Google, Apple, News Corp, and Coles' "freshly baked" selection all under scrutiny. Mojonews.com.au business editor ARON LEWIN looks at the business news that found a way into our pantry.
Savvy trading or insider trading: ASIC investigates
In a published statement, Mr Stevens cited a falling exchange rate, a dip in commodity prices, a falling Aussie dollar, and growing unemployment as reasons for “easing … policy” to encourage spending and investment, but the cash rate remained at its current price for the time being.
The ABC reported a sharp rise in the Aussie dollar just six seconds before the interest rate was announced – despite economists and the bonds market foreshadowing cuts for April. It sparked an ASIC investigation into possible insider trading, as “traders … have correctly guessed surprise decisions on interest rate movements by the Reserve Bank in the minute immediately prior to the official release”.
But the Royal Bank of Canada forecast a fall in the interest rate, with its Capital Markets head of economics for Australia Su-lin Ong predicting it would drop to 1.5 per cent in the next 18 months.
In the Business Spectator, Westpac chief economist Bill Evans wrote: “We would be shocked if the bank does not choose to cut by 25bps at the next meeting on May 5.”
In The Conversation, research fellow at the Griffiths Centre for Personal Finance and Superannuation Osei Wiafe gave investment tips for pensioners as interest rates are predicted to fall.
Voltage Pictures in vigilant hunt for pirates
In a case that sets a precedent on how copyright holders tackle piracy, Federal Court Justice Nye Perram ruled that internet service provider iiNet had to handover to Voltage Pictures the contact details of 4726 Australians who illegally downloaded its film Dallas Buyers Club via BitTorrent.
Voltage Picture’s vice president for royalties Michael Wickstrom said account holders who shared the film on BitTorrent were likely to receive a letter from Voltage Pictures, including a “warning to consumers … [to] seek legal counsel”.
Voltage Pictures used the tactic in 2009 when it issued a letter to 26, 000 account holders in the US who illegally downloaded The Hurt Locker, which led to a drop in piracy of the movie.
But a letter from Voltage Pictures doesn’t mean facing a hefty fine, as telecommunication companies are only required to pass on the personal details of the illegal downloader on to the copyright holder after three “warning letters”.
In the Sydney Morning Herald, Hannah Francis wrote that because Australia doesn’t have “statutory damages provisions prescribing a minimum amount of monetary compensation”, damages awarded to copyright holders will amount to just $20, not including court costs.
Marque Lawyers managing partner Michael Bradley, representing Dallas Buyers Club, promised Voltage Pictures would not ask for unreasonable compensation from illegal downloaders.
“You're not going to see in Australia people receiving letters saying, ‘Give us money or you'll be paying a fine of $150,000' or that kind of ridiculous amount,” he said.
Wickstrom said his company wouldn’t threaten illegal downloaders who are vulnerable – such as the disabled or welfare recipients – or Defence Force personnel.
“If we start proceedings in Australia I will make it clear to local counsel, 'you will not pursue the handicapped, welfare cases or people that have mental issues or the military’,” he said.
In The Conversation, University of Western Australia Centre for Software Practice director David Glance referred to a similar legislative tussle in Canada where Voltage Pictures had not sent warning letters to those alleged to have downloaded The Hurt Locker.
He said Voltage Pictures was “copyright trolling” because its films had underperformed in sales, with The Numbers reporting Voltage Pictures’ 10 films had made about $165,420 million in the box office on a $35.5 billion production budget.
In the Business Spectator, Alan Kohler writes that Voltage Pictures’ win is “pyrrhic” in that it won’t substantially reduce the file sharing, as there are “too many moles to wack”.
But an article circulating throughout Fairfax publications disagrees, arguing a potential fine and legal action is a huge deterrent for would-be illegal downloaders, as the “principle reason why people pirate is because it’s free.”
But the article also cites research from Essential Media that shows 16 per cent of Australians surveyed are using a Virtual Private Network to encrypt their data and evade being caught.
Freshly baked fine for Coles
Coles has been fined $2.5 million for falsely advertising its bread is “freshly baked” when it had been partially baked off-site, sometimes months before. According to The Australian, the Federal Court found it falsely advertised its bread in more than 100 Coles bakery product lines, while AFR reported that the "freshly baked"Cuisine Royal breads and muffins were made in Ireland.
Former Victorian premier Jeff Kennett, who reported Coles by sending its bread to the consumer watchdog while highlighting fine print showing it was made overseas, was embarrassed about the harshness of the fine.
“I was disappointed about Coles’ promotion of its products at the time and I just wanted an independent review of it and a warning shot fired at them,” Mr Kennett said.
“I find it a little embarrassing, it's not what I sought, but it is what it is.”
The Federal Court also banned Coles from labelling its bread as "freshly baked" for three years.
CEOs roasted: Senate inquiry into corporate tax evasion
Federal Treasurer Joe Hockey followed advice from the ATO when he declined to disclose details of companies and taxpayers that siphoned $30 billion to Singapore to minimise their tax in Australia.
“Confidentiality of taxpayer information has been a key feature of Australia’s taxation system since the 1950s,” Hockey said.
The ATO is auditing mining giants BHP Billiton and Rio Tinto for shifting profits overseas to minimise their tax, but the companies deny the accusation.
At the ABC, senior finance journalist Andrew Robertson asked if public outrage over profit shifting to minimise tax was misplaced, as most Australians minimised tax by declaring private expenses as work-related or made tax deductions when possible. He argued that Australians regularly “game the tax system” through “salary packaging”.
But writers for Crikey were more hostile to multinational companies funnelling money overseas.
Journalist Myriam Robin wrote that these companies avoided scrutiny because their tax minimisation strategies are complex and it is legal to declare profits overseas, while Crikey editor Bernard Keane wrote that it was not in Joe Hockey’s interests – or the Coalition’s – to increase the tax burden of multinational companies.
In an interview with AFR, Hockey credited Labor Senator Sam Dastyari – who is the chairman of the Senate inquiry into corporate tax evasion – for highlighting the profit-shifting tactics of Google, Microsoft and Apple.
“Senator Dastyari has been incredible. I’m sure that wasn’t his intention,” Hockey told AFR.
“I grew up in a family of small business people and the thought that a big player is getting away with murder while, you know, our family worked seven days a week trying to keep the door open and pay the bills and pay tax, it’s just unfair.
“There is a pincer movement on these organisations. There’s a global front and there has to be a domestic front as well.”
But The Australian's contributing economics editor Judith Sloan launched a scathing attack on both Hockey and Dastyari, writing that companies expected to be taxed in the countries where they are based rather than where they earn profits, before labelling Senator Dastyari’s “name and shame campaign against multinationals he regards as not paying enough tax is embarrassing and self defeating”.
‘Netflix Tax’ to tax consumer: prediction
Hockey announced during the Senate inquiry the Government’s plan to extend the GST to Netflix and Apple downloads and goods bought online for less than $1000 in what has been called the Netflix Tax.
He said the tax was an integrity measure rather than a tax hike that would “add billions” to Australia’s public accounts, while opposition leader Bill Shorten was also “open” to the Netflix Tax.
But AFR reporter Joanna Mather wrote that the tax would burden consumers rather than the companies, while in News Corp publications, Chris Kohler and Daniel Strudwick suggested it would lead to increased piracy.
The tax would bow to News Corp’s demands for GST to extend to Netflix.
According to Pedestrian TV, the Netflix Tax is the reason why Australians “can’t have nice things”.
News Corp, Fairfax feud heats up
News Corp CEO Julian Clarke has denied claims in a Fairfax report that the company siphoned $4.5 billion of cash and shares overseas to minimise its tax bill.
Clarke said 98 per cent of News Corp’s revenue was taxed in Australia.
In the Senate inquiry, News Corp disclosed it paid “$417 million in corporate tax and withholding tax on accounting profits of $815.9m during a five-year period” and “$900m in goods and services, fringe benefits and payroll taxes”.
Clarke also said the “$4.5 billion was repatriated [to an associated overseas company] …in two years” and that it was a “legal and legitimate transaction”.
In a tense stoush, Clarke countered questions from Greens Senator Christine Milne on why The Australian published at a loss of up to $30m per year, stating it was the “finest national newspaper operation here in Australia”.
“I make no apologies for that. The Australian is actually a very important part of our total newspaper operation and journalistically I think it is very important inside Australia.”