New Financial year

30 June has been and gone, and we’re into the 2017-18 financial year.   The main issue, so far as I am concerned, is that tax returns have to be done.

Admittedly, the information has to arrive so tax returns aren’t an immediate task.  Just the same, until they’re done, I feel that they’re an “outstanding issue” and they weigh (slightly) on my conscience!

I do try and keep our affairs reasonably simple, but even so there are always a few changes every year.   Always something to think about.


Whither Telstra

Last week Telstra ran an investor briefing.      Telstra are going to simplify their product offering and management arrangements, put its infrastructure into a standalone infrastructure business and get stuck into their costs.

Like a lot of people, we’ve got shares in Telstra, and the regular dividends are a source of income given our “self-funded retiree” status. We’ve had our shares since the original IPOs, and yes, I have held on to them because they paid a good dividend.  And, yes, I may have been a bit complacent.  In hindsight, of course, to have sold them a couple of years back when the shares were in the $5.00+ range would have been a good move!   At the time, my mood was along the lines that the dividend probably couldn’t be maintained at the level it then was, but I could live with a bit of a price correction.   I just didn’t expect the correction to be as much as it has been.
Unfortunately, the market appears to have been a bit under-whelmed by the announcement.   I can only speak for myself, but what last week’s announcement suggests to me is that Telstra has a lot more work than I thought it had to get “lean and mean” so as to prosper in the modern world.   All this stuff that now has to be done suggests to me (and the market?)  that there was a lot more flab and more problems than we’d realised.
Where to now?   Realistically, I think the time has passed to bail out.  I think I will just have to ride out the storm, stay with the shares we’ve got and “hope for the best”!

Free Range Eggs

The new labelling rules for “free range” eggs are imminent, and Choice mentioned it again in a recent issue of their magazine.    They’ve made a bit of an issue of this matter in recent years.

The new rules require that where eggs are described as “free range”, the label must state the stocking density.  There are also requirements about the ability of hens to forage outdoors.

Choice’s attitude was someway ungracious, including the comment that, “Unfortunately, the definition of free range eggs still isn’t strict enough to meet common sense expectations”.  Err – somewhat subjective, I would think!

As I mentioned in my previous post, I’m not entirely sure of Choice’s motives here.   Surely if they were concerned for the welfare of hens, their efforts would be directed at banning cage eggs?

Be that as it may, at our local supermarket, there are certainly “options”.  There are what are described “ethical” eggs, which are stated to come from hens having as stocking density of 1500 hens per hectare – but they’re more expensive than the other “free range” brands, stated to have a density of 10,000/hectare.

So, consumers have a choice here;  not only between different stocking densities but also between these and “cage” and “barn laid” eggs.  Yes, we buy “free range” eggs but the idea of being able to make an informed choice seems OK to me.




Another runway for Heathrow

It looks as though there might be another runway coming at Heathrow.  It’s going to be a while before things are finally approved and then plans have to be drawn up.   However, it seems that if all proceeds according to plan, construction will commence in 2022.   Then of course construction will take a few years.   Heathrow will then have three runways (all east/west), although the new runway will be slightly shorter than the existing ones.

Understandably, there’s local opposition, so there may still be issues to be addressed.  Realistically, whether the new runway is built or not probably won’t ever affect me, but I do wonder about the distance of the new runway from the existing terminals.   Wikipedia states that there will be a new terminal building, but I haven’t been able to find out where this might be or how it will be connected to the existing terminals and transport systems.  Already access to terminal 4 on both the Underground and Heathrow Express is a little complicated, and the new runway is off in the opposite direction!   There is talk of new transport systems and a new  “Central Terminal Area“;  perhaps all will be revealed in due course.

In the meantime, of course, access to the airport generally will be improved by integrating the Heathrow Connect services as part of the Crossrail/Elizabeth line.  However, so far as I can see, although Heathrow Connect fares may have already been slightly adjusted (but still include a premium), the very high Heathrow Express fares seem set to stay.   And of course Heathrow Connect still operates at a 30 minute frequency (vs 15 minutes for Heathrow Express).

Shell/”Coles Express”

Although we still have “Shell” branded servos, in fact they’re not owned by Shell.  They were all sold to Vitol (a large, privately-owned Dutch-based trading company) several years back, along with the Geelong refinery.   There appear to be moves afoot to list the business (now known as Viva Energy) on the ASX.

However, many servos are managed by Wesfarmers/Coles as “Coles Express”.   I don’t know how the deal works, but it seems that somewhere along the line,  Wesfarmers/Coles are exposed to the price of fuel and at present are being hit by the price of fuel supplied to them by Viva Energy.

In fact, in the quarter to  March 2018,   Wesfarmers stated that, “Total Coles Express sales, including fuel, for the quarter were $1.3 billion, a decrease of 8.0 per cent on the prior corresponding period, driven by lower fuel volumes”.   In fact, it was stated that, “For the quarter, headline fuel volumes decreased 14.6 per cent and comparable fuel volumes decreased 15.9 per cent”.

Wow – that’s some fall!    And why?   The explanation may be in the Wesfarmers half-yearly results, where it’s stated:

“Coles Express’ earnings decreased due to changes in the commercial terms of its fuel supply arrangement”.

Put another way, seemingly Viva Energy are giving Wesfarmers/Coles a hard time on fuel prices.   For the average driver,  its shows.   Most of us have observed that Coles Express prices are the slowest to move when the pricing cycle for petrol is in the falling stages.

But now it seems also to manifest itself in another way as well:   buying petrol at a Coles Express servo recently, at about half the pumps, there was no hose for 91 octane unleaded.   The hoses at the pumps concerned were all dedicated to diesel and “premium” products (including premium diesel).   On the assumption that 91 octave unleaded is the most price-competitive product, and perhaps the least profitable, is it just me, or do I detect a desire to forego volume in the interests of profit.  Perhaps more sinisterly, the result may also be that motorists unable to shift their vehicle to another pump may have no alternative but to buy a premium product which their vehicle doesn’t need.

EDIT:  The graphs here confirm that, in 2017,  Coles Express had, on average, the highest prices.

That NAB outage

I was holding NAB in high esteem (well, relatively, given there’s a Royal Commission occurring)- and then they go and have a five hour outage of all their systems!

On the NAB website, it’s stated that –

“The outage was caused by a series of failures, originating from our back-up power equipment, which isolated our mainframe.”

Well, it’s good that NAB has been reasonably up-front about what happened, but the question remains, how can this have occurred?    An outage for five hours or so?  Is our banking system really that brittle?   And why did it take so long to get the system up again?

Well, in relation to the latter, NAB state that,  “Power equipment failures like this are incredibly rare and haven’t occurred in a number of years, so it took our technicians several hours to recover our systems once power was restored. Our teams worked incredibly hard over the weekend to restore systems quickly, and continue to work hard to monitor the situation and ensure no further disruptions.”

Are they really saying that they didn’t know what to do?   Or am I mis-reading something?

It’s interesting to think of the wider implications, too.   There have been suggestions that we’re moving towards a “cashless” society (supposedly there are people out there who make even the smallest purchase on a card), but if outages like this can occur,  can a truly cashless society ever become a reality (even if merchants are offered an incentive to go cashless) ?

And from the perspective of governments, while a cashless society might make “tax evasion” less of an issue, perhaps in this era of cryptocurrencies, it may just be wishful thinking to imagine that all financial transactions will be ever able to be monitored by governments .

EDIT – and now big advertisements by NAB in the print media.

UPDATE:   And Visa in Europe recently had a long outage, too!

The Banking Royal Commisssion

Like a lot of people, I’ve been following proceedings at the Banking Royal Commission with a degree of interest.  Mostly I’ve looked at the media reports which of course focus on the major developments each day.

However, I spent a bit of time looking through the transcripts for one day last week.    The strategy of counsel assisting appears to be to select a case study where something has gone “wrong” and dig into it, with a view to identifying errors in the culture and procedures of the institution concerned.

On the particular day that I looked at, this approach appeared to be quite effective, showing up errors in the bank’s processes (which the bank admitted) as well as “cultural issues”, including a bonus scheme that appeared to incentivise inappropriate decisions.   In relation to the bonuses, there was quite a lot of “jargon”, and it was interesting to see the Commission cutting through this.  At one point, Counsel stated “Saying we want to do things in a more holistic way can be, from a lawyer’s perspective, sound like management speak that doesn’t necessarily carry a lot of meaning”.

It will be interesting in due course to see how the Commission addresses the case studies that have been examined.   Seemingly these are mainly being used just as a “tool” to show up the underlying issues (even though the media seems to relish them).  In this regard,  it’s interesting that the following statement is up-front on the Commission’s website:     “The Royal Commission has become aware that some people may have been receiving information that the Commission can make a decision to refund investors or provide compensation. Such claims are not correct. The Commission cannot resolve individual disputes. It cannot fix or award compensation or make orders requiring a party to a dispute to take or not to take any action.”

More broadly, an aspect that comes up in several places is the extent to which banks are required to protect people against themselves, or even in the case of the woman who bought a Wendy’s franchise, inform them of their right to withdraw from a contract during the “cooling off” period, when their own advisers appear not to have done so.   Certainly, in that instance, the branch manager probably over-stepped over the mark by stating that the woman didn’t need to make the offer to purchase “subject to finance”, but (without going into detail) in most other respects, it seems that the woman was fully aware of the issues yet chose to proceed.  We are left to ask whether people should take  some level of personal responsibility, rather than expecting somebody else who is not their financial adviser (but who may have a “deep pocket”!) to deal with their problems?