Wotnews Blog
2008 stories of significance - some perspectives
by Genevieve Robey on
December
10
2008
at 11:52 a.m. EST
Category: Media monitoring
What are some of the news stories that were significant for you this year? I asked a group of Australian leaders and experts to select three.
Looking at issues of 'significance' provides some interesting avenues of discussion, more so than trying to decide upon the 'biggest' issues. Although, I think some of the biggest stories have been mentioned by our contributors below anyway. I've provided some related links at the end for further exploration.
I invite you to comment on the responses given by the group and tell us some of the stories that were significant for you this year.
David Liddy
CEO, Bank of Queensland
Global financial crisis
The sub-prime crisis in the United States has had an unprecedented impact on financial services globally. Over the course of the year we have seen what started as an issue in the USA spread right across the world. Banks have collapsed or been sold at huge discounts, companies have failed after they couldn’t access or roll over their debt, industries such as the car industry have had a near melt down. Global economies are either in recession, or on the brink – this is the first global synchronised slow down since World War II. But while the financial crisis has had a significant impact on Australia in terms of the huge swings in our stock market, the resulting impact on superannuation, and changes to legislation such as the temporary ban on short-selling and introducing a deposit guarantee, it doesn’t mean that Australians should start panicking about the security of Australian banks. Australia is fortunate to have one of the safest, most stable and highly regulated banking systems in the world. It’s been said many times this year, but the fact is that our banks are among the best capitalised in the world and are prudently managed using international best practice. I don’t mean to gloss over the crisis. It has very obviously had a significant impact on Australian banks, particularly in terms of the cost of funding, and this is particularly true for small regional players like Bank of Queensland. Because we don’t have a AA credit rating like the major banks here in Australia, we have to pay more for our wholesale funding. However, being a smaller regional player does have some advantages. We don’t have direct exposure to the poorer quality or ‘sub prime’ lending. We have no exposure to corporate lending or high profile companies such as Lehman Bros, Merrill Lynch or AIG. And the Government’s recent actions to guarantee all deposits in Australia for the next three years and to guarantee term wholesale funding by Australian financial institutions is a great initiative that we will all benefit from. In addition, the RBA’s rate cuts in the latter half of 2008 were on a scale that has not been seen in recent memory. And there is speculation we will see another 1% rate cut in February!
Building understanding of factors surrounding banks moving outside RBA
A flow-on effect of the global financial crisis this year has been banks moving interest rates outside of the RBA cash rate moves, and banks not passing on the entire rate cuts. While general reporting has been that this is due to banks wanting to gouge customers, this is simply not the case. The simple fact is that with the securitisation markets essentially closing for business and the cost of wholesale funding dramatically increasing as a result of the global financial crisis, and the same number of banks needing to fund themselves, the cost of retail funds has increased four-fold. It’s pure supply and demand. This is a huge increase in costs, and it would be unacceptable to banks’ shareholders to absorb it all. For this reason, earlier this year banks (and all financial institutions) were forced to increase rates outside of the RBA moves, and retain a margin of the decreased rate reductions announced by the RBA over recent months. It is not about gouging customers or being driven by greed; it is simply about trying to find the right balance between the interests of our customers and our shareholders.
Consolidation in the banking sector
Another flow-on effect from the global financial crisis is the consolidation we are seeing in the financial sector, not just here in Australia, but right around the world. In recent months we have seen St George taken over by Westpac, Bankwest snapped up at a bargain price by CBA, and Suncorp’s banking assets up on the sale table, temporarily at least. The reason for this rush of consolidation is simple: it has become very expensive to be an Australian bank. Costs have jumped considerably, so banks need to be in a relatively strong position to be able to weather this storm, which Bank of Queensland is. And while we don’t have the AA rating of our major bank peers, we've been very successful in growing our retail deposits to fund our growth, so we are in a pretty good place. Many people have asked me whether I see the consolidation happening in the market as a threat to BOQ. I actually see opportunities for Bank of Queensland. I believe that the creation of a number of domestic banking behemoths creates an opportunity for us to poach disaffected customers. We have historically gained most of our business through customers who’ve had enough of the big banks, and with fewer regional banks for them to choose from I think we’ll see more people voting with their feet and through the front doors of our branches.
Nicola Roxon, MP
Federal Health Minister
Ministerial page
Global Financial Crisis
It’s impossible to go past the Global Financial Crisis as the event of the year. It’s important to remember that it’s not just a big news story – it’s had a very real impact on families right around the world. There have been no events this year with the same worldwide impact – reaching into every country, into workplaces, into family homes, into the pockets of millions if not billions of people. It has affected how we think about markets, about regulation, and about finance. It will change the way a new American President approaches the challenges that face him, and it will have an impact on every government in the world. In its impact on national Budgets, its effect is not limited to economics. It has created tighter Budgetary conditions for the Australian Government, and will have consequences for spending in all portfolios in the new year. A significant story is one that does not just make headlines and fill column space, but changes the lives of ordinary people everywhere. The global financial crisis is definitely that.
Binge drinking
Binge-drinking shot right onto the hot topics list this year. Throughout 2008, newspapers have been filled with stories about alcohol-fuelled violence, alcohol-fuelled tragedies, and the potential health implications of risky drinking. The Prime Minister flagged it as one of his personal priorities early in the year, and it’s been an important part of our Government’s approach to health, along with prevention, this year – and will remain so. Never far from the front page, this was the year when the impact of binge-drinking became inescapable – and the year when it became the subject of concerted efforts by governments around the country. Four Australians under 25 die due to alcohol related injuries in an average week. The annual social cost of alcohol in Australia is estimated to be over $15 billion. This is a problem that isn’t going away in a hurry. The Rudd Government has already taken action on a number of fronts, including tackling binge-drinking at a grassroots level, and closing the loophole on alcopops, and we will have a lot more to say about the epidemic of binge-drinking in this country in the future – and with Christmas coming up, and months of summer still ahead of us, it is not likely to vanish from the national consciousness anytime soon.
The Apology
Meaningful reconciliation took a big step forward this year when the Prime Minister issued an apology to the stolen generations. This was in any analysis a moment of profound significance. But it was not only important on its own - it came with a determination that a great deal needed to change in the way we approach Indigenous policy. The Rudd Government was elected with a firm commitment and a moral obligation to close the gap in life expectancy between indigenous and non-indigenous Australians. In my own area of health, there are few more daunting challenges than this. But there are few more important tasks, either. The Rudd Government has begun the task of closing the gap in earnest. Just a few weeks ago, at COAG, the Commonwealth and the States committed to a $1.6 billion National Partnership on Indigenous Health - a major investment to prevent and better manage chronic disease, which account for some two thirds of the premature deaths among Indigenous Australians. This comes on top of earlier investments in child and maternal health. There are so many terrible statistics when it comes to Indigenous health. If we can turn those around – and I genuinely believe we can – then that will be a story of the year, whichever year it happens to come in.
Laurel Papworth
Social Network Strategist, number 4 Australian blogger (B&T), LaurelPapworth.com
Mumbai bombings
For me, the Mumbai bombings as covered by social media, not heritage media, highlighted the next major change in media coverage - that to Organized Social Media. When bloggers first became involved in News, they grabbed content and added pieces to it. The second phase was creating distribution networks to pass information along to each other - Facebook, Digg and so on - these are not sites to create content on, but channels for distribution. The third tipping point was during the Mumbai bombings - the crowd for the first time became truly self-organised, using Twitter hashtags and content/distribution networks in highly effective way to ensure that everyone in Mumbai with a mobile phone, or internet could get access. Videos, Flickr Photos, Twitter updates, Google docs to track missing/dead/injured, blogs used as helplines, were more effective in many cases than organised support agencies. So effective that the Indian government asked for social media sites to limit the real time tracking of activities at ground zero of bombing sites for fear the bombers were themselves tracking social media. No longer a rabble of consumers and regurgitators of traditional media, the crowd became effective at self-organising along the lines of what THEY wanted to know and track. The Audience is providing the content, the filtering (editing), the distribution and in an organised way. Heritage media had better catch up.
Journey to Jeddah
In March, I was invited to Jeddah in Saudi Arabia to help establish an online community to give Islamic women a voice in the Middle East. The online social network came about because MBC - funded by the Royal House of Saud - asked in Dubai for a women newsreader for their women's channel MBC4. MBC4 has Oprah! as well as Arabic language shows for and about women. They stipulated the job application should contain an essay on why Arabic women 'matter'. After thousands and thousands of applications received from women across the region, MBC realised there was a need to give Arabic Women a Voice. So iMatter was born. iMatter has blogs and forums and photo galleries and is for women only. There are 3 awards - a New Media for Women, a Creativity (Arabic poetry, art etc) and a Business Entrepreneur award. All three are submitted by the women in the community. Thousands signed up after the first TV ad went to air on MBC across the Middle East, and continue signing up in large numbers ever since. While in Jeddah, I gave a keynote at the women's University, Effat and also a number of workshops (around 8) teaching the women how to blog and use social media to gain a voice online. Probably one of the most powerful projects I have been involved in, and a world changer. The International press picked up on the story, but alas, none in Australia did. Social media can change the world.
Finance: Social Network Economy
I've been investigating social media revenue and monetization strategies for a few years and am intrigued by the current wobbles in capitalism. As the money moves into social networks - not media- and we see the rise of peer to peer products, services, e.g. social finance and banking, I've been watching closely those companies that rely on brokerage services. Given that online communities now offer disintermediation services -the ability to find, filter, and use - between members, any company that does not make a physical product (and many that do), are vulnerable to competition from their customer. Example: Large sports community (100's of thousands of members) decides to go to Wembley for the tennis. Even a small percentage of signups immediately swamps most corporate travel and tourism services. (This is actually happening). The social network buying power is greater than the largest corporates. Change indeed in the global economy - the social network economy is still finding it's feet.
I expect heritage media next year to understand that "email in your fotos of breaking news" and "leave a comment" does not create a community. They will finally understand that to build loyalty and readership (and media is all about Audience these days, not News, not Distribution) they need to firmly place foundations of a media social network - this includes Profiles that act as a report card for good/bad behaviour, reward systems (Citizen Journalist badge anyone?), and friends lists (so I can follow commentaters that I like, not just journalists). Without a proper community structure, traditional media will continue to falter, online or offline.
Stephen Mayne
Journalist, shareholder activist, crikey.com.au founder. The Mayne Report
Shareholder protest votes
Record protest votes against remuneration reports at the likes of Toll, Qantas, Wesfarmers, Transurban and Boral, plus big protest votes against directors such as Barbara Ward, James Strong, David Ryan and Barry Cusack. At last, the institutions are waking up and voting against.
Global financial crisis
Completely unprecedented crisis with huge companies collapsing, share market down by 50%, credit squeeze and bursting of resources bubble.
BHP-Rio battle
Remarkable to see $1 billion spent on a failed takeover and then $40bn-plus relative transfer of value from Rio to BHP after bid was aborted. Can't see how there won't be major changes to BHP and Rio boards after this debacle and Rio is highly vulnerable with $65 billion debt.
Clearly, all these topics are connected to the global financial crisis which is the biggest story to hit global markets in my life time.
Simon Bond
Partner, Newport Office, New South Wales
ABN AMRO Morgans
Greed is not good
2008 was the year when the economic chickens came home to roost. For many years we have been living beyond our means and risk management went out the window. We have seen the business landscape littered with the failures of so many businesses that we thought would just continue growing onwards and upwards. The lessons to be learnt from the greed and corporate excesses of 2008 will be with us for many years to come and the damage done will take significant time to repair. We all need ask ourselves what is really important to each and every one of us and use 2009 as an opportunity to give back what we have taken that never did belong to us to begin with.
Family
The troubles in the economies around the world in 2008 serve as a stark reminder of the importance of family, friends and giving not receiving. This Christmas will be a case of less is more and for all the right reasons a return to the old core family values and positive leading by example is the direction that we need to head. 2008 will go down in history as the most difficult economic time since the Great Depression and if we waste the opportunity that we currently have to rebalance our lives and focus on family and core values then more than money will have been lost. In 2009 we will do the right thing because it is the right thing to do.
Leverage and Margin Lending
2008 will be written in the history books as the year that Leverage and borrowing almost sent the world to the edge of collapse. It seemed that money was flowing like water and the available credit encouraged people the world over to spend and live way beyond their means. In the USA and Australia in particular the amount of money borrowed and advanced against credit cards suggests that we continue as citizens to float along on a raft of debt. We need to save and invest more and spend and borrow less in order to pass on prosperity to the next generation. We need to refocus our passion and patience towards the forgotten men and women who continue to toil away and behave in a thoughtful manner that demands our admiration but where there has so far been no provision made in the great selfish scramble that personified 2008.
Christine Christian
CEO, Dun & Bradstreet
The credit crisis
What began as a relatively small exposure to US sub-prime loans has developed into what we can only image will be the most significant global economic event to occur for many decades. Every day we hear of the latest casualty, we hear that global GDP has slowed and that growth forecasts are being downgraded. D&B’s forecast for 2008 global GDP growth has been cut to 2.2%, while Australia, the US, UK and China have also been revised to 1.5%, 1.4%, 0.9% and 8.5% respectively.
But where to from here? Uncertainty will continue in the months ahead. Financial woes have only recently affected emerging markets more seriously and this means the effects will continue to play out for some time.
Rescue packages adopted by governments will help to overcome the turmoil however the short term financial market remains highly unstable, and the impact on the real economy in coming years will be severe. Even when financial stability is restored, recent developments will contribute to a sharp slowdown in economic growth. The decline in international lending will persist and local sources of funding will remain difficult to access. As banks consolidate their balance sheets and restructure, access to credit for businesses, consumers and shippers will tighten further. This will reinforce a downward spiral of investment, employment and consumption in mature economies and emerging markets.
The local economy
In the last year there has been enormous volatility in financial and credit markets. Its impact has been widespread, with the major economies of Europe, Japan and the US in recession and Australia feeling the impacts of the global turmoil. Global demand for commodities has weakened and domestically businesses are reporting their worst expectations for profit and sales in two decades while employment expectations are at their lowest since the 1991 recession. At the same time credit market turmoil and tightening domestic conditions are flowing through to individual businesses. About 70 per cent of Australian executives report that credit market conditions are negatively impacting their business. We also know that businesses are taking longer to pay their bills, with the latest D&B analysis showing that business-to-business payment terms have blown out to about 57 days. Furthermore the number of debts being referred for collection is rising while the average value of debt is declining, pointing to the fact that businesses are focusing on all outstanding debts in this new environment. 2008 has been a challenging year for Australian firms. The businesses that prosper into the New Year will be those that focus on the fundamentals. Strong cash flow, low debt, disciplined management of working capital, rigorous risk assessment and the ability to identify new markets and customers will return as the key attributes of successful businesses.
The volatile Aussie dollar and its impact on traders
The dramatic fall in the Aussie dollar since July comes with varying impacts for Australia’s traders. For importers the impact is largely negative, with businesses forced to pay more for their imports. For exporters, the affect is positive as it makes our products more affordable in overseas markets.
D&B’s Business Expectations Survey reveals the impact of the volatile dollar, with 73% of firms indicating they’ve been hurt by the declining value of our local currency. At a global level, current economic conditions are beginning to impact international trade flows. Approximately 90 per cent of world trade is moved by ship and financed by letters of credit (LCs). In 2007 this equated to USD 14 trillion of trade finance. However counterparty risk fears and scarce inter-bank liquidity have reduced the availability of LCs and consequently global trade has been restricted. The immediate impact has been a decline in trade volumes and industrial production, which has resulted in declining freight rates and commodity prices. Few market participants are willing to admit their exposure for fear of impacting their own creditworthiness however this is creating increased uncertainty in a manner similar to that by which sub-prime assets eroded trust in the financial sector. There is potential for a wide range of trades and an increasing number of firms to be affected by this issue.
Peter Lewis
Executive Producer Landline, ABC TV
Global Food Crisis
The headlines trumpeted : "The End of Cheap Food". But perhaps we just need to get our priorities right. Should we be heavily subsidising the diversion of food crops into fuel production ? Should we have the luxury of ignoring the demonstrated yield boosts from genetically modified food ? And perhaps it is not so much a matter of how much food the world grows that is the issue - but how it is distributed. This year we watched food security collapsing among the world's poorest while those in the richest countries literally eat themselves to death.
Global Financial Meltdown
You have to hand it to those running the "big-end of town". They finally got the chance in 2008 to prove why they're paid big bucks. Sheer front. Who else could blow billions on risky ventures then turn around and expect governments worldwide to bail them out. As they say in the Mastercard advertisement: Priceless!
Inspirational Oasis
There was only one reality show on Australian television in 2008 - an independently-produced documentary on the Salvation Army's Oasis Centre at Surrey Hills in Sydney. It was the story of young homeless Australians trapped in a cycle of grog ,drugs and violence and a remarkable Salvos couple, Paul and Robbin Moulds who've devoted 25 years to trying to rescue them. They are not only making a difference in peoples' lives, they're a much needed antidote to the crap celebrity culture that masquerades as news these days. Who really cares about boofhead sportsman behaving badly or the self-promotion of wannabe actresses and models.
Renai LeMay
News Editor, ZDNet Australia - published by CBS Interactive
3G iPhone release in Australia
The long-awaited release of Apple's 3G iPhone in the Australian market was one of the highlights of the year; never in my experience has the Australian public gotten so excited about a technology gadget. Thousands of stories were written about the local launch of this revolutionary product, which is shaking up the entire telecommunications industry.
National Broadband Network
The ongoing saga that has resulted from Kevin Rudd's election promise to invest $4.7 billion in a National Broadband Network has also generated thousands of stories in 2008. It's a massive project that is shaking up the entire telecommunications industry, and its success or failure will be an important benchmark of the Rudd government's performance.
The growth of Twitter
Back in 1995, it was email and the world wide web that was changing the way we communicate. Today it's a (still little-known) technology called Twitter, which lets people communicate instantly online, using short-form messages to broadcast their lives and share information and experiences with others. It's hard to overestimate how important Twitter is, but 2008 was the year it exploded onto the world stage. When you can watch Australia's opposition leader Malcolm Turnbull on TV Twittering in parliament, we knew the technology had arrived.
Marc Lehmann
CEO, Saasu.com
Heath Ledger
The tragedy of dying young and the elusiveness of truth were both present in the tragedy of Heath Ledgers death. Life shouldn't be so short and the truth should be told as to why things happen so people can learn from it. However Heaths death just highlights for me that the story told can never be taken as the truth, it's just someone's version of the truth and quite often the version of truth that suits their agenda. If it bleeds it reads is the saying. It reminded me that science is nearly always the best reporter despite not being the most exciting one to read. The autopsy results said "We have concluded that the manner of death is accident, resulting from the abuse of prescription medications". I couldn't be help feel that society still over medicates to fix it's problems. Society continually underestimates the loneliness and trapped state people of fame can exist in. To me this was a pure tragedy and I won't judge Heath Ledger.
Mumbai
This was a critical event in so many ways. Not even the optimism of potential change in the way the US positions itself globally could stop those still wanting to have a fight. Even with a relatively passive US president elect and the potential for a reduced assertive nature in US foreign policy, it seems terrorists never be happy until their whole region is engulfed in warfare. This is probably the first event that blogging and micro-blogging outperformed traditional media in the time-to-market of live events as they unfolded. Notably Twitter and Flickr furnished the news hungry online consumers with content. Interestingly traditional media seemed to attack these same organisations for exacerbating the problem as terrorist were claimed to be holding twitter accounts along with guns. I'm not sure how they worked this out so quickly and how the terrorist were able to tweet'n'shoot at the same time but the whole blame game seemed to me to smack of Twitter campaign by parties outside of Twitter seemed vindictive fear of this new social journalism than about the truth.
The Death of Capitalism (as we know it)
A defining year in financial markets with the emergence of a new species of company that will cause the re-writing of so many economic text books. The "too big to fail" organisation will re-shape the way people invest, the presence of government in corporate share registries and the social and taxation equilibrium of the USA. It's a new age of taxpayers funding the big end of town's failures. Will history write it up as another peasants versus kings story? It feels like the tip of the iceberg to me and I'm confident that 2009 will herald an even bigger story than this one.
Steven Ciobo MP
Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts
stevenciobo.com
Deficit Day arrives
In just 12 months, the Prime Minister and Treasurer have sapped the confidence of this nation, putting up the white flag and declaring Australia will go into deficit after Labor insisted there is no need for the Budget to go into deficit. Kevin Rudd conceded the Government may use "a temporary deficit" but we know that Labor's deficits are never temporary. Australians must remember the former Federal Labor Government drove the Budget into deficit and plunged the country into debt to the tune of $96 billion, and it was the Coalition who dug the nation out of this black hole.
Labor's silences classical music
Australia has always encouraged excellence, hence our many centres of excellence to support our most talented men and women such as the Australian Institute of Sport. However this year, we saw a strange turn of events, with Peter Garrett axing funding the Australian National Academy of Music, where the best of the best of classical music train. Labor and the Arts Minister have left the arts community completely gob smacked by its rushed and bungled decision.
Tourism hit by $1b of extra taxes
There is no denying it has been a turbulent year for the tourism industry, and the Rudd Labor Government has only exacerbated the problem, introducing almost $1 billion of addition tourism taxes in its first 12 months of Government. Tourism growth forecasts this year hovered around lows, not seen since 2003, when Australia was recovering from international terrorism and dealing with the SARS breakout. Airlines have cut back services, and in areas such as Tropical North Queensland, tourism operators have been reeling. Labor has no plan to address the immediate challenges facing the tourism industry.
Explore some of the issues in this article further: financial crisis | Banking industry | David Liddy | Binge drinking | Indigenous issues | Nicola Roxon | Mumbai | Social networking | Heritage media | Laurel Papworth | iPhone | National Broadband Network | Twitter | BHP Billiton | Rio Tinto | Stephen Mayne | Capitalism | Steven Ciobo | Journalism
Add your thoughts on this year's significant stories.
Well said Laurel, I think your comments on the social network economy are very pertinent in the current financial climate where heritage media giants are falling by the wayside.