Posts by Sandra Morris

Julian Meehan Adani

Queensland Government Considers Using Public Funds for Adani Road Project

The Queensland government is considering covering the $100 million cost of road access for Adani coal mine, despite promising that no taxpayers fund would go to the project.

The ABC said documents obtained under a right to information revealed the Palaszczuk government is still in negotiations with Adani and Isaac Regional Council about upgrading access to the proposed Carmichael mine site in central Queensland.

However, the Department of Transport and Main Roads said no decision has been made yet.

In November, Palaszczuk said she would not rule out helping the local council fund the access road. A spokesman for the government said it would cooperate with local councils in regard to their infrastructure needs. “Significant projects can impact on local road networks and improvements to those networks can benefit the greater community,” he said. “Costs associated with major projects are recovered by the state on a commercial basis.”

The ongoing negotiations have received backlash. “Annastacia Palaszczuk has lied to Queenslanders and has broken yet another election promise,” said Opposition Leader Deb Frecklington.

The Mackay Conservation Group said the government must rule out funding the road project. “The Queensland Coordinator General recommended Adani be responsible for road upgrades and Adani said it would pay for the upgrade,” said the group’s spokeswoman Maggie McKeown. “Why then would the premier spend public funds on this project?”

Ricoh Becomes Australia’s First Carbon-Neutral IT Services Company

Ricoh has become the first IT services company in Australia to achieve carbon-neutral status.

Following its achievement as the first tech services organisation in the country to achieve a carboNZero certification, Ricoh went further in its efforts to reduce its greenhouse gas (GHG) footprint. The company worked closely with not-for-profit Enviro-Mark Solutions to develop a multi-pronged GHG reduction strategy.

The strategy covered a number of areas, including a reduction in electricity consumption, freight and fuel usage, staff air travel and waste to landfill.

“Every aspect of our national operations was put under the microscope so we could understand the sources of all our existing GHG emissions,” said Tori Starkey, general manager – marketing at Ricoh Australia. “Taking such a holistic approach meant we would be well placed to make our subsequent activities as effective as possible.

“Far from being a set-and-forget exercise, these strategies will continue to be evaluated and improved over time. At the same time, customers are enjoying more efficient service and product deliveries while also being able to achieve their own footprint improvements … With increasing attention being paid to achieving a reduced corporate environmental footprint, many businesses have set a goal of making their operations carbon neutral. For Ricoh Australia, this goal has become a reality.”

Adelaide’s Real Estate Market Continues Speedy Sales Boom

Real estate Adelaide continues its boom as houses sell up to four times as fast as they did a year ago.

According to realestate.com.au data for the six months to April 30, Gilberton is the fastest selling suburb for houses with median time of 13 days on the market. This is a significant improvement from 35 days for the same period last year.

Hyde Park and Sefton Park houses follow with median market time of 17 days, while Clarence Gardens and Melrose Park houses sell in 18 days.

For units, Kensington Gardens rises to the top with 19 days, less than a third of last year’s 65 day median. It is followed by Brompton with 20 days and Klemzig with 22 days, way down from its 88 days last year.

Realestate.com.au chief economist Nerida Conisbee said sale times would continue to go down due to the declining stock trend over the winter.

Trump’s Cancellation of North Korea Summit Sends Markets Down

US and European stocks fell after US president Donald Trump cancelled a planned June summit with North Korean leader Kim Jong-un.

On Thursday morning, Trump cancelled the June 12 Singapore meeting, citing Pyongyang’s “open hostility” even though North Korea followed through on its pledge to destroy tunnels at its nuclear test site.

The Dow Jones fell 75.05 points (0.3 per cent) to finish at 24,811.76 while the S&P dipped by 5.53 points (0.2 per cent) to close at 2,727.76. Nasdaq also dropped 1.53 points (0.02 per cent) to 7,424.43.

European bourses had a sharp dip, with London and Frankfurt down by almost one per cent each.

The markets were also impacted by Trump’s order of investigation into vehicle part imports, which could lead to tariffs on foreign auto goods. US carmakers such as General Motors and Ford rose with 1.4 and 1.5 per cent respectively.

Rio Tinto’s Climate Change Resolution Marks a Significant Shift in Investor Culture

Anita Foerster, University of Melbourne and Jacqueline Peel, University of Melbourne

What does the advocacy group the Australian Centre for Corporate Responsibility (ACCR) have in common with the Local Government Super fund, the Church of England Pensions Board, and the Seventh Swedish National Pension Fund?

Quite a lot, it seems. These three institutional investors joined with the ACCR to co-file a shareholder resolution on climate change at mining giant Rio Tinto’s Australian annual general meeting in Melbourne yesterday. While Rio’s board advised shareholders to vote against the resolution, there was a very healthy showing of 18.3% shareholders voting in support (over 20% including abstentions).

The resolution called on Rio to review and comprehensively report on its membership of industry associations such as the Minerals Council of Australia (MCA). The MCA’s pro-coal political lobbying has been distinctly at odds with the position of companies such as Rio, which publicly support measures to reduce carbon emissions in line with the Paris climate agreement.




Read more:
Is BHP really about to split from the Minerals Council’s hive mind?


This alliance between civil society and institutional investors is significant for several reasons.

Institutional investors (large investors such as superannuation funds which pool money to buy shares and other assets) are increasingly concerned about the long-term resilience of their investments to the business risks posed by climate change.

For an energy-hungry miner such as Rio, these risks include changing energy prices and markets, as well as operational disruptions caused by climate impacts such as storms, floods, and droughts.

Investors want companies to disclose these risks fully and to outline how they will manage them to maintain company value over the long term. As the Rio resolution suggests, they also want companies to be transparent and consistent in their approach to climate change. Paying multimillion-dollar memberships for industry associations that lobby against climate action is inconsistent with the long-term investment goals of such shareholders.

New phenomenon

Shareholder resolutions on climate change are a relatively new phenomenon in Australia. In the United States, however, there is a long history of using resolutions to pressure companies to address human rights abuses and change their approach to issues like climate change.

In Australia, advocacy groups such as ACCR (and its counterpart Market Forces) have taken up this tool more recently and lodged resolutions to Australian banks, utilities, oil and gas companies, insurers, and now the big miners, asking for improved disclosure and better management of climate risks.

What’s more, institutional investors are increasingly backing these requests. This latest resolution to Rio Tinto is also reportedly supported by key voting advisors ACSI and Regnan, as well as other major Australian super funds.

As a result, it marks a significant shift in investor culture in Australia, signalling an increased willingness to engage proactively and publicly on environmental, social and governance issues.

Compared with the US and UK, shareholders in Australia have more limited rights to bring resolutions to an AGM expressing their views or requesting that certain actions be undertaken by company management. Australian court decisions have upheld a strict division of powers between company management and shareholders. Nonbinding advisory resolutions on matters that interfere with company management are not permitted. This means shareholders must lodge a special resolution to change the company constitution to allow them to put forward an advisory resolution on a substantive matter such as climate change.

This is not only clunky and inefficient, but also acts as a significant deterrent for investors to support a substantive resolution with which they would otherwise concur. There are renewed calls for law reform, widely supported by institutional investors and also, increasingly, by some of the companies facing these resolutions, to change the law to allow for a more consistent and orderly approach in Australia.

Do these resolutions actually change behaviour?

From their brief history in Australia so far, it appears that shareholder resolutions on climate change, together with a range of other influences, do have the potential to drive change. Many Australian companies that have faced these resolutions so far have responded with significant improvements in climate risk disclosure and management.

Santos recently released its first Climate Change Report; AGL has developed a long term energy transition strategy; and BHP Billiton (which faced a similar resolution to Rio Tinto on its membership of industry associations in 2017) has announced its withdrawal from the World Coal Association and reviewed its other industry association memberships, including the MCA.

While these developments are undoubtedly the result of many factors – including technology and market developments, behind-the-scenes engagement with investors on climate risks, and increased pressure from financial institutions and regulators – it seems that shareholder resolutions can help to focus a company’s attention on ensuring its climate stance is defensible to shareholders. The impact of these resolutions in Australia may also be a function of their relative novelty compared with other jurisdictions such as the United States.




Read more:
Why has BHP distanced itself from legal threat to environment groups?


This week’s resolution at Rio Tinto signals a coming of age for investor engagement on climate change in Australia. Shareholder resolutions have clearly become an important part of the toolbox for civil society in Australia seeking to influence corporate decision making on climate change.

As mainstream investors come on board with these resolutions, their potential impact is heightened considerably. For their part, Australian institutional investors seem to be increasingly willing to stand behind calls for better disclosure and management of climate risks by the companies in which they invest, including by forming new alliances and supporting the use of these more activist tools.

The ConversationIn a country with a relatively conservative approach to investor engagement, these are important cultural shifts. They offer promising signs that Australian businesses and investors are taking a more considered and proactive approach on climate risks.

Anita Foerster, Senior Research Fellow, University of Melbourne and Jacqueline Peel, Professor of Environmental and Climate Law, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Lachlan Fearnley Brisbane

Brisbane House Price Growth Slides to a 5-Year Low

Home prices in Brisbane have fallen, leading the annual growth to drop to a five-year low.

According to the latest Domain Group’s quarterly house price report released in late April, median house prices were down 0.4 per cent across the area, while unit prices dropped by 1.9 per cent.

Alex Jordan of McGrath Paddington told Domain that changes in Sydney might have influenced buyer activity in Brisbane. “I think the change to Sydney’s market is affecting our confidence,” Jordan said. “When Sydney is going up, we look at them as a leading indicator, so when they turn, confidence in our market also goes down.”

This is despite the fact that the city made the latest Knight Frank Global Residential Cities Index as one of the world’s cities with highest home price growth last month. Brisbane achieved the 100th rank with a growth of 2.1 per cent in the past 12 months, beating cities like Beijing and London.

However, local agents claimed that sales were robust for Brisbane real estate. “Overall, the data might show not much is happening but in certain areas, there will be a real momentum and demand driving things along,” said Lachlan Walker, advisory director at Place. “We’re also a very seasonal city when it comes to property — traditionally things are quieter in the March quarter and September quarter.”

AGL to Build $400 Million Gas-Fired Power Plant in NSW

AGL will build a $400 million gas-fired power plant near Newcastle, NSW to replace the ageing Liddell coal-fired station.

The energy company said it is assessing sites for a 252-megawatt facility development, due for completion in the end of 2022.

“AGL is committed to supporting the orderly transition of Australia’s electricity generation capability to modern, clean and reliable energy supply,” said AGL chief executive Andy Vesey.

“That’s why we gave seven years’ notice of when we intend to close the Liddell power station at the end of 2022 and we are pleased to commit today to build the power station near Newcastle.”

AGL also said there were plans to “assess the potential” to develop a further 500 megawatts of gas-fired generation capacity, pending commercial and industrial demand.

The company’s announcement to the Australian stock exchange followed pressures from the federal government to sell Liddell power plant instead of closing it. Rivalling company Alinta has expressed interest in acquiring the power plant to keep it open until 2029.

Federal Environment Minister Josh Frydenberg said Liddell’s closure would still bring blackout risk, even with the replacement plan. “That’s why it’s really important that the executives of AGL consider on its merits this offer that comes from Alinta,” Frydenberg said.

The Australian Energy Market Operator (AEMO) said there would be a potential shortfall in capacity of 850 megawatts if Liddell was to be closed, but it also said AGL’s replacement plan “would deliver sufficient dispatchable resources to fill the identified 850MW resource gap”.

Will Rio Tinto’s Bid to Escape from Its Contracts with Rusal Succeed?

Mark Giancaspro, University of Adelaide

Mining giant Rio Tinto is attempting to use new American sanctions on Russia to walk away from an agreement with a Russian aluminium company, Rusal. But if the contract is not worded precisely, the law may actually work to Rio’s detriment.

Many companies have successfully ended contracts when war has broken out or the government has changed the law in ways that significantly impacted the contract. However, the fact a government’s actions have made a contract harder or more expensive to complete does not automatically mean it will be terminated.

Rio Tinto’s case depends on whether it can invoke a “force majeure” clause in its contracts with Rusal. This kind of clause allows parties to suspend or end a contract when unique and unforeseen events beyond their control occur.

Under the new sanctions, companies and individuals within the United States have until May 7 to divest or transfer any debt, equity or other holdings in Rusal. Rusal is controlled by Russian billionaire Oleg Deripaska, who has previously been investigated for money laundering, extortion, bribery and alleged links to organised crime groups.

Rio Tinto has a joint venture with Rusal that could be affected by the US sanctions.

The effect of force majeure

Typically, when unique or unforeseen events occur, the contract may be legally “frustrated” and end automatically. Frustration is the legal term for a contract being so radically affected by unforeseeable events outside the control of the parties that it is terminated.

A force majeure clause generally prevents this happening because the inclusion of the clause is regarded as “foresight” of the event. However, force majeure clauses typically allow parties to end the contract if the event lasts for a given time, and don’t always require “radical change” like the frustration doctrine does.

It all turns upon the wording of the particular clause in the Rio Tinto contracts.

Force majeure through history

A successful claim of force majeure was made in the American case of Eastern Airlines v McDonnell Douglas Corp. In this case aircraft manufacturer McDonnell Douglas argued that US government policy during the Vietnam War (occurring at the time) caused the government to prioritise military contracts over civilian ones.

As a result, McDonnell Douglas’s contract with Eastern Airlines was delayed. It invoked a force majeure clause covering “acts of government” to avoid liability for the airline’s lost profits.

The court ruled that McDonnell Douglas was entitled to rely upon the force majeure clause and walk away from the agreement due to the government’s policy.

Importantly, just because a contract has a force majeure clause, this does not mean it can be used freely. Some English cases suggest that parties must still make reasonable efforts to keep the contract alive before resorting to force majeure. Evidence of attempts to preserve its contracts with Rusal would likely work in Rio Tinto’s favour.

The courts have also stressed that force majeure cannot be relied upon where there were reasonable alternative ways to complete the contract.

In the Australian case of European Bank Ltd v Citibank Ltd, Citibank was unsuccessful in claiming force majeure when it transferred European Bank’s deposit to a New York account and the funds were seized by the United States Marshal. The force majeure clause allowed Citibank to escape liability if it could not perform due to “reasons beyond its reasonable control”.

The court held that Citibank could have refunded European Bank’s deposit from other accounts or made other arrangements, so the situation could have been avoided.

In Rio Tinto’s case, its efforts to make alternative arrangements will be of critical importance. If there are no feasible options other than to cancel the Rusal contracts, force majeure will likely apply.

When force majeure doesn’t work

But there are plenty of examples where force majeure events such as government intervention have not been regarded as sufficient grounds to end a contract.

In 1962, a court in the United Kingdom found that the closure of the Suez Canal was not sufficient to end a contract requiring 300 tonnes of Sudanese nuts to be shipped between Port Sudan and Hamburg.

The Suez Canal would have been the cheapest and fastest shipping route. However, it was still possible to deliver the nuts by sailing around the Cape of Good Hope, even if this increased the cost for the seller and took more time.

Inadequate wording in a force majeure clause can also backfire, as in the Kriti Rex case. Here a force majeure clause covering ‘“events beyond the control of the parties” was deemed inapplicable because the courier hired by the purchaser (which damaged the goods) was regarded as being within the purchaser’s control.

So what for Rio Tinto?

Ultimately, the success of Rio Tinto’s attempt to invoke force majeure depends entirely upon the wording of the clauses and whether these account for events such as sanctions being imposed.

But it is highly unlikely the clauses would be this specific as the circumstances are unique. Traditional inclusions in force majeure clauses are things like natural disasters, labour strikes or war, not a foreign government’s political sanction of a company’s controller.

Force majeure clauses are also interpreted quite narrowly by courts, so cannot just be stretched to cover every situation.

If the clauses in Rio’s contracts are deemed not to account for the US sanctions, Rio must rely on the doctrine of frustration. It would need to demonstrate that contracting with a company controlled by a Russian oligarch who has been subsequently sanctioned by the US was a reasonably unforeseeable event when the contract was made, and this event radically altered the contract.

It would not be enough for Rio Tinto to argue it might lose money or be inconvenienced. Though the US government’s actions might have been unexpected, the broader effects of Rusal’s suspension upon Rio Tinto’s operations remain to be seen.

The ConversationIf the consequences are purely financial or inconvenient, Rio Tinto’s legal mettle might be tested.

Mark Giancaspro, Lecturer in Law, University of Adelaide

This article was originally published on The Conversation. Read the original article.

Noosa’s Property Market Growth Continues

Noosa real estate market has continued to grow, thanks to limited land supply and increasing demand from international visitors and expats.

The median house price in the suburb grew by 6.2 per cent in 2017, just around $15,000 under Brisbane LGA’s median price.

In February, a record $22 million deal was made for a seven-bedroom beachfront estate at 21-23 Webb Road. Only two weeks earlier, Pat and Lara Rafter’s beachside mansion was sold for $18 million. In November, a property in Noosa’s north shore and another at Noosaville each sold for over $10 million.

Michelle van der Splinter, sales agent at Tom Offermann Real Estate said Noosa’s performance was at its best over this summer season.

“Wealthy sea-changers, those from interstate and overseas, make up nearly half of our interested buyers for top end houses along the beachfront and canals, and are adding to the strengthening market,” said van der Splinter.

Offermann himself said the tourist destination’s attraction reaches way beyond the local population. “Many think of it as a northern suburb of Sydney; even ‘Toorak in shorts’ for Melburnians,” he said. “But expats from London, Dubai, Hong Kong, Shanghai and Singapore have been very active in the past year.”

Real Estate Institute of Queensland CEO Antonia Mercorella said Noosa’s natural topography is what makes the property market both desirable and limited in supply. “Noosa’s world-class beaches, stunning natural bushland settings and wonderful warm community are factors that are fanning the flames of buyer demand,” said Mercorella.

“It is inevitable that this will push up prices.”