Related article: Construction Slump hits Adelaide Brighton’s Profits as developer Ralan Group collapses


The residential construction party is over. And the hangover looks severe

Elizabeth Knight
Elizabeth Knight

Business columnist

August 1, 2019

Building materials group Adelaide Brighton could be the canary in the coal mine, revealing the toll of damages resulting from the turndown in residential construction, and the risks such a decline may pose to employment.

The company’s profit downgrade for the 2019 financial year took the market by surprise and infected other building materials companies – sending the share prices of Boral and CSR spiralling.

Adelaide Brighton shares have been hammered.
Adelaide Brighton shares have been hammered.CREDIT:BRYAN CHARLTON

Immediately after the release of Adelaide Brighton’s revised earnings prospects its share price tanked 19 percent, CSR tumbled 6 percent while Boral investors watched the value of their holdings slump by 8 percent.

The building materials industry has been caught in the aftermath of a residential construction boom – that has flipped over into a bust.

On the back of a six year property construction boom fed by rising house prices and an under-supply of housing stock, the construction tap was turned off quite abruptly when prices for houses and apartments started to fall about 18 months ago.


Building approvals continued falling through June with warnings more construction jobs are likely to be lost

Property sales tumble leading to prediction of ‘100,000 job losses’

For Adelaide Brighton, Wednesday’s earnings downgrade is its second over the past six months – suggesting that conditions have deteriorated faster than it expected when it issued its first warning back in May.

While some 40 percent of Adelaide Brighton’s profit downgrade is the result of company specific issues, the remainder reflects market based issues.

The company now expects full year net profit to come in at between $120 million and $130 million – a major decline on the $190 million it earned in full year 2018.

It looks to be brewing into a perfect storm for building materials companies who are being hit with the combination of lower demand in numerous geographical pockets, increased competition (which affects the prices received) and a hike in raw materials costs.

Equally disturbing was Adelaide Brighton’s announcement that it would take a writedown of up to $100 million in the value of its business.

As part of its exercise to shore up the balance sheet the cement maker has decided to withhold its 2019 second half dividend. The company also felt the need to assure investors that after any balance sheet impairments it would remain inside its banking covenants.

None of these building materials companies have yet reported results for the second half. But in the first half of 2019, Boral Australia delivered earnings before interest tax amortisation and depreciation of $271 million which was down 8 percent.

At the time, Boral Australia said growing infrastructure activity had offset residential construction.

Adelaide Brighton, however, noted on Wednesday that it had seen a further softening of conditions in residential and civil construction (infrastructure) markets.

(While infrastructure construction markets are considered to have held up relatively well – there have been signs of recent weakness which experts have put down to the timing of new projects rather than anything more sinister.)

The construction slump was outlined clearly in June economic statistics released this week which showed building approvals fell -1.2 percent to be 25.6 percent lower than a year ago. Trend approvals are now annualising 174,000 which is the lowest since June 2013.

Year on year building approvals for houses has fallen 14.5 percent while approvals for apartments have plunged 38 percent.

And given there is a backlog of property supply still sitting in the pipeline there is an expectation that the building approvals numbers will get worse before they get better.

Supply will get tighter as this backlog washes through the system but that will take some time – some economists suggest as long as two years.

In the meantime, building materials companies will wear the pain of operating during this cyclical low. According to UBS the outlook for local building materials remains mixed.

‘We estimate that the known decline in housing approvals will lead to 5 percent decrease in demand for concrete over the next 12 months. But surplus capacity will not just be limited to cement companies. In our view, over the past five years the building materials industry as a whole has built itself around a 225,000 approvals rate.’

A note to investors JP Morgan issued on Tuesday ( before the Adelaide Brighton announcement) warned that CSR and Adelaide Brighton were most exposed to residential construction activity – accounting for 53 percent and 32 percent of group revenue, respectively.

It seems that not only is the construction party over – the hangover looks to be more severe.

Elizabeth Knight

Elizabeth Knight comments on companies, markets and the economy.

Adelaide Brighton shares have been hammered.





Traffic jams don’t help. Picture: AAP/David Clark

The Hilda Report has painted a different picture of the well-being of Australians … from that portrayed by the government …

and raised questions about Australia’s leadership …

‘Living standards have not improved for a decade’: Aussies worse off than during the GFC

A shocking new study out today has painted a bleak picture of Australia’s wellbeing — and raised serious questions about its leadership.

Frank Chung@franks_chung

JULY 31, 2019


The typical Australian household is actually worse off now than during the global financial crisis, with disposable incomes falling between 2009 and 2017.

That’s according to the 2019 Household Income and Labour Dynamics in Australia report, which has been tracking 17,500 people across 9500 households since 2001.

Real median household annual disposable income was $80,595 in 2017, $542 lower than it was in 2009 at $80,637, having fallen between 2009 and 2011, risen in 2012 and remained broadly unchanged after.

From 2009 to 2017, the average household income only grew by $3156 or 3.5 per cent.

“When we look at overall measures of household income, we see that the broad trend in terms of income levels is stagnation, that we’ve seen very little change in the median income,” Professor Roger Wilkins said in a statement.

“So the income of someone in the middle has basically remained unchanged since 2012. That was on the back of very substantial rises, particularly in the mid 2005 to 2009 range in particular, we saw very large increases in household incomes, but since 2012 there’s been basically no growth.”

Australian Council of Trade Unions secretary Sally McManus seized on the findings, saying working people “haven’t had a real pay rise since the Coalition government came to power”.

“This means living standards have not improved for a decade,” she said in a statement.

“This is a government who actively works to keep wages low. It has designed the system this way by making the job of unions, which is to make wages go up, as hard as possible while cutting penalty rates, opposing minimum wage rises and holding down the wages of their own staff.”

Ms McManus said the Morrison Government’s legacy would be “the worst period of economic stagnation for households in recent memory”.

Disposable incomes have fallen since 2009.

Disposable incomes have fallen since 2009.Source:Supplied

The Northern Territory has the highest household incomes.

The Northern Territory has the highest household incomes.Source:Supplied

Speaking during Question Time on Tuesday, Treasurer Josh Frydenberg said Australians were “certainly better off since 2013” and pointed out the HILDA survey was conducted to December 2017.

*“Since then, the unemployment rate has come down from 5.6 per cent to 5.2 per cent, the wage price index has increased from 2.1 per cent to 2.3 per cent,” Mr Frydenberg said.

CAAN: Remind Josh …

Roy Morgan unemployment 9.2% in June

“Real wages have increased, the participation rate has increased and the ABS household income and wealth survey, released earlier this month, which takes into account the full 2017-18 year, shows that real median household disposable incomes have increased by over $2000 per year compared to 2007-08.”

Mr Frydenberg said the Coalition had created the conditions that helped generate more than 1.4 million new jobs. *

“Lower taxes have ensured that Australians can earn more and keep more of what they earn,” he said.

“I will tell you what will lead to worse outcomes for the Australian people, lower household incomes and a lower standard of living, and that’s $387 billion of higher taxes.”

*CAAN: Not so according to this Report: Professor: Migrants take three quarters of Australian jobs

The HILDA report also broke down incomes by state and territory, finding that households in the Northern Territory have now overtaken those in the Australian Capital Territory to take the top spot.

Between 2012-13 and 2016-17, the median household equivalised income — a measure of material living standards obtained by adjusting household disposable income for the household’s “needs” — increased by 8.8 per cent in the NT to $67,061.

The ACT fell by 11 per cent over the same period to $66,230, Sydney increased 1.6 per cent to $48,569, Melbourne increased 4.1 per cent to $51,448, Brisbane increased 1.1 per cent to $51,652, Adelaide fell 1 per cent to $46,993, Perth fell 5.2 per cent to $53,392 and Tasmania increased 0.4 per cent to $41,172.

“After rapid growth between 2006 and 2011, the median income in the ACT fell considerably between 2012 and 2015 and has not since recovered, although it remained around equal-highest with the Northern Territory at the end of the 2001 to 2017 period,” the report said.

“Among the mainland capital cities, Adelaide consistently has the lowest median income, while in recent years Perth has had the highest median income despite experiencing a substantial decline towards the end of the period.

“Aside from the ACT, Western Australia — both Perth and the rest of the state — has fared worst since 2012-2013. Non-Sydney New South Wales and Adelaide have also experienced declines in median incomes since 2012 to 2013.”

Rising childcare costs, increasing commute times and growing rates of depression and anxiety were also highlighted in the report, as was a worrying uptick in poverty after a long-term downward trend.

“The HILDA survey is showing substantial increases in diagnosed depression and anxiety, and we’ve seen particularly large increases amongst young women,” Prof Wilkins said.

“For example, amongst women aged 15 to 34, we had approximately 13 per cent reporting being diagnosed with depression or anxiety in 2009. In 2017, that was up to 20 per cent, so one in five women in that age range has actually been diagnosed with the condition.”

The average weekly commute time since 2002 has ballooned from 3.7 hours to four-and-a-half hours or 66 minutes per day. Sydneysiders have the longest commutes at around 71 minutes a day.

The change has been blamed on poor infrastructure and public transport investment, soaring house prices and rapid population growth. “There are massive gender differences in commuting time,” Dr Inga Lass said in a statement.

“Men usually spend longer on commutes than women, and especially fathers with two children are the ones who have longest commutes, but women tend to commute less when they have children

“The people who have long commutes, who spend more than two hours a day travelling to and from work, they are also less satisfied with their working hours, with the flexibility to balance work and life, and they’re even less satisfied with their pay.”

Kate and Dusty, with kids Charlotte and Emily, posing for Hilda report into Australian families, Alderley Brisbane. Picture: AAP/Steve Pohlner





An oversupply of apartments and building defects are blamed for a big construction down turn …


  • Developer Ralan Group has called in administrators and owes an estimated $500m to creditors
  • Building materials group Adelaide Brighton says its profit may be 37pc down on last year — its shares plunged 18pc
  • Residential building approvals are down by more than a quarter on last year’s high levels

Construction slump hits Adelaide Brighton’s profits, as developer Ralan Group collapses

By business reporter David Chau

31 JULY 2019

Apartments recently built and under construction in Sydney

PHOTO: An oversupply of apartments and building defects are blamed for a big construction downturn. (ABC: John Gunn)

RELATED STORY: Opal Tower owners launch multi-million-dollar class-action lawsuit

RELATED STORY: Australia’s house of cards is still standing, but don’t punt on another boom

RELATED STORY: The economy is in bad shape. This is your ‘please explain’ guide

The slump in Australian construction is starting to hurt the major companies that operate in the industry.

Key points:

  • Developer Ralan Group has called in administrators and owes an estimated $500m to creditors
  • Building materials group Adelaide Brighton says its profit may be 37pc down on last year — its shares plunged 18pc
  • Residential building approvals are down by more than a quarter on last year’s high levels

One of the nation’s largest property developers, Ralan Group, has gone into voluntary administration, leaving billions of dollars worth of apartment projects in doubt and around $500 million owing to creditors.

Furthermore, cement manufacturer Adelaide Brighton has scrapped its interim dividend, in addition to a severe profit downgrade, sending its shares tumbling 18.3 per cent to $3.53.

Its shock profit warning also caused investors to dump their shareholdings in rival companies Boral (-7.8pc) and CSR (-6.1pc), which are subject to similar economic pressures.

All this occurred a day after building approvals plummeted by 25.6 per cent since last year, according to the latest figures from the Bureau of Statistics (ABS).

Adelaide Brighton’s ‘vicious cocktail’

Adelaide Brighton warned its underlying net profit would fall to $120-130 million this calendar year — a 37 per cent drop compared to the $190.1 million profit it earned last year.

In a statement to the ASX, the company blamed “further softening of conditions in the residential and civil construction markets” as the main reason for its earnings downgrade.

It also pointed the figure at “continued competitive pressure” in Queensland and South Australia and “sustained increase in raw material costs”.

This was the second profit downgrade from Adelaide Brighton in less than three months.

In early May, the company told investors to temper their expectations, as this year’s profit was likely to be 10-15 per cent lower than last year’s $190.1 million.

That led to Citi’s building materials analyst Daniel Kang downgrading Adelaide Brighton’s stock to “sell” two months ago.

“A vicious cocktail of an accelerating housing downturn, intensifying competition and higher raw material costs” triggered the company’s profit warning, Mr Kang said.

“With competitive pressures unlikely to ease any time soon, we believe earnings risk remains to the downside.”

Ralan Group collapses

Administrators Grant Thornton said it would undertake an “urgent financial assessment” into Ralan Group and shortly hold a first creditors meeting.

Arrested development

Arrested development

Developers are delaying or abandoning half the apartments they planned to build as the construction downturn intensifies.

The Ralan Group specialises in developing, marketing and managing property — residential and commercial — in Sydney and the Gold Coast.

In a statement, the administrators said Ralan has a “development pipeline of over 3,000 residential units which are in the construction or pre-sale stage as well as operating accommodation assets comprising over 600 rooms“.

“The total value of creditors is still to be confirmed but initial indications are around $500 million owed across the group.”

One of its high-profile developments is the four-tower Ruby Collection hotel on the Gold Coast, worth $1.4 billion.

Ralan Group MD William O'Dwyer with Gold Coast Mayor Tom Tate

PHOTO: Ralan Group managing director William O’Dwyer (right) with Gold Coast Mayor Tom Tate launching construction of the first stage of the Ruby Gold Coast development. (Supplied: Ralan Group)

“In terms of the operating businesses within the group, it is as far as possible, business as usual,” said Grant Thonton’s national managing partner Said Jahani.

“We are working closely with key stakeholders to identify and preserve value for creditors.”

The administrators did not explain why the company collapsed as it is still conducting an “initial investigation”.

Building approvals tumble

Earlier in the week, the ABS revealed that building approvals had fallen 1.2 per cent in June, seasonally adjusted — driven by a downturn in apartment construction.

Australia’s house of cards

Australia's house of cards

Australia’s housing downturn appears to be over … for now. But huge household debts leave the nation vulnerable to a shock.

The annualised results were more downbeat, with the total number of dwellings receiving construction approval falling 25.6 per cent since the previous year.

Within that figure, approvals for houses were down 14.8 per cent over the 12-month period.

However, the result for apartment approvals was far worse, plunging 39.3 per cent since June 2018.

In addition, trend approvals are now at 174,000 over the year, the lowest level in six years.

Morgan Stanley economist Chris Read is pessimistic about the construction industry’s future.

“We expect further declines in building approvals in the coming months, given the elevated level of new supply coming to market and still tight credit conditions,” Mr Read said.

His sentiments were shared by UBS chief economist George Tharenou who “forecast[s] no recovery, with dwelling commencements to drop to 170,000 this year”.

“Hence, as the still near record pipeline of activity completes, GDP-basis dwelling investment will likely still decline for at least a year, and probably slump by around 10 per cent year-over-year, dragging down construction jobs,” Mr Tharenou said.

“Indeed our tracking of construction job ads is consistent with about 100,000 jobs losses ahead.”

Jobs at risk as house prices fall

Jobs at risk as house prices fall

Job advertisement data indicates the banking royal commission and house price falls may have already curtailed career opportunities in finance, construction and retail.

However, BIS Oxford Economics was more upbeat about the prospects of a construction rebound.

“Australia’s dwelling stock deficiency will grow once again as rising undersupplies in Victoria, Queensland and Tasmania develop by 2020/21,” said BIS managing director Robert Mellor earlier this week.

“We anticipate this pressure to facilitate growth in house prices and rents, helping create a renewed upswing in residential building starts through the early to mid-2020s.”

“The downturn has further to run with an additional 8 per cent decline forecast for 2019/20, with the fall in residential building outweighing the growth expected in the non-residential sector.”

Image may contain: sky, tree and outdoor

CAAN Photo: Meadowbank




WILL “NSW ICAC” grill key Party figures over Foreign donations and influence?

IS Canberra failing to see the whole picture, or to understand what has been happening globally … that which is so apparent to the rest of us?

How many more pollies and bureaucrats have been flattered and duchessed by our big neighbour to the North? Some of them are Rhodes Scholars even ..

CHINA with a population of 1.4 Billion, Millions of HNW … cough … cough … why have they been so generous?

CAAN can provide some links to assist ICAC! View below!

NSW Liberals took Donations from Figure linked to Pro-Beijing Group and Huang Xiangmo

MAY 19, 2019 / CAA4NSW

ARE the Libs saying ‘that black is white’?

Donor Huang Xiangmo had help from Liberal Party Director; met Christopher Pyne

APRIL 9, 2019 / CAA4NSW

WHERE’s the Corruption Probe into Donations made by LNP-Linked Chinese Community and some others?


Corruption Probe into Donations made by Labor-linked Restaurateur, friends and Family


Abbott, Liberal Figures at Event with Chinese Communist Party Links


THIS is the mysterious billionaire property developer behind some of the largest political donations


Chinese interests play increasing role in Australian political donations

JULY 31, 2018 / CAA4NSW

ELECTION 2013:  Political donations: Which big businesses are supporting Aussie political parties

JULY 29, 2018 / CAA4NSW

Australian political donations: Who gave how much?

JULY 29, 2018 / CAA4NSW

ICAC to grill key Labor figures over Chinese donations and influence

By Kate McClymontNick McKenzie and Tom Rabe

July 31, 2019

Chinese billionaire and Crown high roller Huang Xiangmo’s relationship with former NSW Labor party boss Jamie Clements and ex-state MP, Ernest Wong, will be the focus of fresh corruption commission hearings next month.

The Independent Commission Against Corruption will examine serious allegations of subversion of state election donation laws. Also of “significant public interest” to the corruption watchdog is possible foreign influence on the NSW electoral process by Chinese business figures, some of whom are understood to have close ties with the Chinese government.

Huang Xiangmo's relationship with key Labor figures will feature at an ICAC public hearing.
Huang Xiangmo’s relationship with key Labor figures will feature at an ICAC public hearing. CREDIT:JAMES BRICKWOOD

The Herald can also reveal that Mr Huang is an $800 million-per-year Crown casino high roller, and such a big punter that it used him as a case study of the benefits of uber-wealthy Chinese gamblers moving to live in Australia.

Leaked Crown documents, part of an ongoing investigation by The Sydney Morning Herald  and The Age, can also reveal how Mr Huang dealt with powerful former Labor party operatives working for Crown Casino, even after ASIO warned Labor and the Coalition about him in August 2015.

Mr Huang was expelled from Australia by ASIO over his foreign influence activities.

As the fallout from this investigation continued, the federal government on Tuesday ordered a national integrity watchdog examine a string of allegations about the conduct of Commonwealth officials linked to Crown’s casino operations.

The Herald has previously revealed the Independent Commission Against Corruption has been investigating NSW Labor concerning allegations of a “scheme to evade” the state’s electoral funding laws.

Jamie Clements, former NSW state secretary of the Labor Party.
Jamie Clements, former NSW state secretary of the Labor Party.CREDIT:DALLAS KILPONEN

Details of the ICAC investigation came to light after NSW Labor registered a formal complaint about ICAC executing a search warrant at its headquarters last December.

An investigation was undertaken by the independent inspector of ICAC, Bruce McClintock, SC.

His report into the ALP’s complaint, tabled in parliament recently, contained extraordinary details surrounding the complexity and seriousness of the ICAC inquiry.

Targets of the inquiry were revealed to be ALP officials, members of Chinese Friends of Labor and political donors, who may have allegedly evaded donation laws, which the report suggests can attract jail terms of up to 10 years.

MP Ernest Wong has close ties to  Huang Xiangmo’s Yuhu Group.
MP Ernest Wong has close ties to Huang Xiangmo’s Yuhu Group.

The report revealed the ICAC was investigating concerns those parties “entered into a scheme to evade the prohibitions and requirements of [the electoral funding act] relating to political donations”.

Sources have told the Herald that of particular interest to the inquiry are donations made by Mr Huang, who was stranded in Hong Kong earlier this year after he was refused re-entry to Australia.

When contacted on Tuesday, Mr Wong said he “expected to be called” to the inquiry given he was the patron of the Chinese Friends of Labor organisation.

In 2013 Mr Wong, a close confidant of Mr Huang, was given an Upper House seat by Labor party officials. He succeeded former treasurer Eric Roozendaal who, upon quitting parliament, went to work for Mr Huang’s prominent property development company, Yuhu.

Asked if he had been summoned to appear, Mr Clements declined to comment.

In 2017 Mr Clements, who was general secretary from 2013 to 2016, was convicted of unlawfully accessing the electoral roll after he sought confidential details about a voter for a union boss. He was fined $4000.

Huang Xiangmo and Sam Dastyari at a Chinese media press conference that would cost him his political career.
Huang Xiangmo and Sam Dastyari at a Chinese media press conference that would cost him his political career.

Of specific interest to ICAC is a March 2015 Chinese Friends of Labor dinner, where $100,000 was raised for the party.

Jonathan Yee, the former head of Chinese Friends of Labor, is understood to have played a key role in rounding up the donors.

A Labor source said there had been discussions within head office as to whether ALP officials would have their legal fees covered by the party in relation to “further developments” in the matter.


Jacqui Lambie has joined Andrew Wilkie in calling for a parliamentary inquiry into Crown.

‘Tip of the iceberg’: Government orders investigation into Crown casino accusations

“There is clearly movement at the station on that matter,” the source said of the ICAC inquiry which is scheduled to start on Monday, 26 August.

They described the decision for Labor to lodge the complaint with ICAC, which resulted in key details and seriousness of the matter being made public, as “a fuck up”.

Former Senator and onetime General Secretary of NSW Labor Sam Dastyari resigned from Federal parliament after it was revealed that he had tipped off Mr Huang that his phone was being monitored.

In February, Mr Dastyari said his first encounter with Mr Huang should have sparked “warning bells” after he met him at a private restaurant in Sydney’s Chinatown.

“He had just booked out an entire restaurant to have dinner with me. I was vain. Arrogant. Thought I was special,” he told The Daily Telegraph.

“There is an arms race for donations between the parties. And when you’ve got individuals like Huang who are prepared to fork out millions of dollars they get listened to,” the former in NSW Senator said.

The Senator had previously found himself in strife when, during the 2016 Federal election campaign, he stood beside Mr Huang at a Chinese-media press conference, supporting the Chinese party’s position on the South China Sea, which was contrary to the ALP’s stated position.

A spokeswoman for ICAC declined to comment.

Kate McClymont

Kate McClymont is an investigative journalist at The Sydney Morning Herald.

Nick McKenzie

Nick McKenzie is an investigative reporter for The Age. He’s won seven Walkley awards and covers politics, business, foreign affairs and defence, human rights issues, the criminal justice system and social affairs.

Tom Rabe

Tom Rabe is a journalist with The Sydney Morning Herald

Bill Shorten with a photograph of Chinese billionaire and political donor Huang Xiangmo and Julie Bishop.





What next? Looks like the Australian economy is under siege … with the daigou business having exploded into a multi-billion dollar economic backchannel integrating retail, marketing, logistics

And now this illegal importation of dirt cheap cigarettes from China … we have been notified that … they can send a maximum of 2 cartons at a time by express post, and sell at a big profit. 

Our contact has said they know a couple in Yunnan who know people who have purchased houses through this business! 

In Sydney’s Chinatown there are signs in Chinese stating ‘Chinese cigarettes sold here’!


China tourists caught with illegal tobacco

 AAP 2/05/2019

A packet of tobacco cigarettes.

© AAP Image/Dean Lewins A packet of tobacco cigarettes.

Eight Chinese nationals have been detained and will be removed from Australia after being stopped at Melbourne Airport with large amounts of illicit tobacco.

The group arrived in Melbourne on a flight from Hong Kong on Monday and was found to have 177,063 cigarettes hidden in their luggage, amounting to more than $160,000 in evaded duty.

The eight travellers had their visas cancelled by Australian Border Force officers and were taken to the Melbourne Immigration Transit Accommodation pending their removal from Australia.

ABF regional commander Craig Palmer said people may think bringing in undeclared tobacco is harmless, but the trade has a massive cost to the Australian economy.

“If you are travelling to Australia with cigarettes or other tobacco products the message is simple: declare it and pay the duty required,” Mr Palmer said.

*“Those caught deliberately evading duty should expect to face fines, removal from Australia or even prosecution.”

Mr Palmer said the ABF is well placed to detect illicit tobacco through intelligence, X-ray capability, tobacco detector dogs and highly skilled officers.

From July, it will be illegal for anyone to import tobacco without a permit.





An unidentifiable woman walks through Sydney airport

PHOTO: Net overseas migration makes up the majority of Australia’s population growth. (AAP: Paul Miller)

IT is all part of the Ponzi Scheme … the origins of which date back to the 457 Visa being introduced after John Howard took office …

Search CAAN Website ‘Visa Manipulation’ Category to learn more …

From ‘The Comments’ …

-the real question no-one has answered is how many of these “new” migrant jobs are as a result of Australians’ jobs disappearing? What’s the net net? I’ve little doubt the job creation figures would look a whole lot less rosy…

-good on them. These cheap workers are providing a valuable service to Australia – enabling business owners employing them to steal their wages (simply pay them less than a local and keep the difference for themselves) to raise their own wages and take on more debt to grow the economy with!

-now I know why Melbourne has 25% youth unemployment

-how many of those jobs are Real Estate agents? How many are baristas? How many are other “service” or BS jobs?

-what jobs have been created vs which jobs have been destroyed I wonder? If wages growth is super low, it can’t be highly skilled jobs they are creating / taking surely? How many are uber drivers?

-the government is going with the path of least resistance – building up a service economy, which can be done by simply importing more consumers and low-wage workers

-building a productive economy, where we build products that the world wants, is too hard

-22 year-old son, recent graduate, could not get any form of job for several months after graduation. Finally secured a job by doing his security licence … 

… HIGH IMMIGRATION ‘instead of providing jobs, it is undercutting wages, crush-loading our cities, and forcing people to live in smaller and more expensive housing’

Professor: Migrants take three-quarters of Australian jobs

By Unconventional Economist in Australian Economy

July 31, 2019 | 29 comments

Last year, the Australian Treasury released a propaganda report, entitled Shaping a Nation, which admitted that the lion’s share of Australian jobs growth has gone to migrants:

*Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years.

*For full-time employment, the impact is even more pronounced, with recent migrants accounting for 72.4 per cent of new jobs created.

Then at a Senate Estimates hearing in May, the Department of Home Affairs confirmed that migrants have taken the majority of new jobs:

Assistant secretary in the Home Affairs statistics and information branch, Jason Russo, said it was likely that “more than 50%” of the 1 million jobs created in five years were a result of immigration.

Home affairs secretary Michael Pezzullo clarified that this was likely because immigration’s contribution to population growth in Australia was running higher than 50%…

*In Estimates, officials could not definitively break down the number of permanent and temporary migrants that made up the total figure, but said that the 457 temporary skilled visa program accounted for around approximately 500,000 of the 850,000 of the jobs created in the time the report examined (which ended in 2016, well before the government reached 1 million jobs created).

Today, we have received further confirmation that migrants have taken most Australian jobs via Melbourne University demographer, Professor Peter McDonald:

“In recent times, about 75 per cent of employment growth in Australia can be attributed to recent immigrants”.

*A 2017 research paper by Professor McDonald published in the Australian Population Studies Journal examined the impact of immigration on Australia’s employment growth after the Global Financial Crisis (July 2011 to July 2016).

*It found that in the five-year period, employment in Australia increased by 738,800, with immigrants accounting for 613,400 of these jobs.

“Research indicates that immigration provides major benefits to the Australian economy,” his report concluded.

*Here is more evidence that the mass immigration ‘Big Australia’ policy is failing to benefit the incumbent population.

Instead of providing jobs, it is undercutting wages, crush-loading our cities, and forcing people to live in smaller and more expensive housing.






-the challenges centre on Chinese-language Liberal Party posters at voting booths on election day

-the posters featured the AEC’s distinctive purple and white colouring and were written in Chinese

-they instructed voters that the “correct way to vote” was to place a “1” next to the name of the Liberal candidate on the ballot paper

-a Chisholm elector has made an application asking the court to make a declaration that Ms Liu and Victorian Lib. Director Frost committed illegal activity by authorising the posters

Josh Frydenberg and Gladys Liu hit with High Court challenge over election results

By Pat McGrath, ABC Investigations

31 JULY 2019

A composite image of Josh Frydenberg, wearing suit and tie, and Gladys Liu, wearing glasses and white blazer

PHOTO: Treasurer Josh Frydenberg and Gladys Liu have been hit with High Court challenges over their election results. (ABC News)

RELATED STORY: Josh Frydenberg’s electorate result to be challenged over ‘misleading’ Chinese signs

RELATED STORY: Liberals’ Chisholm victory faces legal challenge over alleged dirty tactics

RELATED STORY: AEC-coloured posters tell Chinese-speaking voters ‘correct way’ is to put Liberals first

RELATED STORY: Chisholm battle heats up as two female Chinese candidates try and make history in marginal seat

Federal Treasurer Josh Frydenberg and rookie Liberal MP Gladys Liu are facing a last-minute High Court challenge to their victories at this year’s federal election.

Key points:

  • High court challenges have been lodged against election results in Kooyong and Chisholm
  • The seats were won by Liberal MPs Josh Frydenberg and Gladys Liu
  • The challenges centre on posters that appeared outside voting booths on election day

*Failed independent candidate Oliver Yates, who challenged Mr Frydenberg in the seat of Kooyong, has teamed up with a mysterious voter from Ms Liu’s seat of Chisholm to launch a legal bid to have the results in both electorates ruled invalid.

The challenges centre on Chinese-language Liberal Party posters that appeared at voting booths on election day, which they said were designed to deceive voters.

Documents filed to the High Court, sitting as the Court of Disputed Returns, claimed the posters imitated official Australian Electoral Commission (AEC) material and were therefore in breach of electoral laws that make misleading and deceptive conduct illegal.

‘Misleading’ posters officially authorised

A poster in purple and white is attached to a fence next to an official AEC polling poster.

PHOTO: The posters were authorised by the Liberal Party and used similar colours to the AEC. (ABC News: Gemma Hall)

*The posters, which featured the AEC’s distinctive purple and white colouring and were written in Chinese, instructed voters at polling stations that the “correct way to vote” was to place a “1” next to the name of the Liberal candidate on the ballot paper.

They were officially authorised by the Liberal Party’s Victorian state director in small text at the bottom of the poster.

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Mr Yates flagged on Friday that he would begin the legal action this week, but a challenge to Ms Liu’s knife-edge victory in Chisholm appeared unlikely after Labor indicated it would not dispute the result in that seat.


But now Ms Liu has been swept into the proceedings after Mr Yate’s legal team began representing a Chisholm voter named Leslie Hall.

Scott Morrison, wearing suit, applauds Gladys Liu, who is waving in front of posters bearing her face and name.

PHOTO: Ms Liu is the first Chinese-Australian woman to gain a Lower House seat in Federal Parliament. (ABC News: Marco Catalano)

Marque Lawyers principal Michael Bradley, who is acting in both matters, would not go into detail about how Ms Hall became involved in the proceedings.

“She is a private citizen, she is an elector in Chisholm and she made the decision that she was sufficiently unhappy about the conduct of the Liberal Party on election day,” Mr Bradley told the ABC.

“Somebody — either a candidate or elector — has to stand up and be the petitioner and she’s decided that she is prepared to do that. She has no political axe to grind and nothing to gain out of it.”

*Ms Hall’s application also asks the court to make a declaration that Ms Liu, as well as acting Victorian Liberal Party director Simon Frost, committed illegal activity by authorising the posters.

*In a statement provided by her lawyers, Ms Hall said she was concerned the posters represented an “erosion of democracy”.

“I am concerned that the AEC allows deliberately misleading statements in a foreign language to be provided to people who may not have access to English and therefore to a full understanding of the electoral processes,” she said.

Oliver Yates, wearing suit and green tie, stands in front of green tree background.

PHOTO: Independent candidate Oliver Yates is challenging the result of the seat of Kooyong. (Supplied: Oliver Yates)

Mr Yates’ application asks the court for a declaration that Mr Frydenberg engaged in illegal activity.

Today marks the 40-day deadline for disputing the election result.

The Liberal Party has insisted the posters were not misleading and complied with all electoral rules.

“The signs were properly authorised as required by the Commonwealth Electoral Act,” Mr Frost said in a statement.

“The Liberal Party will be vigorously defending our position.”

Mr Frydenberg and Ms Liu have been contacted for comment.

Mr Yates told the ABC he was making the challenge as he believed the current electoral rules allowed for voters to be misled.

“I wouldn’t be doing it if I didn’t think there was a very important point to be made here,” he said.

“If people believe that engaging in misleading and deceptive conduct is something that should be condoned … they are wrong.”

Ultra-thin win in Chisholm

The AEC has previously ruled the posters were not in breach of the Electoral Act because they were properly authorised and the AEC “does not own the colour purple”.

A poster in purple and white is attached to a fence next to an official AEC polling poster.

PHOTO: The challenges claim posters such as this were designed to “trick” people into voting for the Liberal Party. (ABC News: Gemma Hall)

But the applications argued the posters were deceptive because they led voters to believe that “in order to cast a valid vote, the number ‘1’ had to be placed on the green ballot paper that was next to the Liberal candidate”.

Ms Hall’s application said the posters were particularly effective in Chisholm, which took in the suburbs of Box Hill, Blackburn and Mount Waverly, because of the high proportion of Chinese speakers in the electorate.

The 2016 Census found about 20 per cent of Chisholm residents spoke Mandarin or Cantonese at home, compared with a figure of less than 4 per cent nationally.

Ms Liu won her seat with an ultra-thin margin of just 1,090 votes. She is the first Chinese-Australian woman to win a federal seat in the Lower House.

Mr Bradley said the cases hinged on not only proving that the posters were invalid, but they influenced the outcome of the election.

“We have to convince the court that it was likely to have affected the result. In Chisholm [the result] was knife-edge,” he said.

Mr Frydenberg comfortably won Kooyong with a two-party preferred vote of 55.7 per cent.

The Greens candidate for Kooyong, Julian Burnside, who lost with 44.3 per cent of the two-party preferred vote, said the challenge should succeed.

“I think the challenge is correct. The signs were outrageous,” Mr Burnside told the ABC.

“They basically instructed people in Mandarin, they said ‘if you want to cast a valid vote you need to put a ‘1’ beside liberal’, and that’s misleading, deceptive and wrong.”

Mr Yates has launched a crowd-funding campaign for the legal action, which has so far raised more than $17,000.

Contact Pat McGrath





In conclusion … ‘Any government that wants to clean up gambling has the tools to do it. An integrity investigation into Crown announced today by Attorney-General Christian Porter may help achieve some reform, especially around allegations of Crown’s involvement with criminals and money laundering.

The exploitation of vulnerable people by gambling operators across the country needs its own inquiry, and governments need to find the will to regulate in the genuine interests of ordinary people.


The Crown allegations show the repeated failures of our gambling regulators

The Conversation By Charles Livingstone

31 JULY 2019

Poker hand and poker chips.

PHOTO: Regulators have failed to properly monitor Australia’s casino operators. (ABC News)

RELATED STORY: Integrity investigation ordered into Crown Casino allegations

RELATED STORY: ‘Outrageous’: Crown wants more apartments at Barangaroo tower

RELATED STORY: Why James Packer might want to get out of the gambling business

Regulatory failure has been a hot topic in Australia recently.

Royal commissions into the financial and aged care sectors have revealed major regulatory failures.

The harm done by these oversights has been significant.

Regulation is not just red tape. It protects the interests of those who put their faith, money, and in some cases, loved ones, into regulated institutions.

Crown, Australia’s biggest casino operator, has been linked to organised crimemoney laundering and fast-tracked visas for big gamblers. All of these issues are the responsibility of gambling regulators.

Yet, regulators appear to have missed it, despite their key role in preventing criminal influence affecting gambling operators.

One of the main entrances to Crown Casino in Melbourne.

PHOTO: Crown is Australia’s biggest casino operator. (ABC News: Jane Cowan)

‘Underwhelming’ performance

Not that this is a surprise. The Victorian Commission for Gambling and Liquor Regulation has been under scrutiny for some time.

In 2017, the Victorian auditor-general pointed out that VCGLR’s capacity to regulate Crown (and other liquor and gambling venues it also regulates) was underwhelming.

In its conclusions, the Auditor observed:

There is a need for VCGLR to improve its oversight of the casino. VCGLR is not able to demonstrate that its casino supervision is efficient or effective as is required for best practice regulation of a major participant in Victoria’s gambling industry.

In 2016-17, punters using Crown’s Melbourne casino lost $1.56 billion. The Victorian government’s share of this, via tax revenue, was $207.7 million. The Crown casino in Perth relieved its patrons of $622.8 million. The WA government got $61.9 million of this.

This revenue is important to cash-strapped state governments. With few sources to raise revenue, and many big-ticket items to fund, states need revenue.

Even so, Crown’s contribution to Victoria’s revenue stream is modest. The 2018-19 state budget papers estimate a contribution of $237 million from the casino, compared to $1.119 billion from pokies in pubs and clubs, and $1.876 billion in total gambling taxes.

Does Crown get special treatment?

Yet, Crown has many advantages when compared to its rivals in the gambling business.

It operates monopoly casinos in both Victoria and WA, pays a low tax rate compared to its suburban rivals in Victoria (pub and club pokies pay about 37 per cent of gambling revenue to the state), and has far fewer constraints on its operations.

In Victoria, for example, Crown has smoking areas inside the casino, has unlimited bets on many of its pokies, has ATMs on-site, can operate 24 hours a day, and appears to be able to get planning approval without any of the usual fuss.

In the case of the proposed development at Barangaroo on Sydney Harbour, its unsolicited bid for a skyscraper with casino, luxury apartments and a hotel sailed through with support from both government and opposition.

Crown clearly enjoys beneficial access to decision makers. This also appears to extend to regulators.

An artist's impression of Crown Sydney casino and hotel.

PHOTO: An artist’s impression of Crown Sydney casino and hotel (far left), which sailed through the approval process. (Supplied)

Failures to ensure responsible gambling

Headline stories about suspected criminal involvement in casino operations are worrying, and demonstrate just how little apparent scrutiny regulators apply. But more worrying from a public health perspective are the regular breaches of “responsible gambling” principles that are supposed to govern legalised gambling in Australia.

For example, Australia’s largest pokie operator (and Woolworths subsidiary), ALH Pty Ltd, was caught (via whistleblowers) collecting information on patrons that could be used to encourage heavier gambling, and in some cases plying them with free drinks.

In NSW, the Illawarra Steelers club was fined $100,000 after it was revealed the club advanced large sums of cash to punters, disguising it as large-scale liquor sales.

Crown casino in Melbourne was fined $300,000 by VCGLR after whistleblowers revealed that pokies had been tampered with.

*Whistleblowers also revealed that Crown provided punters with plastic picks for jamming pokie buttons to facilitate continuous operation. The VCGLR found this to be irresponsible and banned the picks, but no fines were levied.

Man playing pokies in Sydney (Mick Tsikas, AAP)

PHOTO: There are allegations of poker machines being tampered with. ((Mick Tsikas, AAP))

Regulators are supposed to be concerned with protecting vulnerable people and minimising harm. But evidence suggests that in this area, they have also failed.

The day-to-day exploitation of the ordinary gamblers who contribute most of the money that goes into gambling industry in Australia (about $24 billion every year) attracts less interest, but is arguably at least as important.

The Victorian auditor-general’s report focused on this issue, as well.

VCGLR has not adequately performed its compliance functions. Compliance activities are not sufficiently risk based and have been focused on meeting a target number of inspections, rather than on targeting inspections where noncompliance has a high risk or high potential for harm. This approach to compliance does not support the legislative objectives for harm minimisation.

The VCGLR can hardly be unaware of the extent of its failure to achieve compliance with regulatory requirements.

Last year, VCGLR’s sixth review of Crown’s casino operator licence found, amongst other issues:

  • failures of governance and risk management, contributing to compliance slippages
  • a lack of innovation and progress regarding Crown’s approach to responsible gambling, such as might now be required of a world-leading operator to meet heightening community and regulatory expectations.

A lack of political will

It’s not just regulators who are at fault, of course.

Politicians have also demonstrated little appetite for much in the way of harm prevention.

Regulators may be wilfully ignorant in their selective vision, but they do so in the knowledge that few governments want gambling disrupted.

The memorandums of understanding between Clubs NSW (whose members operate about 70,000 pokies) and successive NSW governments show how deep the ties are between gambling operators and governments.

Political donations are equally significant measures used by casino and other gambling operators.

Not to mention the revolving-door recruitment of influential individuals to act as lobbyists and “government relations experts” practised by the gambling industry (and Crown in particular).

Current board members of Crown include former head of the Australian departments of health and finance Jane Halton, former Liberal Minister Helen Coonan, former Australian Chief Medical Officer John Horvath and former AFL CEO Andrew Demetriou.

These are very well-connected and influential people, who lend their credibility to Crown, along with their expertise in dealing with government and regulation.

So is there any good news?

The good news is that there is much that could be done to improve gambling regulation.

Improved surveillance of criminal activity in casinos is one such step. Increased tax rates might even fund it.

Andrew Wilkie, Peter Whish-Wilson and Jacqui Lambie addressing the media inside Parliament House

PHOTO: Independent MP Andrew Wilkie, centre, with senators Peter Whish-Wilson and Jacqui Lambie calling for an inquiry into Crown and its efforts to lure Chinese gamblers. (ABC News: Marco Catalano)

On the harm prevention front, public health experience in multiple areas (such as tobacco control, alcohol policy, and motor vehicle injury reduction) demonstrates that there is a great deal that can be done to minimise or prevent harm from inherently dangerous products.

Our recent report, published by the Victorian Responsible Gambling Foundation, pointed out 104 things that could be done to prevent or reduce gambling related harm.

Many of them would require better-equipped regulators, with more powers and stronger penalties at their disposal.

What we know from the whistleblowers and investigative journalists (and most pointedly not from regulatory activity) is that Australia’s biggest and most prominent gambling operators regularly flout regulation, and apparently get away with it.

Any government that wants to clean up gambling has the tools to do it. An integrity investigation into Crown announced today by Attorney-General Christian Porter may help achieve some reform, especially around allegations of Crown’s involvement with criminals and money laundering.

However, these are the tip of the iceberg.

The exploitation of vulnerable people by gambling operators across the country needs its own inquiry, and governments need to find the will to regulate in the genuine interests of ordinary people.

Charles Livingstone is an associate professor in the School of Public Health and Preventative Medicine at Monash University. This article first appeared on The Conversation.






-finding a hotel room, or a permanent rental impossible on $21.30 a day after commitments

-over 55s largest group on Newstart; 173,196 people rely on $39 a day

-seeks ‘house sitting’ opportunities

-sleeping in her car compounds health issues

SINCE 2011 NSW Guvmint has sold off much of NSW Public Housing estates for private redevelopment … more than 10 years for those on the waiting list

‘I just exist’: Ex-teacher says Newstart has made her homeless

Karryn Smith has been living in her car for more than two years. Photo: Karryn Smith

Christiane Barro

Christiane Barro@BarroChristiane


Newstart recipient Karryn Smith, 58, considers herself “one of the lucky ones”, yet the former school teacher is living out of her car.

Every night, Ms Smith searches for somewhere safe to park, and with any luck, will find a spot near a public toilet that keeps its doors unlocked overnight.

Public showers are a “rare” find, so she’ll sometimes go without.

Finding a comfortable hotel, let alone a permanent rental, has been impossible on just $20 a day.

“At the moment, I don’t see a future. You hear of people they find dead and with nobody there, I sort of think, is that how I’m going to end up?” Ms Smith said.

“There’s nothing that you can look forward to, being in my situation. You just sort of exist I guess.”

Ms Smith shared her tragic story with The New Daily, as pressure continued to mount on the Morrison government to lift the dole payment by $75 a week amid evidence Newstart recipients are struggling to survive.

Over-55s are the largest single group of Australians on Newstart, with 173,196 people relying on just $39 a day, recent data has shown.

This week, former Nationals Senator John Williams said older unemployed workers deserve an increase to their meagre allowance due to limited job opportunities.

Of the $570.70 she receives fortnightly, Ms Smith pays $167.50 to keep her belongings in storage and sets aside $22.50 for her monthly phone bill and $82.50 for credit card repayments.

That leaves her with just $21.30 a day for food and other expenses.

Some days she’ll have nothing more than a banana and veggie pie with some milk. Other times, she’ll buy a packet of muesli bars to last her a few days.

“I can’t afford to rent and eat on Newstart. So the only way to live within my means has been living out of a car,” she told The New Daily.

The single parent from South Australia had been living with her son but after he moved overseas for a job, Ms Smith could no longer afford the rent.

She spent her life savings on sharing with different flatmates but that money eventually depleted.

Ms Smith said surviving on the Newstart allowance meant she had to forgo housing.

“I’ve been trying to get myself some shelter by doing house sittings,” she said.

After more than two years of sleeping rough in her car, Ms Smith is accustomed to a persistent back ache and swelling in her legs, ankles and feet.

The inside of Ms Smith’s car. Photo: Karryn Smith

She’s on the public housing waiting list, but has been advised it will be “years” before she secures a property.

In the meantime, she has travelled to Victoria, where she has had more luck with house-sitting opportunities.

Suffering from distorted vision in one eye and chronic shoulder pain, Ms Smith said she has struggled to find a job.

“Even job providers have been at a loss to advise what jobs I would be able to manage [with my ailments],” she said.

“One job provider told me I needed to apply for a certain number of jobs even if I am unable to physically do the job. That’s no help to me.”

In the winter, Ms Smith struggles to stay warm so she piles on a lot of blankets to avoid shivering through the night.

Cooling off in the summer is a much trickier task.

Ms Smith keeps the windows down to prevent her car from overheating but wakes up covered in itchy insect bites.

But she remains grateful.

“I have a car that I can get shelter from, whereas a lot of people don’t even have that.”






-the daigou business has exploded into a multi-billion dollar economic backchannel integrating retail, marketing, logistics

daigou have become known for sinking the share price of companies overnight

the daigou market is worth at least $2.5 billion in Australia

reports of the major players — A2, Bellamy’s, Blackmores, Bubs: zero specifics how the daigou are involved or used

-daigou model: impossible to draw a line betw domestic v international sales if products bought locally and shipped privately

THE opaqueness has sparked controversy over whether domestic sales are actually serving Australians

-daigou blog and livestream through We-Chat providing pre and after sales service

-daigou industry trying to rebrand itself as Cross-border E-commerce enterprise

-to tie in the whole network as one entity for mutual benefit

-ATO has no specific taxation rules!

-Angela pays gst; her income deposited into a Chinese bank account; taxed by Beijing

-many transactions take place on We-Chat; linked directly to Chinese bank accounts; off Aust Govt radar

MEANWHILE in Australia we have citizens:

-losing their homes to debt through job loss, illness …

-persecuted by Robodebt

-high youth unemployment and underemployment

-more than 600,000 international students swamping universities

AS the daigou model allows tax avoidance to run rife … not to mention the Daigou, the Proxy buying up Australian Real Estate …

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The daigou channel — how a handful of Chinese shoppers turned into a billion-dollar industry

Whether it’s parents furious over baby formula shortages or military personnel loading boxes onto Chinese warships — chances are you’ve crossed paths with a trading phenomenon that’s shaken businesses around the country.

By Bang Xiao and Sean Mantesso
China Watch — Part 3

Updated 31 Jul 2019

This is Angela Zhang one of more than half a million international students studying in Australia.

CAAN: Temporary Student Visas on issue at March 2019 to a record high 613,000

ABC: She pays her university fees, rent and living costs by buying Australian-made products and posting them to China.

Angela spends up to 15 hours a day receiving orders from thousands of followers on Chinese social media app WeChat, off the radar of Australian authorities.

She says she can work anywhere, anytime.

“My first time was when I was on Christmas vacation and one of my best friends asked me to send her some high quality and well-known Australian products,” she says.

“Four months later I quit my job and did it full time when I realised it could support my basic life in Australia and was much more flexible.”

Angela is one of an estimated 150,000 “daigou” — Chinese for ‘buy on behalf of’ — working here in Australia.

Angela takes her orders to a daigou shop.

This specialty shop is located in North Melbourne.

A selection of products popular with the daigou.

The items are prepared to be sent to China.

In 2008, China was rocked by a baby formula scandal that left as many as 300,000 infants sick and six dead — consumer confidence in locally-made products never fully recovered.

The crisis sparked a phenomenon here of personal shoppers in Australia sending products to China, which has often made headlines over the years with Australian parents furious about baby formula shortages and the daigou’s ability to influence share prices by having a preferred brand.

As China’s middle class grew over the last decade, so too did the appetite for Australian products, and the demand is increasingly being serviced by international students and new migrants.

*As a result, the daigou business exploded from a handful of personal shoppers with handbaskets into a multi-billion-dollar economic backchannel integrating retail, marketing, and logistics services across the country.

A parcel is labelled with logistics information.

Some businesses also sell directly to China.

Day-to-day orders are handled by logistics firms.

There are now some 1,000 Chinese specialty stores and logistics companies across Australia that have made massive business out of handling retail and shipping for the lucrative industry.

Yaqiong has a master’s degree in accounting from Melbourne University. ABC News

Melbourne University graduate Yaqiong Hu says her parents were initially opposed to her being a daigou because they didn’t believe it was a proper job, but changed their minds after seeing how much she earned.

“My parents thought working in an office with a set income were the standards for a proper job,” Yaqiong says.

“When they realised the income exceeded that of an office job, they started to see it as a career.”

Although the daigou industry was accelerated by the baby formula crisis, it has since expanded to include a vast range of Australian products cosmetics, clothes, food, wine, vitamins, toys — pretty much anything a buyer might want.

Today, with the daigou channel in full swing, those involved in the trade say as many as half a million packages are sent to China every week.

This is how one of Angela’s orders makes its way from the shelves of inner-city Melbourne to a family in the city of Hangzhou, China.

Google Earth: Digital Globe

Angela takes orders and hands the items or pre-packaged parcels over to a local specialty store for processing.

Specialty stores are scattered throughout the country and funnel day-to-day orders on to logistics firms.

Some daigou logistics firms maintain industry-scale warehouses near Australian airports to facilitate processing.

EWE Global Express processes thousands of parcels through its Moorabbin warehouse every single day.

Parcels are flown 7,500km over South-East Asia to major Chinese trade hubs depending on which province they’re heading to.

Angela’s package was sent to Shanghai’s Free Trade Zone to be processed for distribution in Zhejiang province.

From there, Chinese postal services take over distribution to daigou customers across the country.

This package from Angela was delivered to the Shen family residence in Hangzhou city in the country’s south.

Four-year-old Anna Shen has been fed Australian baby formula since she was born.

A typical parcel might include A2 baby formula and Swisse and Blackmores vitamins, among other popular Australian products.

Like any parents, the Shens just want the best products for their daughter.

*“It’s convenient to buy through daigou because they can get us products not sold on big e-commerce platforms,” the family explains.

“But mostly, the daigou we buy from are friends that we trust.”

‘No matter how big or small, your company must embrace them’

While daigou is a global phenomenon, Australia has become a case study in terms of the scale and sophistication of the operation.

*It’s nearly impossible to put an exact dollar figure on the size of the industry, but daigou are massive business — a slew of publicly-listed companies in Australia rely so heavily on daigou sales that daigou have become known for sinking the share price of companies overnight.

Blackmores interim CEO Marcus Blackmore recently told the ABC following an overnight share drop that the daigou made up some 25 per cent of his business.

But analysts estimate that the daigou make up as much as 60 per cent of many businesses, while AuMake, a publicly-listed daigou specialty business, told the ABC that the daigou market is worth at least $2.5 billion in Australia.

Daigou are important for Blackmores’ business.

Popular Australian products purchased by daigou

*The ABC examined the financial reports of the major players — A2, Bellamy’s, Blackmores, Bubs — and while they contain reference after reference to “daigou channels” and “China channels” there are zero specifics about how the daigou are involved or used.

*All companies and media spokespersons declined requests for financial breakdowns and comment, with others saying that they actually just don’t know for sure.

*Part of this is because with the daigou model, it’s nearly impossible to draw a line between domestic versus international sales if the products are bought locally and shipped privately the opaqueness has sparked controversy over whether domestic sales are actually serving Australians.

But if China is such big business, why don’t Australian companies simply increase their international quota and sell directly into China? Well, it’s not that easy.

Businesses who think they can get around the daigou by cutting costs or selling directly into China have found themselves in terrible positions.

Bellamy’s were doing very well through the daigou channels, so they thought: ‘OK, we can just take this over[and sell directly to China and undercut them], because clearly everyone wants our product’,” strategic business management professor Stuart Orr told the ABC.

“But they completely misunderstood.”

That’s because the key to the daigou phenomenon doesn’t necessarily lie in the quality product, but how it’s marketed.

Daigou have direct rapport and personal trust with Chinese clients that Australian companies simply don’t have.

For example, by blogging and live-streaming her services through WeChat, Yaqiong Hu is able to provide invaluable personalised pre- and after-sales services.

Sometimes tens of thousands of people all across China are watching the sessions.

*It’s proof that the daigou bought the product from Australian retailers, but for the businesses, it’s outsourced marketing.

“We’re very dependent on the daigou in Australia,” Mr Blackmore told the ABC.

“They’ve made the point to us that they do a hell of a lot of the marketing and the sales for our product in China.”

At a recent daigou event in Melbourne, Blackmores CFO Aaron Canning said the daigou were “the single largest network of sales, people, ambassadors and influencers [in Australia]“.

“No matter how big or small your company is, you must embrace them,” he said.

‘Where the real concern lies’: Tax loopholes, WeChat and the future of daigou

*Since late last year, the daigou industry has been trying to rebrand itself as an Cross-Border E-Commerce (CBEC) enterprise in order to shake its reputation as an unofficial and unregulated channel.

*Under CBEC — which refers to all digital international trade like that done on eBay and Amazonthe daigou are hoping to tie in the whole network of individual shoppers, specialty shops, distributors, and logistics firms as one entity working together for mutual benefit.

*But while the daigou phenomenon continues to grow, a number of unanswered questions remain: such as whether these lucrative backchannels are creating tax loopholes, and whether it’s responsible for companies to rely on a marketing strategy they can’t control.

Thousands of Chinese buyers pay for daigou services through WeChat off the Australian Government’s radar. ABC News

*The Australian Tax Office told the ABC that while there are “no specific taxation rules” for the daigou business, the expectation is that they would meet GST and income tax obligations, while noting that “some daigou participants may not be correctly registering business activities”.

*Angela pays GST just like any other Australian consumer, and told the ABC that her income is deposited into a Chinese bank account and taxed by Beijing, which she can prove — however, it’s a grey area whether or not some daigou activities should be classified as taxable income here in Australia.Billion-dollar baby formula crazeEver seen people clear entire shelves of baby formula at your local pharmacy or supermarket? They may be Daigou and it’s a simple and lucrative business.

*The fact that many daigou transactions take place on Chinese social media apps like WeChat and are directly linked to Chinese bank accounts, means that many operations are taking place off the Australian Government’s radar, making them hard to crack down on.

*At the same time, using a daigou channel effectively allows companies to sell into China and label it as domestic trade since products are bought locally — in turn, it also allows customers in China to buy Australian products duty free.

*“Whether [those engaging the daigou] are meeting their corporate governance responsibilities in terms of actually understanding this channel — I think they’re not,” Professor Orr says.

*“I think they’re standing back and just allowing it to happen. I think that’s where the real concern lies.”

Yet despite these issues, Australian companies that benefit from the daigou are ploughing ahead in the hopes they’re effectively tapping into the lucrative industry.

Just this week, Bubs Australia said in a statement that “the rapid growth of the corporate daigou segment” contributed to our domestic sales, more than doubling that of the prior year, but refused to disclose the figure to the ABC.

“Our China route-to-market platform capability advanced significantly through new strategic partnerships with Beingmate, Alibaba and Kidswant,” Bubs CEO Kristy Carr said in the company’s quarterly report.

Australia Post’s daigou specialty store in Box Hill.

Everything sold here must be sent to China.

Even Australia Post — led by former Blackmores CEO Christine Holgate — is getting on board, having opened a handful of China Direct stores over the past year that are stocked with duty-free goods that can only be shipped directly to China.

The company and Ms Holgate declined to talk about their daigou strategy or provide a representative to speak on the record, but in a statement to the ABC simply said the enterprise was a trial concept aimed at capitalising on a $320 million daigou market, without providing details on how the market is calculated.

As Australia Post is government-owned, the ABC asked the Ministries of Finance and Communications for comment on how the China Direct stores were related to its principal function of providing postal services for Australians.

A subsidiary function of Australia Post is to carry on — outside Australia — any business or activity relating to postal services [or] any business that is incidental to its principal and subsidiary functions,” a spokesperson for the Finance Minister said.

Australia Post has flexibility and discretion in its operational and commercial decisions within the parameters of the Australian Postal Corporation Act 1989.

*“These stores operate in a highly competitive retail market and sales figures and parcel volumes are commercial in confidence.”

CAAN: Where have you heard that before??? ‘commercial in confidence’ ???

Chinese military personnel loading baby formula boxes on to a warship.

Back in Beijing, China is trying hard to rebuild trust in home-grown products in order to wean consumers off the reliance on imports, aiming to increase local production of baby formula to more than 60 per cent — domestic infant and toddler milk accounted for 43.7 per cent of the Chinese market in 2018.

*Beijing has also implemented e-commerce laws to ensure professional daigou are registered as businesses and pay tax on the products that they’re importing — there are reports some smaller daigou operators have already exited the market, but the laws will be relatively limited in effect as significant portions of the daigou trade take place on platforms like WeChat.

“It will capture some people, it will generate some revenue,” Professor Orr says.

“But it’s not really going to dampen down anyone who seriously wants to continue the trade.”

In the meantime, the phenomenon continues to create such a frenzy that when Chinese warships unexpectedly rocked up in Sydney Harbour this year, some media outlets suggested they were stealth missions to collect baby formula after military personnel were seen loading boxes onto the ships.

Whether the billion-dollar industry can or will ever be assimilated into the mainstream economy is unclear — but for now, the daigou industry show no signs of slowing.

Watch the full episode of ‘China Watch 3: The Daigou Channel’ on YouTube.

The Daigou Channel ABC News


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