Have you made a decision about your remuneration issues yet? If not, what are you waiting for? An interest rate drop today, or the Federal Budget next week?
It’s not easy to decide. The Aussie economy is trending downward, political impasse is now being blamed for the rapidly increasing budget deficit. The electorate is in denial, we just wish it would all go away!
The world is on an uncertain path. US employment data fluctuates, an interest rate rise is not in sight but the share market continues to fluctuate. Will a new princess in the UK help the Brits focus on their election on Thursday and vote to avoid a minority government, a hung parliament and other electoral nasties? The Greek tragedy continues and Greece is teetering on the economic brink. The tie-less (or tie-free) Finance Minister has been sidelined while the Prime Minister negotiates with the creditors to sort out the mess he promised his people to fix without too much pain.
The international media has begun a debate about which conflict is the bigger threat to world stability – the Middle East or Eastern Europe, not only on the ground, but growing fast in cyberspace.
Western terror sympathisers are getting younger – a 14 year old in UK encouraging weapon importing teenagers in Melbourne with plans to kill on Anzac Day- all are now in custody. But social media provides inspiration to copy cats everywhere – who and what is next? How effective can belated de-radicalisation programs be?
The Asian Region
The Nepalese earthquake disaster has not replaced the Indonesian execution of the drug smugglers in the news. Can the debate about moral issues and principles versus the tragic effects of drug use on children and families displace the real estate price watch and worry discussions at the dinner table – can an annual rise of 15.5% in Sydney be sustained and for how long?
The Aussie Condition
The State Premiers have gone home after their vicious brawl about the GST carve up, they’ll meet with the Prime Minister again in July. Western Australia got a relief package, they need time to move the economy from mining to a new market. It also badly needs a dose of disruptive innovation in its bureaucracy to kick it along.
The RBA governor is telling retirees to get used to low returns for a long time. Does he see a recession coming?
Not in New South Wales!It’s all systems go here! The election is over - the government has four more years to continue its clean up of old bureaucratic silos and initiate new infrastructure.
The ebullient mood has infected salary expectations. Good staff, especially in development, is hard to find and keep. The head hunters are out with enticing offers. Expect an exodus of professionals out of low paying consultancies which have not secured enough work to stem the flow.
Victorian business people are nervously watching the new government spending money to cancel infrastructure contracts, introducing disruptive infrastructure projects and waiting for the unions to flex their muscles. However, despite the introduction of a new tax on property purchases, offshore companies still see Melbourne as a safe place to buy.
A nervous wait produces subdued pay rises, will the team get fed up with asking for more and just move north?
Meanwhile can the local developers take their money to Queensland, a traditional escape route when things get tough? The property industry is still coming to terms with the new minority government and working out what the new policies on planning and development will be.
The Shock of the New
There’s a new generation of developers pushing the boundaries of local government laws and sustainability limits in the interests of creating affordable housing. Is this a fore taste of the future?
The financial services industry is upgrading its technology – Fintech is the new buzzword and battle ground, in expectation of significant disruption and the erosion of their market share by peer-to-peer lending. Will they use the new technology to take greater risks in their battle to maintain profitability?
Enter the CRO
There’s a new seat at the table of the C-Suite executives – the Chief Risk Officer. Already a feature in global financial institutions, it is regarded as one of the big 3 with the CEO and the CFO, and paid accordingly.
In a litigious environment risk is a big factor in any organisation. Financial, operational and industrial relations risks are a threat and must be mitigated. This needs a new set of skills – what are they and is the risk committee chair competent to monitor the decisions made by the CRO?
In the regular remix of positions at the top in the major property players, executives with across the board experience in the industry have already risen to the rank of CRO.
What will be the shareholders’ perception of this new role? A new fat cat hired with the usual golden handshakes, handcuffs and parachutes or an essential member of the team nurturing their nest egg?
The Women – Winners and Losers
New South Wales’ favourite Transport Minister, having given her best to clean up the transport system has been promoted to State Treasurer. Given her finance background it seems an appropriate choice.
Meanwhile a listed asset management group promoted a woman Board member to the CEO role. The share price promptly plunged by 19%.
But there are women waiting in the wings – parked in subordinate roles or as non-executive directors on government and NFP Boards.
Avdiev does ongoing research in this area. Among our remuneration products and solutions are Avdiev Women Business Leaders Databases which give profiles of women directors and senior executives in ASX Listed companies for Top 300 Companies and Property Companies (ASX Real Estate Sector). Comparing the 2013 and 2015 editions – our research shows an increase of women in both groups, but with the increase of women in property companies at a lower rate than the Top 300 companies.
Number of women identified in each edition
ASX Top 300 Companies
ASX Property Companies
Increase from 2013
Women’s Pay – it’s a universal and multimarket problem
It’s also the elephant in the room. The property industry’s Male Champions of Change commissioned a report on women in property which analysed every issue pertinent to the problem except women’s pay and the differentials which exist between them and their male peers.
There is daily media about gender balance, lack of women at the top, and there are companies trying to equalise the numbers, but it’s a long, slow battle. Have you checked your payroll for disparities and how they developed?
Take a risk. Realign the remuneration. Could your next CRO be a woman?
For the latest in Property Remuneration, the Avdiev Property Industry Remuneration Report was released in March. No gender breakdowns, objective market remuneration rates for all, with data for over 320 property positions. Click here for more information.
It’s two months into the new year and, in response to a sharp rise in unemployment, the RBA has cut the interest rate to a new record low. The governor is looking for the usual exuberance in the business community to help the slowing economy along, but all the action is with the Sydney and Melbourne residential property investors. When will they run out of puff?
A reality check
2014, a year of subdued optimism, ended with a terrorist event in Sydney’s Martin Place, a reminder that Australia is not immune from terrorism. An escalating global phenomenon engulfing the Middle East, Daish (IS) atrocities and mass executions proudly announced on social media are drawing more and more countries into collaborative action to defeat the terrorists. Egypt is the latest. But terrorism is infectious, universal and coming to a café near you. Lone wolf and small group attacks in Sydney, Copenhagen and Paris have added to the general feeling of unease and fear. Governments are responding with tougher laws.
That’s on the ground. What about the cyber skirmishes, the twitter attacks, and the currency wars? When and how far will the Aussie dollar fall, will it help or harm our economy?
Australia in the Asia Pacific region
Our assets are getting cheaper, the global investment community is cashed up and has a long term investment horizon. Not only have our property assets been desirable targets for some time, the latest play is a Japanese proposal to take over a major logistics company at a substantial premium to its share price.
Have we been dragged into the Asia Pacific region despite ourselves or is this the next step to freer regional trade and a revival of prosperity?
The interest rate cut has delivered real estate investment a big win, self funded retirees are the losers. The hunt for yield is on! Is there a property bubble forming? How long will the share market keep rising?
Asian money continues to be plentiful here and buying up property at prices well above local comfort zones. This has been a boon for the local property industry, especially Sydney and Melbourne.
The States of play
Across Australia state economies have polarised again.
New South Wales is continuing as the stand out economy. It’s buzzing with activity. Infrastructure projects are progressing, all transport bureaucrats are now under one umbrella organisation, the Ministry of Transport. Its minister is widely praised for her ability to achieve results. Planning and Transport are beginning to collaborate. State Electorate boundary changes are not expected to influence the expected result of the election at the end of March, which the current government is forecast to win, despite escalating media campaigns of assorted pressure groups and road rage in the Inner West in Sydney.
In Victoria a recent change of government has brought planning and development uncertainty, proposed cancellation of major infrastructure projects, removal of safeguards against unfettered industrial action and potential loss of federal funding. Will there be a boost in pay for IR skills in the next salary review?
The tradies on talk back radio are incandescent with rage about the loss of a vital road link. The new government is focusing on rail and level crossings. Are toolbox friendly train carriages on the horizon?
The property industry in Queensland woke in fright on the morning after its election at the end of January. Could the voters’ intention have been to give their gung-ho, fast moving government a message to slow down? Instead they elected a fragile minority government. Is it prepared for the task ahead and where is the money coming from? Major leasing decisions have been put on hold. What else will go on the backburner until the situation becomes clearer? Certainly not the storm and flood repairs. Weather keeps the dollar moving through the Queensland economy.
Western Australia is no longer the mining export darling. A new service industry will take some time to develop. Tasmania, the Northern Territory and South Australia, contemplating nuclear energy and waste as a potential saviour of its fragile economy, each face their own problems and continue to lag behind the Eastern states.
There’s action in property
The property industry never stands still. US companies are showing great interest in Australia’s built environment consultancies. How many more will change hands this year? Major development companies have joined forces, retail A-REITs are re-branding and merging. Others are disposing of major portfolios, there’s lots of interest from cashed up global investors. New REITs are doing well. Hostile take-over attempts have begun, how will the shareholders respond?
Overseas assets are beginning to attract Australian investment.
The retirement sector is doing well, corporate decisions to focus on this market have paid off. At the beginning of the life span investment in childcare property is a growing market, especially if a Federal Government initiative for welfare reform is implemented.
And then there’s e-commerce and its young digital property disruptors, just powering ahead. Real estate websites are in conflict, a new web portal for off the plan apartment sales has just been set up by the sons of seasoned media chiefs. Our next sensational success story?
Having been reluctant to lend to new business customers, the banks are now battling online business lenders, trying to prevent losing market share they should have ring fenced long ago.
Jobs and salaries – waxing and waning
A report from FINSIA in the financial services industry indicates that the number of finance jobs and pay are remaining stable, but that employees changing jobs could demand higher pay. The head hunters will make sure of that.
The latest Master Builders Australia report found that demand for construction workers is strong, with builders expecting growth in activity, translating into more job opportunities especially for apprentices and higher pay for trades people and subcontractors.
Employer interest in sustainability and other environment related positions is in decline across the country, with the associated drop in pay, as reported in the green press.
After a strong increase in environmental awareness and sustainability activity, especially among some of the major property owners, it’s disappointing to see that a new vital sector of the industry is seemingly in retreat.
Fat Cat news
There are winners and losers here too.
News from abroad indicating that asset management pay is overtaking the investment bankers will put pressure on boards of local listed companies to move with the times. How will the shareholders react? Some fiery AGMs ahead?
But in the cut and thrust of takeovers, amalgamations and restructures, senior executives lucky to survive the shakeup have seen pay cuts of significant size, especially if the new owner is a foreign entity and not inclined to gestures of largesse.
The Avdiev Report
We shall be reporting on our findings shortly. Some may differ from the prevailing wisdom.
Thank you to all companies and individuals who have contributed remuneration data and commented on business conditions and other issues in the latest Avdiev Survey.
The Avdiev Property Industry Remuneration Report will be published in mid-March and contains extensive commentary and detailed remuneration tables for over 350 positions, with national data and state breakups. An order form is now available, please click here.
We also publish the Women Leaders Database, identifying key women business leaders - profiles of all senior women executives and board members for the S&P/ASX Top 300 and Property Companies.
What about the women?
The pay gap between men and women keeps growing. Serious enough at 18% at graduate level, it’s worse at executive level and there has increased from 24.6% to 28.9%, according to the latest report from the Workplace Gender Equality Agency.
The female CEO of a major construction company has just been elected President of the Victorian division of the Property Council of Australia. A Royal Commission into Family Violence has been set up there, the first in Australia. Queensland’s new Premier is a woman.
Will the good times in the property industry last long?
The RBA is worried about Australia’s economic future and calling on all and sundry to get together and fix it.
The media is in disconnect mode – the editors are stating the obvious economic reality that our huge and growing debt burden is unsustainable. Their commentators are busy trying to destabilize the federal government and encouraging the citizens to hate the Prime Minister.
The cartoons are getting very monotonous.
The voters are refusing to recognise that the age of entitlement is over and are throwing out state governments which move too fast in the race to fix the debt.
But the Aussie credit card just keeps ticking up the interest, and it will have to be paid. Could we be the future Greece of the Asia Pacific?
Decision making in that environment will be tricky. Beware the captain’s pick.