Reading books by cover-up
- John Beveridge
- From: Herald Sun
- November 13, 2009 12:02PM
THERE are many side effects from the Federal Government’s misguided decision to retain the protectionist import monopoly on books.
But the most bizarre is its stated reliance on offshore booksellers such as Amazon to keep downward price pressure on Australian publishers.
Encouraging consumers to help employ offshore shippers and to avoid paying GST on the way through is no doubt a message that will resonate strongly with consumers, who love nothing better than a bit of government-endorsed tax avoidance.
As long as the shipping comes in at less than 10 per cent of the cost, the dollar remains strong and the price is cheaper, the consumer will no doubt oblige and assist in the restructuring of the local industry.
The only victims are taxpayers, Australian booksellers who are prohibited from shopping directly offshore, and eventually the predominantly foreign publishers who continue to treat Australian consumers like colonial patsies.
If books are available more cheaply it is only logical to assume that people will buy more of them, growing the pie and creating a healthier market for authors.
Instead, the industry gets to hide behind an artificial and anti-competitive wall that will inevitably crumble and will hit bricks-and-mortar retailers and their employees the hardest.
As we have seen before in the case of the automotive and textile, clothing and footwear industries, what emerges at the end of a long period of industry protection is not a competitive and attractive butterfly but a sickly moth on borrowed time.
When the ban on parallel imports on CDs was lifted in 1998, consumers responded to lower prices and the local industry ended up being more competitive and stronger than if “assistance” had continued.
There are genuine issues that could have been directly addressed through grants, such as culturally important authors with small print runs, local language differences (mom versus mum) and possibly local printing jobs, although that is debatable given the penchant of Australian publishers to print offshore.
In the very long term, the protectionist wall will go the way of its Berlin counterpart when “books” are downloaded on to electronic readers rather than coming off printing presses.
In the meantime, it is every consumer for themselves as Australians try to get the best value they can from the $2.5 billion they spend on books every year.
AMP in front
BARRING any competitors spoiling the party, it is looking increasingly likely that Craig Dunn at AMP will get his hands on the levers at AXA Asia Pacific Holding’s Australian wealth management and insurance business.
The $12.5 billion “scheme of arrangement” bid for AXA will need to be sweetened to above $6 a share at some stage, but so far the winds of change have been blowing in AMP’s direction, with a firming share price filling the bids sails and giving it a sense of inevitability.
With AXA’s French parent and 53 per cent shareholder desperate to get direct control of the fast-growing Asian wealth business run by its listed Australian arm, AXA APH’s chairman Rick Allert is now fighting to get the best price possible rather than repelling the invaders from a position of strength.
While it is a great pity to see Australian shareholders lose a listed exposure to an attractive Asian wealth management business built up over many years, the burning question is what Craig Dunn plans to do with the local AXA business when and if he gets hold of it?
The most obvious is to cement AMP’s position as the fifth pillar in Australia’s burgeoning wealth management industry at a time of tremendous change.
There was a time when AMP and the old National Mutual dominated this field with their slick sales forces.
But since then, the big four banks have all busily built or bought significant wealth and insurance arms. Commonwealth has Colonial, NAB the MLC business, ANZ has ING and Westpac BT.
After being badly burnt through British acquisitions and focusing back on Australia, it is a logical move for AMP to bulk up to remain a player of scale.
Another reason to get bigger is the two current inquiries into the area.
Former ASIC deputy chairman Jeremy Cooper is well into a thorough review of the superannuation industry and his recommendations are likely to put downward pressure on fees and charges.
And the Henry review into taxation is having a close look at the tax treatment of superannuation, with a likely outcome higher superannuation taxes (or lower tax breaks) for higher income earners.
The combined effect of these changes and the continuing pressure to phase out the commission structure for financial planning are likely to favour players with large and efficient investment platforms such as the banks and a combined AMP/AXA.
While Dunn faces a mammoth task in integrating AMP and AXA, the restructuring pain is the only strategic option to remain relevant in the more than trillion dollar superannuation industry.
THIS week, the most important players in meeting Australia’s target of 20 per cent renewable energy by 2020 were all rubbing shoulders at a Brisbane conference.
Geothermal Downunder brought together what could literally become the next “hot” sector on the share market.
With 10 ASX-listed players and 48 companies in total, the conference heard that geothermal could become the next coal seam gas industry — a sector that literally came from nowhere to be worth multiple billions of dollars as plans developed to liquefy and export the gas from Gladstone.
Just like coal seam gas, there are plenty of sceptics who point out that so far nobody is producing significant renewable electricity from underground heat in Australia.
The reply from the players is that they are the only ones developing a source of reliable, baseload renewable electricity and if they don’t succeed, there is no way the 20 per cent target will be met in a meaningful way.
While wind power is the fastest growing renewable power source, its intermittent nature makes it problematic for electricity distributors and unreliable for producing power at peak times.
Large-scale solar has similar limitations until practical storage solutions such as electric cars become common.
Which leaves the two main geothermal methods racing to produce power.
The deep, hot rock technology being developed and tested by the large players Geodynamics and Petratherm aims to produce large amounts of electricity at below $100 per MWh to overcome remote locations in the South Australian outback.
With significant partners such as Origin Energy, Beach Petroleum and TRUenergy and recent government grants of $152 million riding on their success, pressure is building up in places other than their very deep wells which produce superheated steam.
Geodynamics suffered a blowout at its Habanero 3 well, but as chief executive Gerry Grove-White pointed out, he would rather find out they needed different steel well casings now than after they had 100 wells operating.
The shallow aquifer players hope to produce smaller power plants closer to established electricity markets using proven lower temperature technology, although they will be more reliant on renewable energy certificates as their electricity will probably cost more than $100 per MWh to produce.
If the 20 per cent renewables target is to be met, we may need both types to succeed.