THE DISTILLERY: Oh, what a firing
One jotter evaluates Toyota's decision to 'fire on merit', while another argues that the Centro-PwC court case highlights a need for law reform.
First up, The Australian Financial Review’s Matthew Stevens considers the fascinating and controversial scoring system that Toyota will use to identify 350 workers that it needs to sack. This is a significant departure from the usual call for voluntary redundancies, then finding the rest through firings.
"Toyota clearly wants to make a point here. It has assessed the performance of its people, identified who does and does not meet performance expectations and determined it will expel its worst rather than its best performers. In very simple terms Toyota is reaffirming that its right to hire is matched by a right to fire. But in doing so, according to the unions, it risks the dire complication of mass action by any or all of the 350 workers it has dismissed. The human resources community in Australia – particularly those working in manufacturing’s financially challenged heartlands – will be watching Toyota’s progress with focused interest.
The Australian’s John Durie delivers a great piece on the Centro-PricewaterhouseCoopers court case so far, arguing that a play on words by PwC demonstrates a need for greater accountability in corporate law.
"In the Centro case, PwC admitted it was wrong to mis-classify $3.1 billion in debt as non-current, instead of current debt. Having admitted this mistake, it argued that its duty was to the company, not the shareholders. Technically, the company and the shareholders are different legal entities, and in this case PwC is arguably correct to say that any shareholder losses caused by news of the mis-classification were due more to Centro’s confession that it couldn’t repay its debts. Irrespective of what Justice Gordon ultimately decides, there is something fundamentally wrong with the system if an auditor can escape liability for mistakes because he or she reports to a company not a shareholder.”
Fairfax’s Chris Zappone has found a growing number of analysts predicting an increase in Japanese lending to the Australian market – our second largest trading partner is too frequently overlooked for anything China-related.
"Japanese banks have already increased their footprint here. Bank of Tokyo-Mitsubishi UFJ opened an office in Perth this month and in March SMBC Nikko Capital Markets opened a branch in Sydney to issue yen-denominated bonds for institutional and retail investors in Japan… Japanese banks hold about $25 billion in loan assets in Australia, a figure that could increase dramatically in three to five years if the current trend continued, analysts said. The Bank of Japan maintains interest rates near zero, lowering the yield that banks there can charge for loans in Japan's highly competitive domestic sector. By contrast, the Reserve Bank's interest rate stands at 4.25 per cent in a market where big companies rely on overseas funding for expansion.”
And The Age’s Michael West injects some much-needed perspective into the discussion concerning the pay of top union lobbyists.
"Michael Williamson is being vilified. Williamson is widely reported to be the ‘best-paid unionist in the country’. But at a paltry $330,000 a year, the suspended Health Services Union boss with the Black ‘Centurian’ Amex card makes less than half the wage of a union boss in the business world. Business Council of Australia boss Jennifer Westacott earns around $850,000. The BCA is the nation’s ritziest union. Its members are the chief executives of Australia’s top 100 companies. And if the speculation is correct, Westacott’s wage is trumped by the boss of the company directors’ union, John Colvin, who is said to be paid around $1 million.”
On stories related to the Reserve Bank’s minutes yesterday, the Herald Sun’s Terry McCrann says a rate cut of 25 basis points at the next board meeting is effectively a lock. The Sydney Morning Herald’s Michael Pascoe laments the rule in Canberra that interest rate cuts are always good, while The Australian’s Richard Gluyas puts the minutes into the broader context of Spain’s painful debt-reduction efforts.
In other economic news, The Australian’s David Uren and Adam Creighton find the government beginning to examine why they’re historically bereft of corporate tax revenue. Uren explains in a separate piece that the International Monetary Fund’s report shows how brilliantly Australia is placed when it comes to debt and deficit. The writer adds that forging a credible path back to surplus (not a quick one) is crucial in maintaining our government’s reputation as one worthy of investment. The Age’s Malcolm Maiden flips through that same report from the IMF and finds a maze left in the wake of the global financial crisis that markets and economies must find their way through.
The Australian Financial Review’s Alan Mitchell encourages the Council of Australian Governments (COAG) to use the squeeze on federal coffers as an opportunity to improve the process of this tired platform. The writer suggests linking money closer to the outcomes of policy. Speaking of policy, The Australian’s editor-at-large Paul Kelly has spoken to Fortescue Metals Group chairman Andrew Forrest, who claims that his company was on the brink of securing a mining tax agreement with former Prime Minister Kevin Rudd the day before Julia Gillard rolled him.
In company news, The Australian Financial Review’s Chanticleer columnist Michael Smith reminds Telstra shareholders hoping for a big-time capital management plan from the NBN-deal proceeds that the telco’s board is conservative – always has been. The Sydney Morning Herald’s Elizabeth Knight says Coca-Cola Amatil’s share price premium is under more pressure than some might be letting on. The Age’s Eric Johnston listened in on the 3AW interview with National Australia Bank boss Cameron Clyne, who left the door open for more rate hikes. And The Australian’s Bryan Frith offers much praise to M2 Telecommunications for opting for what is essentially an old-fashioned rights issue in order to pay for its purchase of Primus Australia.
Finally, The Sydney Morning Herald’s Jessica Irvine pleads for some perspective for anyone trying to deduce whether working mothers are less devoted to their children but perhaps more capable workers than stay-at-home-mothers. Irvine contests that in many instances, the decision between the two is purely financial.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free