers Union national secretary Paul Howes over claims the government was “sending in the stormtroopers” to quash debate between the party’s political and industrial wings ahead of next month’s ALP national conference.

“I meant what I said prior to the last election and I said about the future of the ABCC that it would continue and that there would be a replacement body by 2010,” Mr Rudd told Sky News.

“Furthermore on the substance of it, and you’d have to be Blind Freddy not to conclude that there have been historical problems, most particularly in the Victoria and West Australian divisions of the construction division of the CFMEU (Construction Forestry Mining and Energy Union).

“There will always be limits to how far we can responsibly go, and we have made that very plain to our friends in the trade union movement.”

Dave Noonan, the national secretary of the CFMEU’s construction division, disagreed with Mr de Bruyn.

“I would say that there is absolutely a mandate,” he said.

“I think it was absolutely clear that Labor said they were going to abolish the ABCC. We had a difference with them about the timing.

“They said they would keep it until 2010 but nowhere did they tell the Australian people that they intend to maintain coercive powers. And Forward with Fairness, which was the policy they took to the Australian people, says that Labor doesn’t agree with separate (laws) for workers.”

Mr de Bruyn said cabinet ministers and union leaders should stop “slanging off at each other in the media”.

“I do think that all of us should go and have a cold shower,” he said.

http://www.theaustralian.news.com.au/story/0,25197,25613561-601,00.html