Rates will rise, but Lowe offers something for everyone

A pedestrian passes the Reserve Bank of Australia (RBA) in Sydney. Picture: NCA NewsWire/Joel Carrett

RBA boss Philip Lowe has delivered as expected – he is cautiously starting to loosen the rules about the next rate rise and flagging easing last year’s emergency measures initiated when Covid first hit.

Those at the Commonwealth Bank calling for rates to rise as early as November next year didn’t get the vindication they wanted but like all central bankers Lowe gave everyone a little bit.

Consensus is that a raise in the second half of 2023 is still more likely, which is earlier than previously stated, but the bulls will point to the dropping of the words “at the earliest” from forecasts about 2024 and the predicted 20 per cent tapering of bond purchases in September with a review in November.

CBA’s Stephen Halmerick is more confident today about his November 2022 prediction.

NAB’s Alan Oster thinks the economy will slow from the running rate this year of 5 per cent to 2.5 per cent, which takes the pressure off any need to lift rates next calendar year.

That said, the next move will be up – it’s just a question of when – and Lowe gave himself a bit more wiggle room when noting factors other than wages growth would be considered in making the call. Wages growth of 3 per cent was considered a prerequisite but no more and as per usual it’s the data not timelines that will dictate terms.

Capturing carbon

Energy Minister Angus Taylor is moving in the right direction towards establishing a viable method of measuring soil carbon, according to Carbon Link’s Dr Terry McCosker.

McCosker is working with the Mulloon Institute and the CSIRO to develop methods and technology to better measure soil carbon.

Soil carbon is to many the key to managing Australia’s emissions because it holds three times more carbon than the atmosphere – carbon-rich soils hold water better and help moderate temperatures.

For farmers, a well-managed property means you can develop soil carbon on the same land as you are grazing cattle, therefore earning twice from the same land and as far as emissions reduction is concerned it’s a step ahead of just planting trees.

The problem has been the rules surrounding soil carbon, which have restricted its use through rules such as if land is more than 20 per cent exposed then soil carbon is not measured and there is a long list of biological stimulants that cannot be used.

The industry is slowly working through these impediments while at the same time working out better ways to measure the carbon that cuts down the cost of developing soil carbon and earning bankable credits.

McCosker figures workable rules are now just a matter of months away, which means farmers will be able to earn more money from their land, provided they manage it well by not overgrazing or clearing the vegetation.

The Mulloon Institute was established on land left by the late Antony Coote and his sister Toni from the Angus & Coote jewellery family and is chaired now by former Howard government minister Gary Nairn.

It works on a model of managing water better by slowing river flows to back-up storage and other methods.

Their testbed is land between Bungendore and Braidwood on the coast road from Canberra.

Carbon rich soils hold more water and by rehydrating land carbon storage potentially increases a virtuous circle that produces better vegetation and better quality fruit and crops, which in return attract more carbon.

Scientist Peter Andrews notes: “Those who grow a plant are contributing to a truly solar-powered climate renewal.”

The trick is to get the rules up to the science so farmers will be fully compensated while helping the earth.

Calderon’s challenge

Former Orica boss Alberto Calderon will attempt to use his Colombian charm to resurrect the market credibility at South African-based Anglo Gold Ashanti.

The company has struggled since losing the highly credentialed Kelvin Dushinksy last year after just two years in the job. Calderon thinks the company has the right assets and technology – it’s just a matter of restoring its credibility and he is backing himself as the one to do it.

Sims gets busy

Australian Competition and Consumer Commission chief Rod Sims’ campaign to prevent Australian industry becoming even more concentrated has turned to edtech and US-based Turnitin’s acquisition of Swedish-based Ouriginal to dominate the multi-billion dollar global anti-plagiarism software market.

The acquisition price was not disclosed but as a guide, US-based Advance Publications paid $2.3 billion for Turnitin two years ago.

The combined firm would control 86 per cent of the Australian anti-plagiarism software market.

Educational software is in hot demand post-Covid, which highlights the reasons for the deal.

Globally the combined firm would control 97 per cent of the market and the UK regulator has already commenced a probe on competition concerns.

The investigation is one of just eight on the ACCC’s books despite the merger boom. Over half the cases are offshore mergers, which means the competition watchdog is waiting for information to complete inquiries in three of those cases, including Facebook and Kustomer and Aon and Towers Willis Watson.

The August 5 decision date on the Bunnings - RJ Beaumont Tiles case was delayed last week by a request for more information from the parties.

A new decision date has yet to be set which suggests further delays for the deal, which was unveiled in May.

On July 30 the ACCC is due to hand down its decision on the payments merger with BPay, eftpos and New Payments platform all combining into one group, underlining the market power of the big banks.

Separately superannuation behemoth AustralianSuper ($225bn under management and growth at $1.7bn a month) has continued its Pac-Man ways with a deal to buy LUCRF Super, which has $7bn under management.

AustralianSuper has recently acquired Club Super ($3bn) as part of APRA’s push to clean up small funds, which means the big get bigger and another industry more concentrated, this time under the guise of risk management.