Community outrage as residents forced to abandon businesses to make way for Metro West


Western Sydney resident, Maria Marino, was relying on her mechanics shop as security after retirement but following an acquisition by the NSW government, her Burwood business is soon to be swallowed up by the new Metro West.

“I’ve had this property for 25 years, father bought it for us, it’s very emotional,” Marina Marino told 9News.

Across Parramatta Road, another local icon, Urban Flower, will soon shut its doors after 48 years in business.

Western Sydney resident, Maria Marino.
Western Sydney resident, Maria Marino. (Nine)

“We’re fourth generation florists, my grandfather opened shop, it’s devastating his legacy is being erased,” owners Winston and Carli Jeffrey told 9News.

Ms Marino and Mr Jeffrey are among hundreds of Sydney residents forced to abandon their homes and businesses to make way for major development projects.

In the past three years 1000 homes and businesses have been acquired across Sydney.

The suburbs hit hardest include Randwick with 89 properties acquired, followed by Parramatta with 62, Luddenham with 33 and Kellyville with 30.

Despite the land now being gazetted, 76 inner west property owners are taking on Sydney Metro for greater compensation, arguing they’ve been priced out of the market.

“You have to spend a million dollars more to find something similar,” Ms Marino said.

Sydney business owners Winston and Carli Jeffrey.
Sydney business owners Winston and Carli Jeffrey. (Nine)

“We have no choice but to go to the valuer general, no one would meet with us take our phone calls,” Mr Jeffrey said.  

Despite no official settlement being reached, the government is now charging property owners rent until they are forced to leave at the end of June.

Community frustration surrounding acquisitions has prompted a parliamentary inquiry into how the process could be made fairer.  

“It is important to have a spotlight on the process … let’s leave it to a parliamentary inquiry to review it,” NSW Minister for Transport Andrew Constance said.

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Australian uniform China connection, furious backlash, Uighurs, forced labour


Australian Olympians became embroiled in the global row over Chinese forced-labour cotton on Wednesday as the country revealed its uniforms for the upcoming Tokyo Games.

The Australian Olympic committee faced criticism as it rolled out ASICS-branded sportswear, with the company facing questions over its use of cotton from the Xinjiang region.

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“We’ve been assured that none of the cotton for the Australian Olympic team comes from that region,” said Ian Chesterman, Australian Olympic Committee (AOC) vice president.

“I think athletes at the moment need to focus on what their job is, which is to get out there and compete for Australia,” he said during a press conference.

At least one million Uighurs and people from other mostly Muslim groups are believed to have been held in camps in Xinjiang, in China’s northwest.

Human rights groups, independent media and foreign governments have found evidence that the local authorities have carried out mass detention, forced labour, political indoctrination, torture and forcible sterilisation.

The United States has described the situation as genocide and banned all cotton from Xinjiang. Australia’s parliament is considering a similar move.

Several major fashion brands recently announced they would no longer use cotton from Xinjiang — for fear it has been produced by forced labour.

But ASICS was one of several firms — hoping to safeguard access to China’s vast marketplace — that initially responded to the allegations by vowing to “continue to purchase and support Xinjiang cotton”.

Uniform choice ‘disgusting and shameful’

Nathan Ruser, a researcher at the Australian Strategic Policy Institute, was among the critics describing Australia’s use of ASICS sportswear as “disgusting and shameful”.

An ASICS spokesperson told AFP that the initial company statement on Chinese social media was “unauthorised” and did not represent “our official corporate position on this matter”.

“We are fully committed to working closely with business partners to ensure human rights are respected and environmental standards are met at all times,” the spokesperson said.

The Chinese government has denied carrying out rights abuses but companies that have voiced concerns have been punished.

Swedish fashion retailer H&M disappeared from Chinese shopping apps and has been targeted for boycott.

Chinese state-run tabloid the Global Times on Tuesday said ASICS had become “the latest target of a boycott by Chinese customers” and was facing “catastrophic losses” after backtracking on its initial statement.

China is one of the world’s largest suppliers of cotton, making up around one-fifth of the global total.

Almost 90 per cent of China’s cotton comes is believed to come from Xinjiang.

“I don’t think any Australian athlete wants to wear a uniform produced by a company that is sourcing cotton from Xinjiang,” Elaine Pearson, Australia director for Human Rights Watch, told AFP.

“This is a test case for companies like ASICS about how committed they are to upholding human rights principles.

“They should do their due diligence and be transparent in reporting about their supply chain. “The Chinese government is showing its true colours by pressuring companies to be complicit in abuses rather than working to end violations against Uighurs and other Turkic Muslims.”

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Cafes and restaurants forced to cut back opening hours


Cafes and restaurants across the Northern Rivers are being forced to reduce their opening hours as they struggle to find and keep workers.

As the end of JobKeeper looms, creating a lot of uncertainty for business owners and employees, questions have also been raised about whether hospitality wages are satisfactory.

La Cucina di Vino at Ballina recently told customers they could no longer open on Sundays and Mondays “until further notice” because of “staff shortages”.

“We are sorry for any inconvenience but we will be back soon,” they wrote on Facebook.

 

La Cucina di Vino Ballina is one restaurant that has been forced to close for two days a week because of a lack of workers.

 

Popular Evans Head cafe, Evans to Betsy, has also found it difficult to get workers.

They posted on the Evans Head Notice Board advising of the changes to their opening hours.

“Apologies to everyone. Like many other hospitality businesses in northern NSW at the moment, we cannot find staff and are changing our hours until we do to Thursday to Sunday, 6am to 2pm,” they wrote.

“Look forward to opening seven days again soon.”

Riva Bar & Grill in Ballina is now only open from Thursday to Saturday.

Maheep Singh from the venue recently took to social media to lament the lack of hospitality staff in the area.

“Any idea when we will be able to fill hospitality positions in Ballina? Businesses will have to close due to lack of staff,” he wrote.

Commenters suggested the end of JobKeeper payments on March 28 could see people forced to return to the workforce.

JobKeeper was introduced as a subsidy for businesses significantly affected by COVID-19.

According to data released by the ATO and Treasury earlier this month, more than 3600 organisations on the Northern Rivers are still using JobKeeper.

The 2480 and 2481 postcodes the Lismore and Byron regions have the most applications, with more than 700 each.

 

More and more people want to eat out with the easing of COVID-19 restrictions, but venues are struggling to find, and keep, good staff.

More and more people want to eat out with the easing of COVID-19 restrictions, but venues are struggling to find, and keep, good staff.

 

Meanwhile, even some of the region’s most renowned and popular venues are offering extra incentives in an effort to attract staff.

According to Seek, there are more than 180 vacant jobs in hospitality and tourism in the Far North Coast region.

The Empire Cafe in Mullumbimby is looking for a manager and, according to the job ad, there are numerous benefits.

“Attractive salary package based on experience with incentives, fantastic location and lifestyle, job security with a permanent full time role,” the ad states.

Bangalow Bread Co is offering “above award wages” for a head barista position, while the Lennox Head said its chef de partie position offered “opportunities for career growth and progression” and “staff perks and discounts”.

Three Blue Ducks at The Farm has two vacant positions, both of which have an “attractive salary, incentive package, tips, super”.

But are hospitality workers paid enough to meet the costs of living on the Northern Rivers?

 

A number of cafes and restaurants are adjusting opening hours because they can't find staff, but workers say the award wages aren’t enough to survive on.

A number of cafes and restaurants are adjusting opening hours because they can’t find staff, but workers say the award wages aren’t enough to survive on.

 

That was the question Brett Strickland recently asked on the Ballina Community Noticeboard.

“Business owners are pulling their hair out wondering why they can’t fill positions,” he wrote.

“Well, you won’t attract workers in 2021 with 2001 pay rates. Just something to think about.”

Almost 200 people weighed in on the argument.

Sammy Kelly: “It has nothing to do with business not paying the right pay rate, it has everything to do with the lazy people these days due to government handouts because of Covid. Why would people work when the government pays them to do sh-t all?”

Edison Cullen: “As a business owner I pay my staff more than the minimum because I’m not a giant prick. I also have amazing staff as a result.”

Paul Ibrahim: “I’m a business owner, people don’t turn up for interviews nor to work. But you wait and see, around the 28th of March, all these people will come knocking looking for work.”

Ella Marie: “One thing I notice is almost 90 per cent of the jobs are casual … it’s not the job security people need.”



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Adult children forced back home during COVID are still recovering


It has been almost a year since university student Gabi Vella was stood down as a bar manager in Sydney when the pandemic hit Australian shores.

Like thousands of other young adults, she was staring down the barrel of lockdown — with no income and rent and bills to pay.

She did what thousands of other young adults did at that time: moved back in with her parents.

A new survey from Finder revealed exclusively to Domain found more than a third (34 per cent) of Australian households had adult children return home when COVID hit.

Many abandoned their rentals to take refuge with their parents to help allay some of the fears and pressure after industries such as hospitality, retail and entertainment heavily reliant on casual work evaporated overnight.

Ms Vella stayed at her parents’ place at Tamworth close to four months while paying the rent on the remainder of her lease.

But as her workplace started re-opening, she returned to Sydney and found a new rental in a share house with friends, and, 12 months on, she’s actually better off — her rent is cheaper now than it was pre-COVID.

Much like Australia’s fast economic turnaround, the recovery for many young adults who fled home to their parents has been swifter than they initially expected.

The Finder figures revealed that almost half (43 per cent) of the adult children who returned home last year when the pandemic hit Australian shores have been able to recover enough financially to leave again.

DSC_2129_c5smge
Gabi Vella moved home from Sydney to her parents’ house in Tamworth after being stood down from her job due to COVID-19 restrictions. Photo: Peter Rae

But it’s not all sunshine and rainbows. Ms Vella’s situation, although improved from this time last year, is still precarious. She’s relying on Centrelink payments to cover her rent and is worried her rent will go up, costing her more than she can afford.

“COVID pushed all my uni placements this year and I have to do it for eight months straight — I had to quit my job to finish my placement,” she said. “Currently I’m relying on Centrelink to pay my rent.

“We’re concerned if we stay here that they might put [the rent] back up to the original price so we can’t afford to stay here. It’s definitely stressful. We’re three very, very young uni students, we’re not from Sydney, we don’t have an option.”

The_Sunday_Age_-_Adult_kids_moving_back_home_6_eelgac
Des Flanagan moved back in with his mum and dad, Maureen and Brendan, after losing work due to the COVID-19 pandemic. Photo: Stephen McKenzie

Melbourne music theatre performer Des Flanagan spent about five months living with his parents after losing work at the beginning of the lockdown but was able to move back out again in July.

The rental market dropped just as he was eligible for JobKeeper, keeping him “afloat”.

“I worked sustainably and I have somewhat of a buffer to get through this period,” Mr Flanagan said. He was relying on his savings until he can work full time again in performing arts.

Krystie Gunn and parents
Krystie Gunn moved home with her parents Helen and Peter due to the COVID-19 pandemic.

Melbourne retail merchandise planner Krystie Gunn, who moved out less for financial reasons and more to lockdown with her parents in Shepparton, has also returned to the city.

Ms Gunn said she was able to find a discount rental in the CBD that saw her save $6000 on a new 12-month lease.

“I think the timing of your lease expiry is everything. I got very lucky. I had no issue finding something much much cheaper,” Ms Gunn said.

“There’s still about six apartments that are empty at the moment and if it continues along that way they’ll struggle to put it up.”

The Finder data, which surveyed 1015 Australians, found that one in four adult kids still live with their parents in Victoria – the highest rate in Australia.

Finder’s personal finance specialist Taylor Blackburn said the pandemic left many financially distressed.

“Being able to move home to live with parents has been a lifeline for those lucky enough to have the option,” Mr Blackburn said.

But the uncertainty did not just affect kids last year, with quite a few medically frail parents who moved in with their adult children, he said.

Forty per cent of Victorians also had multi-generational living between parents and children compared to just 28 per cent in Western Australian and South Australia.

Parents in South Australia were most likely to live with an adult child at 18 per cent of households compared with 12 per cent of households in Queensland.

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Adult children forced back home during COVID are still recovering


It has been almost a year since university student Gabi Vella was stood down as a bar manager in Sydney when the pandemic hit Australian shores.

Like thousands of other young adults, she was staring down the barrel of lockdown — with no income and rent and bills to pay.

She did what thousands of other young adults did at that time: moved back in with her parents.

A new survey from Finder revealed exclusively to Domain found more than a third (34 per cent) of Australian households had adult children return home when COVID hit.

Many abandoned their rentals to take refuge with their parents to help allay some of the fears and pressure after industries such as hospitality, retail and entertainment heavily reliant on casual work evaporated overnight.

Ms Vella stayed at her parents’ place at Tamworth close to four months while paying the rent on the remainder of her lease.

But as her workplace started re-opening, she returned to Sydney and found a new rental in a share house with friends, and, 12 months on, she’s actually better off — her rent is cheaper now than it was pre-COVID.

Much like Australia’s fast economic turnaround, the recovery for many young adults who fled home to their parents has been swifter than they initially expected.

The Finder figures revealed that almost half (43 per cent) of the adult children who returned home last year when the pandemic hit Australian shores have been able to recover enough financially to leave again.

DSC_2129_c5smge
Gabi Vella moved home from Sydney to her parents’ house in Tamworth after being stood down from her job due to COVID-19 restrictions. Photo: Peter Rae

But it’s not all sunshine and rainbows. Ms Vella’s situation, although improved from this time last year, is still precarious. She’s relying on Centrelink payments to cover her rent and is worried her rent will go up, costing her more than she can afford.

“COVID pushed all my uni placements this year and I have to do it for eight months straight — I had to quit my job to finish my placement,” she said. “Currently I’m relying on Centrelink to pay my rent.

“We’re concerned if we stay here that they might put [the rent] back up to the original price so we can’t afford to stay here. It’s definitely stressful. We’re three very, very young uni students, we’re not from Sydney, we don’t have an option.”

The_Sunday_Age_-_Adult_kids_moving_back_home_6_eelgac
Des Flanagan moved back in with his mum and dad, Maureen and Brendan, after losing work due to the COVID-19 pandemic. Photo: Stephen McKenzie

Melbourne music theatre performer Des Flanagan spent about five months living with his parents after losing work at the beginning of the lockdown but was able to move back out again in July.

The rental market dropped just as he was eligible for JobKeeper, keeping him “afloat”.

“I worked sustainably and I have somewhat of a buffer to get through this period,” Mr Flanagan said. He was relying on his savings until he can work full time again in performing arts.

Krystie Gunn and parents
Krystie Gunn moved home with her parents Helen and Peter due to the COVID-19 pandemic.

Melbourne retail merchandise planner Krystie Gunn, who moved out less for financial reasons and more to lockdown with her parents in Shepparton, has also returned to the city.

Ms Gunn said she was able to find a discount rental in the CBD that saw her save $6000 on a new 12-month lease.

“I think the timing of your lease expiry is everything. I got very lucky. I had no issue finding something much much cheaper,” Ms Gunn said.

“There’s still about six apartments that are empty at the moment and if it continues along that way they’ll struggle to put it up.”

The Finder data, which surveyed 1015 Australians, found that one in four adult kids still live with their parents in Victoria – the highest rate in Australia.

Finder’s personal finance specialist Taylor Blackburn said the pandemic left many financially distressed.

“Being able to move home to live with parents has been a lifeline for those lucky enough to have the option,” Mr Blackburn said.

But the uncertainty did not just affect kids last year, with quite a few medically frail parents who moved in with their adult children, he said.

Forty per cent of Victorians also had multi-generational living between parents and children compared to just 28 per cent in Western Australian and South Australia.

Parents in South Australia were most likely to live with an adult child at 18 per cent of households compared with 12 per cent of households in Queensland.

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Racing Victoria disqualifies 72 horses embroiled in Aquanita scandal but owners won’t be forced to repay prizemoney


Racing Victoria stewards have disqualified 72 horses implicated in the Aquanita Racing scandal but affected owners won’t have to repay more than $1 million in prizemoney.

Aquanita Racing trainers Robert Smerdon, Stuart Webb and Tony Vasil were disqualified along with four stablehands for engaging in improper or dishonourable actions in connection with racing at the end of a long saga in 2018 and 2019.

RV stewards asked the managing owners of 81 starters to show cause why their horses should not have been disqualified from their respective races.

Only nine runners escaped disqualification, including the 2015 Group 1 Myer Classic winner Politeness.

Those disqualified include the Smerdon-trained Group 2 Herbert Power Stakes winner (2400m) Shewan.

Former star jumper Black And Bent, also trained by Smerdon, was disqualified from the 2011 Grand National Hurdle and a hurdle at Sandown in 2012.

Black And Bent’s former stablemate Brungle Cry was stripped of her win in the 2012 Grand National Hurdle.

The placings of the affected races will be amended and prizemoney paid to other runners “as though the disqualified horse had not started in the race”.

“Having considered all the facts and the numerous and extensive responses to show cause notices, the Stewards determined that 72 starters were the subject of a prohibited administration, and that the appropriate course of action is to disqualify them,” RV chief executive Giles Thompson said.

“The Aquanita case has been a long and challenging chapter where the systematic cheating of a small group of individuals cast a poor light over Victorian racing and the many honest, hardworking people within.”

Racing Victoria will pay the balance of any prizemoney owing, based on the amended placings, to the owners, trainers and jockeys of horses that finished behind the disqualified runners.

Racing Victoria has budgeted that amount in its finances since 2018.

However, Racing Victoria will send letters to Smerdon, Vasil and Webb demanding repayment of prizemoney they received from any of the 72 starters they trained.

RV chairman Brian Kruger said the Board faced a difficult decision on the repayment of prizemoney but decided against recouping money from owners.

“This was a difficult decision for the Board to make knowing that there were pros and cons with the various options available to it,” Kruger said in a statement.

“In making its determination, the Board was ultimately guided by the principle of what is in the best overall interests of Victorian racing and a desire to apply a consistent determination for owners across all disqualified starters.”

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Insurance Australia Group forced to clarify Greensill relationship


Insurance Australia Group has been forced to clarify its exposure to failed financier Greensill after its shares sank 10 per cent amid concerns about its relationship with the group.

The general insurance giant went into a trading halt on Tuesday after its shares tumbled over its links to Greensill, which were first revealed by The Age and The Sydney Morning Herald last week.

Lex Greensill’s Greensill Capital has formally entered administration. Credit:Peter Braig

Greensill’s United Kingdom operating arm and its Australian head company collapsed into administration on Tuesday after losing the support of its key financial backer Credit Suisse.

Greensill provides a service that allows suppliers to large companies to be paid earlier for a fee. These financing arrangements are then packaged up and rolled into securities that are sold by Credit Suisse.

IAG put out a statement to the market distancing itself from Greensill, saying it no longer carried the risk attached to $4 billion worth of policies underwritten by its former joint venture entity The Bond & Credit Company (BCC) because it sold its stake to its partner Tokio Marine in April 2019.

“As part of a transition arrangement after the April sale of BCC, new policies were underwritten by
[IAG’s] IAL from the date of sale up to June 30, 2019 and Tokio Marine & Nichido Fire Insurance Co Ltd
(Tokio Marine) retained the risk for these polices, net of reinsurance.

“In addition to extensive reinsurance placed by IAG as part of the sale, IAG entered into agreements
with Tokio Marine for it to hold any remaining exposure to trade credit insurance written by BCC
through IAL,” the statement said.

IAG’s shares quickly recovered following its statement to be trading down 2 per cent to $4.72.

The Age and The Sydney Morning Herald also revealed that the Australian prudential regulator had been monitoring IAG’s exposure to Greensill amid concerns the major insurer had not clearly disclosed the extent of its relationship with Greensill. The Australian Prudential Regulatory Authority declined to comment.

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RBA could be forced to hike interest rates as house price boom continues


Since the overnight cash rate hit 17.5 per cent in January 1990, Australians have seen the RBA cut interest rates 51 times. Now, after more than three decades of interest rate cuts, the cash rate sits at just 0.1 per cent.

This has led some analysts to call the bottom, predicting that the cash rate will never be cut lower than it is today.

With the economy’s recovery from the pandemic still fragile and heavily reliant on government support and household savings, RBA governor Philip Lowe has stated interest rates would stay low for “as long as needed”.

In a recent appearance before a parliamentary committee, Mr Lowe stated that rates would stay at this level for up to three years.

RELATED: Property dreams are over for young Aussies

This was no doubt music to the ears of Australia’s 2.1 million property investors, and the more than 100,000 first homebuyers who purchased property since the pandemic began.

With many mortgage holders still facing an uncertain future, the predicted certainty about the stability of interest rates also provided a much-needed boost to household confidence. Partially as a result, the Westpac consumer sentiment index recently hit a decade high.

While the RBA does have a great deal of power to influence interest rates through a number of different tools it possesses, the direction of interest rates are not entirely within their control. They are ultimately guided by the tides of the global bond market.

Despite Governor Lowe’s view that rates would stay low for at least three years, financial markets are seeing things quite differently.

According to a report from Bloomberg, credit markets are pricing a 30 per cent chance of the RBA being forced to hike interest rates by the middle of next year.

As global government bond yields (aka borrowing costs) continue to rise, the RBA aren’t the only central bank beginning to see upward pressure on mortgage rates.

In the United States, banks have already started to raise mortgage rates without a move by the Federal Reserve. In the past four weeks, the interest rate on a 30-year fixed rate mortgage has risen by 0.45 per cent.

This has resulted in demand for mortgages beginning to cool. According to the US Mortgage Bankers Association mortgage applications to purchase a home, fell 11.4 per cent in the latest week’s data, with applications for refinancing down 11 per cent.

While the level of mortgage applications remains elevated, above pre-pandemic levels, if rates continue to rise, demand for property will likely moderate in time.

As global bond yields continue to rise, US banks are increasingly finding their lending margins squeezed, forcing them to raise mortgage rates in order to maintain profits and the stability of their businesses.

RELATED: Huge change 95 per cent of Aussies want

Back in Australia, there is an unprecedented consensus surrounding the direction of the property market. Across a wide range of analysts and market commentators there are few that disagree that residential property as an asset class is set to boom and likely very strong price growth in 2021.

Unlike other housing price booms that have occurred in the recent past, this one is predicted to be the first truly nationwide property boom in years with a few very notable exceptions.

But as mortgage rates in the United States and elsewhere continue to rise, the global bond market could slam on the brakes of this would be multi-year housing price boom.

In as little as 15 months time Aussie mortgage holders could be staring down the possibility of not only an interest rate hike, but the chance that rates may only rise from here.

After relying on interest rate cuts for over 30 years to make paying off our homes significantly easier and/or faster, the Aussie mortgage holder’s greatest friend, the interest rate cut, may be put to rest for the foreseeable future.

If we do see continued upward pressure on borrowing costs the RBA is not likely to sit idly by. It will use its various tools to attempt to continue to artificially suppress interest rates.

As it stands the RBA is engaging in yield curve control. In plain English, it has set a target it does not wish three-year government borrowing costs to significantly exceed (0.1 per cent) and is buying bonds in an attempt to keep borrowing costs in its target range.

So far it has been relatively successful in suppressing rates to its desired level, despite seeing some brief moments where their target was significantly exceeded.

RELATED: Stunning prediction for house prices

However, the Australian Government’s long-term borrowing costs have seen far more explosive growth in their relative cost.

In the past six weeks, the cost of the Federal Government borrowing money for a 10-year fixed term has effectively increased by 79 per cent, with interest rates rising from 0.94 per cent to 1.68 per cent.

Despite the RBA Governor’s promises of rates staying low for at least three years, the directions of interest rates are not entirely within his control. They are ultimately at the mercy of the unpredictable tides of the global bond market.

As the global bond market attempts to price in what lays ahead and borrowing costs continue to rise, Aussie mortgage holders and the Reserve Bank may increasingly find themselves caught in the crossfire.

Going forward, rates may stagnate at roughly this level or even go slightly lower again if the global recovery shows signs of faltering. But as the global consensus turns towards a more inflationary future, it’s possible the days of bargain basement interest rates may already be slowly drawing to a close.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator



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Jack Ma’s Ant forced into arms of banks he once dubbed ‘pawnshops’


Jack Ma’s Ant Group has undercut, undermined and insulted China’s big state-owned banks for years. Regulators have now turned the tables on the financial technology group after forcing the company to pull its record $37bn initial public offering in November.

Beijing is targeting the symbiotic relationship that has transformed China’s financial system by matching loans from small regional banks with 500m borrowers via Ant’s Alipay app, the country’s biggest payments platform.

Under new rules that will be enforced from next January, Ant will be required to limit its business with regional lenders in favour of the big state-owned banks Ma derided as having a “pawnshop” mentality in a speech last October. The billionaire entrepreneur has largely vanished from public view since he made the comments in a dispute that has underlined growing tensions between the state and the private sector in China as President Xi Jinping tightens his grip on the economy.

The move to clip Ant’s wings came after the size and scale of the company’s lending operation, which was revealed in its IPO pitch, caught regulators off guard, according to several people familiar with the situation.

“The regulators were surprised that Ant would have a larger market capitalisation than China’s largest state-owned banks,” said one Chinese banker who advises the government on financial policy issues. “When the IPO was priced they looked at it and said: ‘What, this thing is bigger than JPMorgan?’”

Rules designed to slow down Ant

Ant was responsible for arranging about one-tenth of China’s consumer lending last year via two products: Huabei, which is similar to a credit card; and Jiebei, which offers small unsecured loans through Alipay. Ant’s total outstanding loans reached Rmb2.2tn ($340bn) as of June 30.

About 90 per cent of the lending was underwritten by a network of 100 partner banks, many of which were smaller, regional lenders that offered competitive rates in exchange for access to Ant’s vast customer base and national reach.

The new rules mandate that joint-lending made through the internet can account for no more than half of any bank’s total loan book and lending through any single fintech platform cannot exceed 25 per cent of a bank’s tier one, or core, capital.

This will inevitably lead Ant to have to work more closely with the country’s bigger banks to expand its lending business, as China’s top 10 banks hold 64 per cent of the country’s total Rmb20tn of tier one capital, according to Bernstein.

“Since each player, especially the smaller ones, can do less, Ant has to do more with the bigger banks with big balance sheets,” said Kevin Kwek, an analyst at Bernstein. “This will weaken Ant’s bargaining position with them.”

Bernstein has cut its estimate of Ant’s value from $310bn at the putative IPO price to $230bn and said it could fall further. “The model is not completely broken, but growth will be curtailed quite a bit,” said Kwek.

The rules also introduced regional restrictions, so a city bank in Beijing would no longer be able to extend Alipay loans to consumers in Shanghai.

“Ant has more than 100 financial partners but China only has roughly 20 national banks . . . the new rules on cross-region lending will hurt Ant a lot,” said Xiaoxi Zhang, a financial analyst at Gavekal Dragonomics, a research firm.

The Bank of Tianjin, for example, increased its consumer loan book by nearly 800 per cent in 2018 after it signed deals with Ant and other fintech platforms.

The Bank of Shizuishan, in China’s north-west Ningxia region, extended Rmb20bn in loans through Alipay over about 18 months to October, according to state media.

One lender in Hangzhou said Alipay lending had been so good for business that the company tiptoed around negotiations with Ant for fear the group would walk away.

To help fund their lending spree, analysts said, regional banks had offered attractive rates for deposit products on platforms such as Alipay. On January 15, regulators barred banks from offering deposit accounts on third-party online platforms.

“That basically cut their aggressive funding channel possibly used to fund the co-lending with fintech platforms,” said Jacky Zuo, an analyst with China Renaissance, an investment bank. “The trend is smaller banks are retreating from this type of co-operation.”

Data sharing and risk management

The rules will force banks to complete credit assessments on potential borrowers themselves, rather than relying on Ant.

But most banks have mainly dealt in mortgages and business loans, situations in which borrowers have collateral, said Chen Long, a Beijing-based partner at Plenum, a consultancy.

“Banks don’t have the expertise, they don’t have the data” to assess consumer loan risk, he added. “The banks will have to find another way around this regulation.”

Chinese consumer loan annual interest rates by platform

Ant shares some borrower data with lenders but it may have to hand over much more to maintain its partnerships, although this may not suffice.

“Even if Ant hands over the data, banks will find it difficult to create sophisticated risk management systems powered by AI algorithms that can match Ant’s,” said Linghao Bao of Trivium China, a research firm. “Small banks won’t even know what to do with all this data.”

Taking on more credit risk

Chinese regulators were particularly perturbed that Ant earned fees on the loans it pushed to users without having to take on the credit risk. 

The new rules decree that online lenders will have to self-fund 30 per cent of each loan they make with banks. It is unclear what portion of Ant’s lending business this will affect. 

But an expansive application of the rule would turn Ant from an asset-light tech company into a capital-heavy business more akin to a bank. Bernstein noted a shift to on-balance sheet lending would actually improve Ant’s profitability, as the company would earn the interest income, but would also lower its return on capital. 

“Not being an asset-light model will mean investors will punish the stock via weaker multiples,” it said.

Coronavirus causes rise in delinquency rate

Even though Ant reached a restructuring deal with Chinese regulators, the reorganisation of its business as a financial holding company will bring it directly under the thumb of the central bank.

The People’s Bank of China in January also took the unusual step of issuing draft rules that would allow it to push for the break-up of payments companies such as Ant on antitrust grounds.

Ant declined to comment.

Additional reporting by Nian Liu, Sun Yu and Tom Mitchell

Video: Why the Ant IPO got cancelled

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Queensland sex workers forced underground by ‘draconian’ laws amid ‘predatory’ police targeting, advocates say


“American girl next door …,” it read.

When he arrived at her apartment in Brisbane, he was nervous — nosey even. Then the barrage of questions began.

Where was she from? Who was she working with? Will she have group sex? Does she offer natural services (sex acts without a condom)?

While Isabel was used to awkward, middle-aged men prying about her services, she felt uneasy.

Queensland’s sex industry is home to a labyrinth of complex laws that are tightly regulated, with sex only legally sold in about 30 licensed brothels across the state or by people working alone.

Despite it being legal to be a sex worker in Queensland, workers are criminalised for explicitly advertising their services, working in pairs or offering “natural services” — sending much of the industry underground.

Thanks for stopping by and seeing this story about “What’s On in the City of Brisbane” titled “Queensland sex workers forced underground by ‘draconian’ laws amid ‘predatory’ police targeting, advocates say”. This story was presented by MyLocalPages as part of our local events & news services.

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