DP World sells $1.5bn Australian stake

DP World, the container terminal operator, is to sell a majority stake in its Australian subsidiary to Citi Infrastructure Investors, a private equity company, for A$1.5bn ($1.5bn).

Dubai-listed DP World announced on Wednesday that it was selling the stake to CII and an unnamed partner described as “a major investor”. The company will continue to operate the container terminals at Brisbane, Sydney, Melbourne, Adelaide and Fremantle under a management contract.

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The company said that it expected regulatory approval by the end of the first quarter next year.

DP World said the proceeds of the sale to CII would go towards reducing net debt as part of a strategy “to improve balance sheet flexibility”.

DP World is one of the healthier divisions of Dubai World, the indebted conglomerate, and was excluded from a round of debt restructuring earlier this year. In November last year the Dubai World shocked global markets when it asked for a moratorium on repaying its debts. It has subsequently secured a $25bn restructuring agreement with creditors.

DP World has the widest geographical spread of any of the world’s leading port groups, with operations in Latin America, Africa, the Middle East and Asia. The capacity of the five Australian ports is in excess of 3.5m 20ft-equivalent units a year, a common industry measure, which the company said constituted roughly half the total Australian container market.

The deal values DP World Australia at A$1.817m, the company said. DP World was advised by Deutsche Bank and Citgroup Global Markets while CII was advised by HSBC and UBS.

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Source http://www.ft.com/cms/s/0/97a6b220-0daa-11e0-8b53-00144feabdc0.html#axzz18pfuM6kn

Rosy export outlook but business glum

A rosy export outlook has failed to lift the spirits of businesses, while new government forecasts highlight the impact on farmers from this month's storms in Queensland and NSW.

The heavy rainfalls and flooding have wiped $1 billion off the value of wheat production for 2010/11, the federal government's commodity forecaster said on Tuesday.

Releasing its quarterly commodities report for the December quarter, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) now predicts wheat production of $5.7 billion in 2010/11 rather than the $6.7 billion forecast in September.

"In addition to expected lower production and export volumes from Western Australia, these downward revisions reflect the impact on grain quality of untimely rain on the wheat crop in the eastern states," ABARES acting executive director Paul Morris said releasing the report.

However, the bureau still predicts record commodity exports overall of $211 billion, a 23 per cent increase compared to 2009/10, despite a $3.8 billion downgrade because crop damage and slower growth in gold, iron ore and coal exports.

The bureau still expects iron ore and coal will make a large contribution to exports in 2010/11, while mine production is forecast to increase significantly in response to higher world prices.

This still rosy export outlook came as a new survey showed only a modest improvement in business conditions in November, while confidence fell for a third straight month.

"The impending mining investment and export boom should prove a spectacular ride, but the reality is that the train is still yet to leave the platform," National Australian Bank chief economist Alan Oster said releasing the results of his bank's monthly business survey.

Its business conditions index rose two points in November, while its confidence index was down two points - both being below their long term trend.

Mr Oster said the survey shows no sign of a pick-up in economic growth half way through the December quarter, after the disappointing outcome for the September quarter.

He expects the Reserve Bank will be surprised by this weakness, and as such is not predicting a further rise in the cash rate from 4.75 per cent to 5.0 per cent until May next year.

Other data released on Tuesday showed that new home building slumped in the September quarter, even before the last round of interest rate increases in November.

Builders started work on under 40,000 homes in the quarter, a 13.2 per cent drop compared to the June quarter, and much weaker than the five per cent fall predicted by economists.

The decline was led by a 13.5 per cent drop in the more volatile other residential building component in the private sector - such as flats and townhouses - although even private house building fell by 4.3 per cent.

"The conclusion from the September report is that residential building is returning to the sluggish pre-2009 trend as the lagged effects from earlier record low cash rates and subsidy schemes in housing are unwound," JP Morgan economist Ben Jarman said.

Growth in building approvals have been in decline for much of 2010 after interest rates rose six times between October last year and May, and as the government ended its more generous first home buyers grant on January 1.

Source http://news.smh.com.au/breaking-news-national/rosy-export-outlook-but-business-glum-20101214-18wlh.html

Proposed ASX merger will serve the national interest

The need for additional scale and regional relevance makes ASX's participation in consolidation mandatory.

Change is rarely easy, or initially easily accepted. When we consider the events that led to the creation of the Australian Securities Exchange as we know it today, such as the amalgamation of six state exchanges, or the closure of trading floors, or demutualisation, or the merger with the Sydney Futures Exchange, we may forget how challenging to various stakeholders they seemed at the time.

ASX understands the public interest in the proposed combination with Singapore Exchange (SGX) to create the first major regional exchange group in the Asian time zone.

In the near future, ASX will release information that outlines how the proposal advances Australia's national interest and informs much of the criticism that emerged after the proposal was announced on October 25.

Let me emphatically dispel concerns about a potential reduction -- or even transfer to Singapore -- of governance and regulatory oversight of ASX's operations.

The proposal is for a merger of exchange groups, akin to that which has been sanctioned in numerous other jurisdictions, not a takeover of Australian law.

ASIC, not ASX, is Australia's financial markets regulator and the Reserve Bank oversees Australia's financial stability standards, enshrined in the Corporations Law.

ASX's capacity to set the content of its listing and operating rules is already subject to a regulatory approval process in which the Australian government has the final say.

The Australian operations of the merged group will remain under Australian law and regulated by Australian authorities.

This maintenance of existing local sovereignty occurred with New York Stock Exchange's combination with the Euronext exchange group in 2006 and with Nasdaq's combination with the OMX group of Nordic exchanges in 2008. There can be no change to ASX rules without the agreement of the Australian Securities and Investments Commission and the Australian government.

ASX views the proposed combination as a natural competitive and regulatory evolution of Australia's capital markets.

Despite the fact that ASX is already one of the most cost-efficient exchange groups in the world, the need for additional scale and regional relevance makes ASX's participation in exchange consolidation a mandatory -- not an elective -- matter for all its stakeholders, and not just its shareholders.

Financial capital is highly mobile and increasingly free of geographic boundaries.

Governments appear to welcome new types of trading participants with high-performance technology-based trading strategies, while multinational corporations are drawn to listing venues of regional and global scale and efficiency. These trends are driving market structure, irrespective of whether or when competition between market operators is introduced in Australia.

At the same time, the global balance of power has been shifting from developed economies to developing ones, especially those in the Asia-Pacific region.

The global crisis accelerated this trend. It is no coincidence that Australian government policy has oriented towards building support for the concept of an Asia-Pacific community, focused on regional economic and security.

The Johnson report concludes: "Greater integration of financial markets is an important aspect of the concept of an Asia-Pacific community, and can contribute to Australia's broader national economic and security objectives in the region."

The Johnson report also notes that the contribution to GDP of Australia's financial sector ranks comparably with its counterparts in other advanced economies, such as the US, Britain Japan and Canada, but it ranks much lower in financial services exports as a share of financial services value added. Additionally, the report quotes Rainmaker statistics showing that half of the 20 largest fund managers are overseas companies, but that only between 3.5 per cent and 11 per cent of the $1.2 trillion funds under management are from offshore.

This compares unfavourably with the situation in Britain (31 per cent of total FUM sourced from abroad), Hong Kong (64 per cent) and Singapore (80 per cent), which broadly defines the challenge facing Australia's financial services industry to evolve beyond its domestic origins.

The merger presents the opportunity for a larger volume of financial transactions involving offshore parties to flow through Australia -- a key characteristic of leading financial centres.

The increased size, liquidity pool and product diversification of a combined exchange group will enable better matching of the risk and reward preferences of investors and companies, reducing the cost of capital for ASX-listed entities. An outcome unequivocally in the national interest.

This is the context in which the ASX-SGX transaction should be judged. As a nation we are indebted to the strength of Asia's industrialising economies and their appetite for our resources (and government debt) -- factors that helped us avoid the worst effects of the global crisis.

Yet, despite talk of becoming more integrated with the pan-Asian economy, a transaction that seeks to achieve this causes parts of the community to raise the spectre of loss of national sovereignty, without understanding the protection afforded by the existing regulatory framework or the competitive forces that threaten to marginalise ASX if parochialism prevails.

Public policy consistency dictates that encouragement of new foreign-owned competitors for domestic exchange-related services, to use their global scale in Australia, also calls for allowing the incumbent exchange group to be similarly allowed to extend its presence through a regional or global combination beyond local shores. Such action, through the proposed ASX-SGX combination, strengthens the national interest and helps to develop Australia's financial services sector.

Source http://www.theaustralian.com.au/business/proposed-asx-merger-will-serve-the-national-interest/story-e6frg8zx-1225965415691

End in sight for unpaid NAB customers

The National Australia Bank says work on restoring customer accounts should be complete by tomorrow.

This afternoon, the bank said work would continue into the night to rectify accounts after a corrupt computer file last Wednesday night left people without wages and payments unprocessed.

NAB says while the glitch that caused payments and transactions to be delayed has now been fixed, additional work on around 19,000 accounts where duplicate or multiple transactions have occurred still needs to be completed and will be done so overnight.

Spokesman George Wright says outstanding transactions are being processed in chronological order.

"A person might have had a payment coming in on Wednesday and there might have been something going out on Thursday," he said.

"So you can't really say it's fixed for this number of customers, it's not that number. But we're up to Friday, so we're working through Friday."

In some cases there have been multiple debits and credits, but the bank says it is aware of the problem and it will be fixed as soon as possible.

Mr Wright says customers who have been charged fees or interest because of the glitch will be reimbursed.

"For NAB customers who may have incurred a fee or interest charge from the bank as a result of these delays, we're putting in a process to identify that and rectify it and refund people," he said.

"And anyone who might have incurred a charge from another institution as a result of these delays, we would ask them to contact us. We don't want people to be out of pocket and we'll work with them to fix that up."

Consumer group Choice says the payments system used by the major banks needs to be scrutinised in the wake of the NAB incident.

Choice spokesman Christopher Zinn says the delays have dragged on for far too long and highlight the vulnerability of the system.

"If this really was just a corrupted file which has caused this much damage, this much distress, we think it's a good time to take a long, hard look at the payments system and see if it really is robust enough and efficient enough for what is something that is essential to our daily lives," he said.

Mr Zinn says the current system is preventing new players from entering the market.

"We've been in talks with those who would seek to enter the banking sector in Australia, with new, competitive and innovative products who feel the structure of the payments system, some of its archaic nature, actually makes it impossible for them.

"We think that is something which the regulators, such as the Reserve Bank and the Federal Government, need to look at."

Source http://www.abc.net.au/news/stories/2010/11/29/3079719.htm?section=justin

ACC drops Paul Hogan tax investigation

THE Australian Crime Commission has revealed it will not lay charges against actor Paul Hogan and his artistic collaborator John "Strop" Cornell.

After a five-year investigation, the ACC today took the extraordinary step of issuing a press release saying it was no longer pursuing the pair over their offshore tax arrangements put in place following the success of the Crocodile Dundee movies.

"This decision has been made following a careful process, including obtaining high-level legal advice on some issues," the crime commission said.

Hogan and Cornell have been targets of the nation's $300 million Wickenby tax probe into offshore structures. They have always maintained their innocence and denied any wrongdoing.

Earlier this year, the Crocodile Dundee star was temporarily banned from leaving Australia at the request of the Australian Taxation Office.

The two-week standoff ended on September 3 and the 70-year-old was allowed to return to Los Angeles where he lives with his wife Linda Kozlowski and their son Chance.

It is understood the ATO will not be dropping its probe into Mr Hogan's affairs. An ATO spokesman declined to comment on the case on Tuesday.

In its statement issued today, the crime commission also noted the number of legal challenges Hogan and Cornell had made in relation to the investigation.

"The delay in resolving this long-running investigation hinges on the international complexity of the structures put in place by those who are the subject of the investigation and a clear strategy by those being investigated to legally challenge the ACC's attempt to establish the facts in the case," it said.

The decision was welcomed by Robinson Legal's Andrew Robinson who released a statement vindicating the innocence of his clients.

"After nearly six years of massively costly investigations during which our clients have been routinely branded in the local and international press as 'tax cheats' and 'tax criminals', the news that the ACC has acknowledged that it does not have the basis to continue with a criminal investigation is of immense relief to them," Mr Robinson said today. "It vindicates the position they have taken since the start of this investigation."

"Unfortunately, we have not been able to contact Paul Hogan to give him the news but John Cornell's reaction was: 'that speck in the sky is my hat and I look forward to sampling some of Strop's patented hangover cure tomorrow morning'."

Source http://www.theaustralian.com.au/news/acc-drops-paul-hogan-tax-investigation/story-e6frg6n6-1225959464455

New South Wales Receives Bids for Electricity Assets

The government of New South Wales, Australia’s most-populous state, has started evaluating bids for the electricity assets it put up for sale and plans to complete the review by the end of the year.

Submissions closed at 3 p.m. Sydney time, the state government said in an e-mailed statement, declining to identify any potential buyers. AGL Energy Ltd. said today it had made an offer, while Origin Energy Ltd. has previously said it planned to bid.

The sale, which includes the retail businesses of EnergyAustralia, Country Energy and Integral Energy, is the “last available opportunity to obtain a significant retail and generation presence in Australia’s largest electricity market,” state Treasurer Eric Roozendaal said in the statement.

New South Wales may raise A$3.5 billion ($3.4 billion) selling the retail assets, David Leitch, an analyst at UBS AG in Sydney, has estimated. The state is also offering development sites for new power plants and contracting the right to sell electricity produced by state-owned generators.

Australian regulators are scheduled to announce Nov. 25 whether purchases of New South Wales power assets by AGL and Origin would raise competition concerns. The Australian Competition and Consumer Commission had previously expected to report its findings on Oct. 28.

Origin spokesman Tim Scott, TRUenergy Holdings Pty spokesman Carl Kitchen and International Power Plc spokesman Trevor Rowe declined to comment on whether the companies had bid.

Competition, Funds

New South Wales Premier Kristina Keneally said Nov. 3 that the plan to sell the assets by the end of the year remains on schedule. The government has said it wants to spur competition in the electricity market, reduce the need for state investment in power generation and strengthen its finances.

Completion of the sale is expected by early 2011, state Auditor-General Peter Achterstraat said in a report earlier this month. He cited “significant uncertainty” surrounding the value of the assets because of the unknown impact of a potential carbon pollution reduction plan in Australia.

The effort to sell the government assets began about 12 years ago, the auditor-general’s report said.

AGL and Origin may spend more than A$5 billion combined, Leitch of UBS said this month. Origin may buy EnergyAustralia and AGL may get Country Energy, Leitch said. TRUenergy, CLP Holdings Ltd.’s Australian unit, was evaluating a bid, CLP Chief Executive Officer Andrew Brandler said Sept. 28.

The government of New South Wales said last month that it intends to keep ownership of the Cobbora coal mine to supply state-owned power stations with fuel.

Source http://www.businessweek.com/news/2010-11-15/new-south-wales-receives-bids-for-electricity-assets.html

Deaths in Australia at record low

Australia's death rate has hit a record low, as the nation older citizens are growing in number and living longer.

There were 140,800 deaths officially recorded Australia-wide during 2009, according to figures released by the Australian Bureau of Statistics (ABS).

It was a real decline of about 3,200 deaths from 2008, when 143,900 Australians died.

The figure also marked a new low in deaths measured against the population, continuing a declining trend which has unfolded over the past few decades.

In 1989, there were 9.1 deaths per thousand Australians, and in 2009 this figure hit a record low of 5.7.

"It's not just more younger Australians who are surviving through to older ages, those people who get through to age 50 are increasingly likely to live longer," demographer and Professor of Geography Graeme Hugo said in response to the figures released on Wednesday.

"Since 1970 we've added nearly eight years of extra life to an Australian aged 50 ... that's an incredible increase in life expectancy, a remarkable change in a generation when you think about it."

Prof Hugo, from the University of Adelaide, attributes the change to medical breakthroughs that now keep stroke, heart attack and cancer patients alive, along with improving treatments across the board.

Smoking rates were in decline while Australians now enjoyed safer workplaces and roads, and a blurring of once traditional male and female roles was allowing men to catch up to usually longer-lived women.

The ABS figures show over the past two decades, life expectancy increased six years for men (to just over 79 years) and more than four years for women (to almost 84 years).

Prof Hugo said there was room for more improvement as other countries had lower rates of cancer, heart attack and road crash deaths, but there were also emerging challenges.

"Obesity is much higher than it was in previous generations and it could compromise the continued year-by-year improvement in life expectancy," Prof Hugo said.

The ABS figures also show more men than women died in 2009, with 72,300 male deaths compared to 68,400 females.

The nation's infant mortality rate increased slightly, from 4.1 deaths per thousand births in 2008 to 4.3 last year.

Prof Hugo also said "closing the gap" between indigenous and non-indigenous health was also a must, and it would further boost the nation's average life span.

There were 2,400 indigenous deaths recorded last year, accounting for 1.7 per cent of all deaths.

The NT had the nation's highest death rate, at 7.9 deaths per thousand people, while the ACT came in with the lowest at 5.4 deaths.

While total deaths were down last year, the change appears to occur on a scale not immediately felt by the funeral industry.

"I've been around every state in the last few months and none of the funeral directors I've spoken to say `gee, we're down`," Australian Funeral Directors Association president John Scott said.

"(But) there is no doubt people are certainly living longer ... I know in our area (Kyneton, Victoria) we've got some very old people who are well into their hundreds."

Source http://news.smh.com.au/breaking-news-national/deaths-in-australia-at-record-low-20101110-17nhj.html