Crown billionaire James Packer has been jabbing at Echo Entertainment for some time and the latter’s chief executive John Redmond has started punching back. Two business scribes have taken a look at Redmond’s address to the Sydney Business Chamber, with a specific focus on Packer’s apparent lack of transparency in regards to the plans for Barangaroo.
Also in this morning’s edition of The Distillery, we’re talking cars. Specifically, we’re talking the plans to fix the Victorian taxi industry and the demands on an automotive insurer when driving is becoming safer.
But first, The Australian’s Bryan Frith examines the claim from Redmond that the casino part of Packer’s Barangaroo formula is getting bigger while the hotel part is getting smaller.
“And that claim appears to be borne out by the winning Barangaroo design, which was unveiled by Packer two weeks ago. The proposal involves a 235 metre-high, 60-storey tower, which would require the approval of the New South Wales Department of Planning because it exceeds the 170 metre approval limit. It turns out the 350-room hotel is now planned for the low-rise part of the complex. The casino would be located in three of the upper floors of the tower, which would also include 75-80 luxury apartments, to help pay for the project. There would also be ‘villas’ below the apartments to accommodate the high rollers – the ‘whales’ – that Crown would hope to attract to the VIP-only casino. But even that seems to be shifting somewhat because the design also includes a podium on the ground floor, which appears to encroach on a significant portion of Southern Cove, and could create some controversy.”
But, as Fairfax’s Elizabeth Knight points out, Packer isn’t alone in his need to make his proposal clear for the good of New South Wales.
“The trouble is that both players have put proposals that have a degree of secrecy. Crown's plans have been more fleshed out but they do move around. Echo also will have made promises to the government about the scale of its Sydney expansion, but its proposal remains completely under wraps. The trick for Echo would be to convince investors it can win the competition without overspending. Redmond said any Echo investments would be made prudently.”
Meanwhile, beyond NSW’s southern border, former Australian Competition and Consumer Commission chairman Graeme Samuel has been brought in to effectively replace his predecessor, Allan Fels, as Victoria’s taxi industry tsar.
Fairfax’s Malcolm Maiden says Fels’ inquiry has produced a blueprint for reforming the taxi industry across the country.
“It is also making changes that threaten the listed taxi payment processor Cabcharge, as the 15.3 per cent slide in Cabcharge's share price on Tuesday after the government's announcement underlines. The 10 per cent fee that Cabcharge levies for processing card payments in taxis will be halved to 5 per cent in Victoria, creating another potential national precedent as the Reserve Bank and credit card companies bear down on third-party card processing fees. Almost all of the 139 recommendations the Fels inquiry made last December were accepted entirely or in part by the Victorian government, and there will be significant reform of the industry in the state as a result.”
The Australian’s John Durie points out that aside from leading the ACCC, Fels and Samuel share very little in common.
“Given the two men rarely see the world the same way, Samuel’s appointment was met with some bemusement but for the record, Fels didn’t want the job while clearly Samuels did. He recently formed a Monash University think tank with former ACCC colleague Stephen King, among others, and in the process phased down his work for Greenhill Caliburn. Samuels is also considered in some circles as in with a chance to run Bruce Billson’s proposed ‘root and branch’ review of the Competition and Consumer Act if the Coalition wins government.”
Staying with cars, The Australian Financial Review’s Chanticleer columnist Michael Smith reports on the adaptation that Suncorp’s Patrick Snowball is trying to get ahead of in regards to automotive insurance.
“Technology is rapidly changing the approach customers have to car repairs and the way vehicles are insured and assessed. The aim is to lower the cost of repairs and get them back on the road faster than it would take to do the dry cleaning. Unlike other industries, particularly retail, insurers like Suncorp have not left it too late to adapt. The impact of vehicle telematics (which combine telecommunications and informatics in cars which could measure driver behaviour), driverless cars and new vehicle repair methods are some of the things being looked at by a team at Suncorp’s crystal ball gazing department, Snowball says. Although he is not worried technology will replace the need for insurance just yet.”
Meanwhile, in a separate piece Durie notices that Snowball is about to rack up four years in the top job at Suncorp and the performance thus far has been solid.
“Over that time he has outperformed the index by a factor of more than six. Suncorp has increased by 55 per cent over the past 12 months against 27 per cent for the index. The general insurance duopoly with Insurance Australia Group helps because it minimises messy competition. So does a prolonged period without major catastrophes, allowing the industry to capitalise on several years of 15 to 20 per cent annual premium increases. The only downsides have been falling interest rates, which have minimised earnings potential and, in Suncorp's case, its home base Queensland just happening to have above-average bad property loans and weather damage.”
Fairfax’s Michael Pascoe notes the results of two surveys indicating that Australia is both a nation that whinges more than the Poms and one boasting the happiest citizens in the world. Surveys can really suck sometimes.
The Australian Financial Review’s Jennifer Hewett reports that presumptive incoming resources minister Ian Macfarlane believes farmers should have the right to just say no to the coal seam gas industry, underlining just how sensitive this issue is politically.
And speaking of gas, The Australian’s Barry Fitzgerald reports that Asian countries are wising up to the reality that Australia’s gas is expensive and there are other places that you can get the stuff.