It doesn’t look like the RBA is in a rush to cut rates

If there’s one thing that Reserve Bank of Australia board member John Edwards likes to do, it’s to create a stir on a sleepy Friday afternoon in Asia.

In an interview with the Wall Street Journal, Edwards expressed a lack of urgency to bring Australia’s core inflation rate — currently running at an annual pace of 1.55% — back into the RBA’s 2-3% target band, fitting with the minutes of the bank’s May monetary policy meeting which indicated that board members had to be “persuaded” to cut interest rates at to a record low level of 1.75%.

“It is certainly right to say that, at this point it is below target,” Edwards told the Journal. “But then it has never been the view that the target had to be achieved each and every quarter, or for that matter each and every couple of quarters, or year for that matter”

“The target exists, and I think it will be desirable to return over time to the midpoint of the target, but I don’t think it can be done urgently, “ he said, adding that he didn’t know of any solution to help lift inflation in the near-term, acknowledging that slow wage growth was one major influence keeping inflationary pressures low.

Certainly not a view one would expect from a central banker pondering whether to deliver back-to-back rate cuts in an attempt to bring inflation back to within target.

Keeping on the inflation theme, Edwards also poured cold water on the notion expressed by some private sector economists that the bank should consider lowering its inflation target, suggesting that the current target has served the country well.

“It would be wildly premature to actually change the target on the basis of what we know now,” Edwards told the Journal. “It would be a calamity to adjust the target downwards and then discover inflation is on the way back up again.”

Rather than the continued focus on returning inflation to target, Edwards suggested that the anchoring of inflation expectations was more important, acknowledging that it would be critical to the outlook for interest rates.

“(The key question is) are inflation expectations anchored around where they had been, and so far I think they probably still are,” he said.

Though only one member of the RBA board, Edwards’ view does not fit with the view presented by some analysts who are forecasting that interest rates will be cut to 1%, or lower, in order to help counteract disinflationary pressures that have intensified in recent quarters.

While few can fault the track record of the RBA, it’s been second to none for decades, if there’s one criticism that could be levelled at the bank it would be that it’s been overly conservative in recent years, being prompted to ease policy rather than premeditating periods of weakness.

Though a slow and steady hand with interest rates is a necessity to ensure households and businesses have confidence to make investment decisions, sometimes reacting too slowly can have even greater negative implications.

It could be argued that this conservative approach cost the bank the opportunity to address building disinflationary pressures in late 2015.

In the end they it didn’t act until prompted, again following the release of the quarterly CPI release in April.

Over the same period wage inflation fell to a record low and the Australian dollar strengthened, two factors that will almost certainly add to disinflationary pressures in the quarters ahead.

Now many believe the board will wait until its August policy meeting before easing policy further, once again based on the belief that it will want to see the next set of inflation figures.

Given heightened uncertainty surrounding the economic outlook, at a time when inflationary pressures are close to non-existent, it’s not surprising that some analysts believe that rates are going significantly lower.

If you think that’s still unlikely, just remember how many were predicting rates would eventually fall to 1.75% at the start of 2015.

You can read more from the Journal here.

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Federal police raided Labor offices over NBN leaks

Australian Federal Police have raided the Melbourne office of senior Labor MP and former communications minister Stephen Conroy over suspected leaks to journalists about the National Broadband Network (NBN).

Labor has described the raids as “unprecedented” and said two party staff members were also named in related warrants.

A spokeswoman for the NBN Co has confirmed to Business Insider that it referred the leaks to the AFP. It’s believed that the leaks were reported 6 months ago, and investigations have been underway ever since.

The AFR reports that the addresses raided included shadow defence minister Conroy’s CPO office at Treasury Place and the home of a staffer of shadow communications minister Jason Clare.

Details are unconfirmed but it appears the raids relate to stories published in Fairfax Media in February, which said that the NBN as conceived by Malcolm Turnbull, while he was communications minister, was “facing mounting delays and rising costs, according to a damning internal progress report“.

The AFP said it had “operational activity” ongoing in Melbourne on Thursday night and a clearly angry Labor frontbencher Tony Burke confirmed raids were underway during an interview on ABC TV’s 7.30 program.

“There are allegations floating around about documents that were leaked from the NBN. There’s no doubt the leaks that came from the NBN caused immense damage, immense damage to Malcolm Turnbull when they showed the cost blowout of the NBN, the fact it was slower and going to be delayed,” Burke said.

He accused government staffers of handing out cabinet-in-confidence documents to press gallery journalists and claimed Labor had raised concerns about leaks from all parts of this government, “right through to the National Security Committee of cabinet”, 23 times.

“I don’t know how many of those inquiries have resulted in police raids. I don’t know how many times they’ve been referred to the AFP,” he said.

The Guardian Australia says separate offices belonging to one of shadow communications minister Jason Clare’s staffers are also being raided.

The shadow attorney-general, Mark Dreyfus, said “we have never witnessed such an extraordinary action during a Federal election campaign”.

In a statement, he said:

I can confirm the office of Labor Senator Stephen Conroy has this evening been searched by the AFP. I understand two Labor staff members have also been named in warrants relating to this matter.

I understand these searches are in relation to documents relating to NBN Co.

I have no further information about these documents.


There is no doubt there would be many, many documents that would be of major embarrassment to Malcolm Turnbull.

What we also know is that there have been many other serious leaks out of Government – including relating to national security, defence, and the Federal Budget – and none of them have resulted in Federal police raids.

Tonight’s events are unprecedented – we have never witnessed such an extraordinary action during a Federal election campaign.

Prime Minister Turnbull addressed reporters earlier this evening, saying the raid was a matter for the Australian Federal Police.

“This is entirely a matter for the AFP. You know they operate entirely independently of the Government… the Labor party know that as well as you and I do,” he said.

Opposition Leader Bill Shorten said it was “an extraordinary development”.

“It relates to his embarrassment over the fact that there was a massive blow out of costs of billions and billions of dollars, and of course huge delays in the roll out of the NBN,” Shorten said.

The CEO of the journalists’ union, Paul Murphy, added that the AFP raid “makes protection of journalist sources and our disgraceful data retention legislation an election issue”.

The 7.30 interview is here.

Disclosure: Business Insider Australia’s publisher, Allure Media, is 100% owned by Fairfax Media.

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Science says penis size doesn’t matter to fish

The size of a penis doesn’t really make a difference.

When you are a fish.

Researchers at the Australian National University (ANU) have been looking at the breeding habits of fish to test the theory that bigger genitals make males more attractive or successful in fathering offspring.

“Our findings show the size of male genitals has no effect on their attractiveness, success in reproduction, or their ability to swim and move around in the water,” says Michael Jennions from the ANU Research School of Biology.

The results contradict two previous studies which found that larger penis size had a positive relationship with fish paternity success.

In humans, research has found that women rate men with a larger penis as more attractive.

Professor Jennions says the latest study will lead to a greater understanding of the evolution of genitals. Male genital size vary a lot among species.

The research involved studying the mosquitofish, Gambusia holbrooki, which has a penis-like structure known as a gonopodium. The normal male gonopodium is equal to about 30% of the fish’s body length.

However, the team selectively bred males for eight generations to create some with larger gonopodia and some smaller.

The males were then allowed to freely compete to mate with females. The researchers then used DNA paternity testing to see which males were more successful at fathering offspring.

The size of the gonopodia made no difference to which fish successfully became fathers.

The research used a sample size of 173 males and 165 females and paternity tested over 2,250 offspring.

Mosquitofish have live offspring rather than lay eggs. They are considered a feral pest in Australia after they were introduced in the 1920s in a failed attempt to control mosquitoes.

The research is published in the journal Nature Communications.

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A senior Labor powerbroker forgot to mention his $2.3 million investment property

Labor MP David Feeney could be in deep political trouble after failing to declare a $2.31 million investment property in his inner Melbourne electorate.

Fairfax Media reports Feeney bought the four bedroom home in Northcote in 2013 and planned to renovate it and make it his family home, but instead currently has tenants in there.

But the problem for the factional powerbroker is that he has not declared the Northcote house on the Parliamentary Register of Members interests, despite rules that say any property, shares and gifts over $300 must be registered within 28 days.

His seat of Batman is being targeted by the Greens and the shadow assistant minister for defence does not live in his electorate. Instead he lives in a $2.875 million apartment in East Melbourne, which he bought with his wife in 2010.

The East Melbourne apartment is on the register, along with another jointly owned investment property in Seddon bought for $380,000 back in 2004. Feeney told Fairfax the Seddon property is negatively geared.

His failure to declare the Northcote property could put in in contempt of parliament.

Feeney was contacted by Fairfax and says the failure to declare the house “is something I will look in to straight away”.

The full details are here.

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How an Australian company convinced Marvel to let Quicksilver plug its product

Who needs sports stars when you’ve got superheroes using your product?

Two years ago, when V Energy marketing manager – and X-Men fan – Craig Harkness learnt a third movie in the X-Men prequel trilogy was under way.

The energy drink maker was riding high on a new ad starring a group of Vikings who were mulling up replacing their leader with a slightly better version of their leader:

That was the start of the energy drink’s “the massive hit that improves you a bit” campaign. And Harkness, looking to build on that awareness, saw an opportunity.

Maybe even superheroes could do with a quick jolt – even, Quicksilver, the mutant who can move at supersonic speeds.

But rather than go down the same road V had in the past, of simply branding cans with Wolverine and The Avengers, Harkness wanted something more “real”.

“I wanted to do one in 2016 that was bigger than just putting characters on the can, so I approached 20th Century Fox at a local level, where I’d worked with them in the past, and asked how they would feel about us using one of their movie characters,” Harkness says.

“One in particular who would be really appealing to an 18-24 year old audience, and how would you feel about us inserting one of them into the our ads.”

Pretty good, as it turns out:

Keep it simple

You might already be thinking “Well, it’s V, isn’t it? Not exactly a small brand.” But Harkness said when he approached 20th Century Fox in the US, the energy drink was virtually unknown.

“We do sell in the UK and Argentina, but V Energy is mainly Australia and New Zealand,” Harkness says. “So the guys over in LA didn’t really know who we were they were very nice to us, but they didn’t know anything else other than we were the No 1 player in Australia, New Zealand.”

With the help of ad agency Clemenger BDO, Harkness and his team put together a pitch and were surprised to find “it wasn’t really that much of a hard sell”, despite the relative unknown status of V in the US.

“They liked the idea of Quicksilver being replaced by a slightly better version of himself. And they saw that it could be really funny and it could add some levity to their whole campaign around the movie.

“Coincidentally when we pitched it to the US, the Fox marketing guy in LA, he was the character they had in mind as well so it was really good that we both arrived at this same place.”

Harkness says the key to getting the attention of global heavyweights was to keep everything as collaborative as possible. “There’s a little bit of give and take with everything… it works much better than trying to call the shots,” he says.

So that meant being prepared to fly to Canada and be close to the “X-Men” set. In V’s case, it meant beating there the day Quicksilver, aka Evan Peters, finished filming.

“We literally had one day and one window in his calendar,” Harkness says. “Fortunately, we had Peters’ wardrobe mistress from Apocalypse and the person who helped with all his special effects. So it meant we had the same people who’d worked on movie with us watching the shoot of the ad to make sure that we got everything we needed.

“If we had done it 6 or 9 months later, it would have been a lot more difficult because you’d have to try to find his wardrobe again out of storage, all those kind of things.”

Obviously, the cost of making it all run as smoothly as possible for Peters and those in charge of the movie franchise is not insignificant.

Quicksilver’s spot has been reported as up to a $6 million punt for the brand. But while the original “Vikings” launch on YouTube – V’s most successful campaign – pulled nearly 360,000 views over the past two years, the Quicksilver ad has already surpassed that – in just two weeks.

More than social

Harkness will know if the exposure has paid off in about three weeks, when sales data starts coming in. But it certainly could have been much more expensive. For example, Wolverine was probably a more obvious choice.

“That was the process we had to go through,” Harkness says. “We could have gone and asked Hugh Jackman if he wanted to do it. I imagine the fee might have been a bit more but the thing about it was … we wanted it to be someone who was identifiable.

“Even though he’s Quicksilver and he moves around the world very, very fast, we wanted it to be someone who looks like someone who could be your mate you were at university with or something.

“I knew this was going to be one of the biggest films of the year and at the end the reviews are out and they’re saying that Evan Peters is the breakout star, so we’ve picked the right character.”

And Harkness says impact and ROI is not as simple as counting the YouTube hits or Facebook page views (280,000 and counting). Cinema and TV advertising are still the key to maximum impact – at least in the initial stages.

Harkness has had a two-week spot booked for the ad to run before “Captain America: Civil War” in cinemas since December.

“It’s really, really interesting. We find we need to use a balance,” Harkness says. “Cinema’s great for the big splash when you first launch. Obviously your reach is massive and the environment people see it in is fantastic.

“TV is really important for us, especially going into the big shows like ‘The Voice’, ‘Masterchef’ and so on. That gets us fantastic reach.”

“But the frequency, we deliver through digital. So that’s the way we play it, we use.. big reach building programs, like the ones that have a 2 million audiences in the first month, then build our frequency through digital.”

Nothing to lose

Harkness says if you’ve got a great product and great idea for a collaboration, there’s nothing to be lost from trying.

“Basically, we just went over there and my advice to anyone else who wanted to do this going forward would be just approach it from the point of view of speaking to the local market,” he says.

“So, the local studio. I’ve worked with Disney before, I’ve worked with Fox and they’re all open to discussions.

“I think people think that its harder than it needs it to be, or it’s too hard for a local brand to do these kind of collaborations. But just be bold and think anything’s possible and go to talk them, and they’ll listen.”

And of course, you might get to hang out with a superhero.

“(Peters) was really, really great,” Harkness says. “Obviously on the set he had his space he could go to, but he had lunch with all the cast and crew and we all took our selfies and stuff with him.

“He was really just a nice, decent person.”

“X-Men: Apocalypse” will open in Australian cinemas on May 19.

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