Wednesday, May 27, 2009

Vic govt denies favours for Crown casino, by Katie Bradford - Fairfax - 27th May 2009

The Victorian government denies giving special favours to Crown casino but admits it has a close working relationship.

Two weeks after announcing it was allowing Crown to expand its gaming floor in return for increased poker machine tax, Tourism Minister Tim Holding defended the government's relationship with the casino while promoting its new hotel on Monday.

"We work closely with Crown but there's no deal in relation to this development," Mr Holding told reporters.

"Whether you're coming to dine in the magnificent restaurant, whether you want to stay in the fantastic hotel, whether you're wanting to gamble in the casino ... whatever you want to do here on site there are fantastic opportunities to do so.

"The government is very pleased that Crown is so confident in the tourism industry of Victoria that it has decided to build Australia's biggest hotel."

Anti-gambling campaigners accused the government of having a "cosy" relationship with Crown after permitting it to expand its gaming area by a further 150 tables.

In exchange, Crown's tax rate on its poker machines will progressively increase by 10 per cent to 32.5 per cent by 2014/15 - only then matching what other gaming venues already pay.

"We actually use this as an example of how Crown is being treated the same as other venues across Victoria," Mr Holding said.

Crown Melbourne's chief executive David Courtney refused to comment on his relationship with the government, or the tax deal.

"We're really here today to talk about the new hotel, it's a significant investment," he told reporters.

Under repeated questioning, Mr Courtney said it had been 10 years since Crown had been allowed to expand its gaming operations.

"It's very important to allow us to beat international competitors."

He refused to answer questions on whether the casino had a "sweetheart relationship" with the state government.

But Mr Courtney admitted the expansion would attract more high rollers.

Victorian opposition leader Ted Baillieu said the relationship between the government and the venue was "obviously very close".

He demanded the government answer further questions about the extra tables deal, including who initiated it and what the exact conditions were.

"Clearly, until these questions are being answered by the government, it ought to be very cautious about the relationship."

Mr Baillieu said Mr Holding would do "anything he believes was in his own interests".

"But that's the way this government operates, this is a government of political patronage, this is the government that's searching for favours all over the place but it's lost touch with the community, it's lost touch with reality and has no credibility on integrity, on corruption and on good governance." (Credit: Fairfax)

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Sunday, May 24, 2009

Global downturn hammers James Packer's gambling ambitions, by Eli Greenblat - The Age - 22nd May 2009

James Packer's growing casino operation in Macau is the latest victim of the global downturn.

Dwindling patronage at Crown's Macau joint venture, which posted a $US35.3 million ($A45.6 million) first-quarter loss on a 55 per cent revenue slump, is challenging his push into the region.

Melco Crown Entertainment, which operates the Altira Macau casino and is building the $US2 billion City of Dreams casino, reported overnight that in the first quarter of this year revenue fell to $US216.5 million, down from $US482.9 million in the previous corresponding period.

Revenue from its maiden Altira development dropped 60 per cent in the period.

Although Melco Crown Entertainment's adjusted pre-tax and depreciation earnings were significantly weaker, they remained in the black at $US21.3 million. But the bottom line was deep in the red and showed a $US35.3 million loss against a $US43.2 million profit previously.

The souring performance reflects the depressed state of major casino and gambling businesses in Asia and the US, forcing companies to slash the value of their assets in the face of a drop in consumer spending on gambling and entertainment.

For Mr Packer, it is a further blow to his ambitions in the region as he tries to broaden Crown's earnings base away from Australia — where the company owns Melbourne's Crown Casino and Burswood Casino in Perth — to the Asian region and North America. In 2006, soon after the death of his father, Kerry, James Packer forged a $US8.7 billion venture with Lawrence Ho's Melco casino group to create Melco Crown Entertainment. Mr Ho is the son of Macau gambling kingpin Stanley Ho.

Crown, then called Publishing and Broadcasting Ltd, took a post-listing 41.4 per cent equity share in the joint venture that was valued at $A4.73 billion when Melco Crown Entertainment stock began trading on Nasdaq and closed its first day at $US21.55.

Since then, Crown's stake in the joint venture has been diluted to 36.4 per cent while Melco Crown Entertainment shares have fallen to $US5.85.

At Crown's half-year financial report, chief executive Rowen Craigie said its share of Melco Crown Entertainment's normalised result for the half was an $A11.3 million loss. The venture's Altira Macau casino recorded $US183.6 million net revenue for the March quarter versus $US459.9 million for the same quarter last year.

Constellation Capital Management investment analyst Peter Chilton said yesterday the Macau casino market was having earnings problems similar to those of Las Vegas.

"It probably is under some pressure with a lot of new capacity and at the same time the actual business available has slowed down, because of the downturn in China," he said. "And we have seen it in the United States as well, where people are less willing to, and have less funds available, to put into casinos.

"Las Vegas is suffering as well. I think maybe people had thought of casinos as fairly recession-type-proof businesses but there is obviously a limit in a serious downturn — people do visit these establishments less, or spend less money."

Melco Crown Entertainment co-chairman and chief executive Mr Ho said City of Dreams was scheduled to open on June 1, and the budget was unchanged.

"Our financial position remains strong and our balance sheet is one of the best in the gaming industry," he said. "We held approximately $US755 million of cash, excluding cage cash, at the end of the first quarter, and we expect to spend approximately $US244 million on construction and pre-opening preparations at City of Dreams from the start of the current quarter through its opening."

Crown shares fell 2¢ to $6.97.

(Credit: The Age)

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Sunday, May 17, 2009

Branson plans launch of Virgin internet bank, by Richard Wachman - The Observer - 17th May 2009

Richard Branson is to launch an internet bank in a move designed to exploit public disgust with Britain's big banks in the wake of the credit crunch.

Branson follows Tesco, which is also planning to capitalise on disenchantment with traditional banking via a big push into financial services.

The entrepreneur will act through his Virgin Money subsidiary, which is headed by Jayne-Anne Gadhia, a former boss of RBS's mortgage division and marketing director of Norwich Union.

Virgin Money is understood to be poised to apply for a banking licence from the Financial Services Authority to allow it to take deposits and offer mortgages for the first time. Branson is talking to US investment banks and other investors about financial backing.

He is also talking with advisers about more ambitious plans that could see Virgin launch a bid for Northern Rock, if the government decides to sell part of the bank back to the private sector before the general election in May 2010.

Credit Suisse, the Treasury's financial adviser, is thought to have sounded out potential buyers in recent weeks. Virgin Money failed in an earlier bid to acquire Northern Rock, which was nationalised by the government in early 2008.

Virgin is looking at three options: launching a new bank, complete with a branch network; entering a partnership with another financial player; or buying a stricken bank, such as Northern Rock, as part of a larger consortium.

Virgin Money is shortly to announce that sales leapt from £70m to around £100m in 2008. Profits are estimated to come in at £30m.

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Saturday, May 16, 2009

Second high-roller deal for Crown casino, by Michael Warner - Herald Sun - 16th May 2009

EXCLUSIVE: CROWN casino has hit the jackpot for the second time this week.

The state's gambling watchdog revealed it had given preliminary approval for Crown to expand its rich high-roller Mahogany Room.

It comes just days after Premier John Brumby announced the casino would be granted an extra 150 gaming tables in a sweetheart deal with its billionaire owner, James Packer.

The Mahogany Room expansion will see a new VIP facility built above the Crown Towers driveway at the casino's eastern end.

High-stakes roulette, blackjack and baccarat tables will cater for bets of up to $280,000.

And smoking will also be permitted under special international exemptions, despite the vast majority of patrons hailing from Victoria.

"We've told them (Crown) that, based on how they've described it to us, we see no impediment to it proceeding," Victorian Commission for Gambling Regulation chief Peter Cohen said.

"They've sought some boundary changes to the room."

Mr Cohen revealed sections of the casino's public gaming floors were also set to increase.

But a spokeswoman for Gaming Minister Tony Robinson said last night the two rulings were unrelated.

"I've just had a few more discussions, and my understanding is that all of this is at very preliminary stages between Crown and the VCGR. And so at this point, the minister has not been formally advised of any expansion of the Mahogany Room," Rebecca Harrison said.

Mr Brumby revealed on Tuesday - just hours before the handing down of the federal Budget - that he had handed Crown 150 new tables in exchange for higher tax on the casino's poker machines.

He defended the timing of the announcement and rejected criticism that he had tried to hide the deal.

But sources suggested the agreement was signed more than 10 days ago, and its announcement delayed until Budget day.

Mr Brumby admitted to private discussions with Mr Packer at a taxpayer-funded suite at the Albert Park Grand Prix six weeks ago.

He initially refused to detail the discussions, claiming they were private, but has since said they talked about Tiger Woods' visit to Melbourne in November and not the lucrative casino deal.

Mr Packer described the talks as "casual" and unrelated to the arrangement. (Credit: Herald Sun)

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Friday, May 15, 2009

Average Australians Support Crown Casino Expansion - great for tourism, entertainment industry and having a punt! - 15th May 2009

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Homeless now charged to stay at homeless shelters - 11th May 2009

In these dire times, even the homeless are now being charged to stay at homeless shelters.

That's the situation in New York City where city officials this month began charging rent to working families staying in public homeless shelters.

The policy stems from a 1997 state law that hasn't been enforced until now. Under that law, shelter managers started to require families to pay a portion of their income, depending on the shelter and family size, according to The New York Times newspapers.

Residents could be expected to pay up to half their earnings.

Some shelter residents say the new rule will ruin their chances of saving enough money to get an apartment.

One single mother living in a Manhattan shelter tells the newspaper she got a letter saying she had to give up $336 ($A440) of the $800 ($A1050) she makes each month as a cashier.

Vanessa Dacosta makes $8.40 ($A11) an hour. She got a letter under her door at the shelter a few weeks ago saying she'd have to fork up nearly half of what she was bringing in.

For Dacosta, who pays nearly $100 ($A131) a week on child care for her 2-year-old, paying the shelter is hardly an expense she can afford.

“It’s not right,” Dacosta told the Times. “I pay my baby sitter, I buy diapers, and I’m trying to save money so I can get out of here. I don’t want to be in the shelter forever.”

But the city says it's got to find a way to cover the costs of state housing aid.

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Crisis hits millionaires' row, by Chris Zappone - The Sydney Morning Herald - 15th May 2009

Australia has fewer million-dollar suburbs as the global financial crisis erodes home values, according to a report.

How did your suburb fare? Click here for the list.

The total number of suburbs where the median home price is $1 million or more fell to 134 in the year to the end of February, from 152 a year ago, according to real estate research agency RP Data, with median home prices plunging more than 20 per cent in the some suburbs.

"The top end of the market has always been seen as a bit of safe haven and has generally been immune to downturn,'' said RP Data senior research analyst Cameron Kusher, but the global financial crisis has "really impacted hard on high income earners'' resulting in the need to sell properties.

"Even through past recessions it's very rare to see these areas drop more than 20 per cent,'' Mr Kusher said.

"It is something new and something that hasn't been seen before.'' Four suburbs in Western Australia showed the average median price falling more then 20 per cent, based on monthly sales data.

New South Wales saw the largest fall in the number of million-dollar suburbs, losing eight in the year to February.

The suburb of Warrawee experienced the biggest plunge, with the median home price of $1.09 million in 2008, slumping to $895,000 in 2009.

Overall, the number of million-dollar NSW suburbs fell to 78 in 2009 from 86 in 2008, the report said.

The impact of the financial crisis, which accelerated late last year, has been driving the sales of top-end homes, Mr Kusher said.

Good times gone

Some high income-earners ''probably thought the good times would continue for a lot longer than they have,'' he said.

''They have missed out on bonuses, their share portfolios are worth half of what they were 18 months ago,'' Mr Kusher said. ''Some people have had to sell their properties.''

''Given the state of the economy, there are not a lot of people in a position to spend more than $1 million at the moment.''

Western Australia, where the economy is tied to the price and outlook of resources, saw the most rapid shrinkage of million-dollar neighbourhoods in percentage terms. The number of suburbs where the median home price was $1 million or more dropped 21 per cent, from 29 in 2008 to 23 in 2009.

The Perth suburb of Ardross led the price falls, with the median price tumbling 26.4 per cent in the year to February.

Five of Victoria's million-plus-neighbourhoods slipped under the threshold, bringing the total to 20 in 2009, a 20 per cent fall.

South Yarra lost the most, dropping 18.1 per cent, to $900,000 in 2009 from $1.1 in the twelve months to February 2008.

Queensland and South Australia both gained one-million-dollar-plus suburbs each in the year.

US price plunge

A plunge in US home prices linked to subprime loans set off the global financial crisis last year, igniting fears that drops of 20 per cent the US and UK could eventually hit Australia.

Official home prices have fallen 6.7 per cent in the year to March according to Australian Bureau of Statistics data, although unofficial measures show more resilience.

''This decline in prices, the largest since the Great Depression, comes in spite of the fact that subprime lending comprised only a tiny part of the local market while Australia never saw the overbuilding that occurred in other countries,'' wrote RBS economists Kieran Davies and Felicity Emmett in a note to clients.

''With this downward momentum now in place, as well as the prospect of a further large rise in unemployment, house prices could potentially fall further over coming months.''

The Federal Government extended the deadline for the full First Home Owners grant boost until the end of December, and in a reduced from till the end of 2009.

Economists link the resilience in sub-$500,000 home prices with the grant boost.

JP Morgan analyst Helen Kevans flagged the hazards of high risk borrowers entering the housing market ahead of an expected rise in the unemployment.

By government estimates, the jobless rate will rise to 8.25 per cent by the middle of 2010. The rate currently stands at 5.4 per cent. (Credit: The Sydney Morning Herald)


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Thursday, May 14, 2009

Packer rebounds as Australia's richest, by Trevor Chappell - The Sydney Morning Herald - 14th May 2009

Gambling tycoon James Packer is Australia's richest man after a slump in the resources sector eroded the fortune of the previous wealth leader, iron-ore magnate Andrew Forrest.

Forbes Asia magazine's 2009 list of rich Australians shows Mr Packer, 41, took back the top mantle from third position.

But his estimated wealth fell to $US3.1 billion ($A4.12 billion), from $US5.3 billion in 2008, following a drop in the share prices of his casinos and media interests.

Mr Packer's interests in Australia include the Crown casino in Melbourne and the Burswood casino in Perth.

Mr Forrest, the boss of Fortescue Metals Group Ltd, crashed to fifth, after his fortune shrank to $US1.65 billion ($A2.19 billion), from almost $US5 billion, as waning China demand for iron ore caused Fortescue's shares to drop by two-thirds.

Second on the list was shopping centre developer Frank Lowy, whose wealth decreased to $US2.8 billion ($A3.72 billion), from $US4.4 billion.

Harry Triguboff, head of Australia's biggest builder of apartments, Meriton, was third with $US2 billion ($A2.66 billion), down from $US2.7 billion.

Forbes Asia said that overall, Australia's billionaires and millionaires were less wealthy than they were 12 months ago, when the global financial crisis began to bite.

The number of billionaires among Australia's 40 richest business people contracted from 16 to nine.

However, three increased their wealth.

The head of hedge fund group CQS, Michael Hintze, had $US150 million ($A199.15 million) more to roll in and was in 12th position with $US900 million ($A1.19 billion).

At number 14 was Macarthur Coal founder Ken Talbot, whose fortune grew to $US750 million ($A995.75 million), from $US620 million.

Property tycoon Maurice Alter's wealth grew by $US20 million ($A26.55 million), to $US590 million ($A783.32 million).

Forbes Asia said Australia's tycoons were also getting older, with 16 on the list of 40 aged 70 years or more.

Packaging magnate Richard Pratt, who died in April from cancer aged 78, was replaced on the rich list by his son Anthony.

Anthony Pratt, who now heads Visy Industries, was in sixth spot, with a net worth of $US1.6 billion ($A2.12 billion).

Other newcomers to the list were Reece Australia chairman Leslie Alan Wilson at 28th with $US445 million ($A590.81 million), and gaming magnate Bruce Mathieson at 36th with $US350 million ($A464.68 million).

Mining heiress Gina Rinehart remained Australia's richest woman and seventh overall with $US1.5 billion ($A1.99 billion), down from $US2.4 billion in 2008.

Forbes Asia said that for the first time since it began compiling the annual list, a New Zealander was richer than the wealthiest Australian.

Kiwi Graeme Hart's mountain of money is estimated at $US4.7 billion ($A6.24 billion), well above Mr Packer.

Mr Hart made his fortune in the paper and packaging sector. (Credit: The Sydney Morning Herald)

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Wednesday, May 13, 2009

Crown expansion plan draws fire from critics, by Sarah-Jane Collins and Jason Dowling - The Sydney Morning Herald - 13th May 2009

Crown Casino has been granted its biggest expansion in gambling capacity since opening at its Southbank location more than a decade ago, in a deal attacked yesterday by campaigners for responsible gaming.

The casino, now one of the biggest in the world, will be able to increase its number of gambling tables by more than 40 per cent to 500 tables.

"Clearly the casino is being treated as the primary and first citizen of the state, with privileges that are really a cosy deal without the rest of the community having any say," the Reverend Tim Costello said.

The Victorian Gaming Minister, Tony Robinson, said the Government had agreed with Crown to alter their licence agreement to allow for 150 extra gaming tables and an expansion of the gaming floor. In exchange, Crown will pay about 10.5 per cent extra in poker machine taxes, bringing it into line with other pokie machine operators across Victoria. The increase will be implemented in 1.7 per cent increments over six years.

"This is bringing the tax that they pay on their poker machines up to the level that is paid by other entities across the state, so it's a good deal for taxpayers," Mr Robinson said.

He said allowing the expansion would ensure Crown remained the first choice casino destination in Australia.

"If people ultimately want to have the boiled sweets experience of casinos, let them go to Sydney. If they want the rolled gold dark chocolate experience they're going to keep coming to Melbourne and we're going to ensure that."

Gary O'Neill, from Crown Casino, said the deal meant Crown would be able to keep up with growing rivals in Macau and Singapore. "The new mega complexes are very big. They will be very competitive and they will compete for the tourist dollar in this part of the world."

Mr O'Neill said the gaming floor at Crown would expand but final approval for an expansion rests with the Victorian Commission for Gambling Regulation.

Mark Zirnsak, from the Interfaith Gambling Taskforce described the expansion as appalling. "This, coming at a time when there's a global financial crisis, it's going to push more Victorians into being in hardship and vulnerable," he said.

Dr Zirnsak said the deal pointed to the "very cosy relationship between the Government and Crown".

"There's been no consultation on this expansion, which we believe there should have been, and the timing is indeed appalling," he said.

He said Crown did not need an expansion to remain competitive. "They've got a monopoly [in Victoria] and most of their patrons aren't millionaires flying in from overseas. They are locals," he said.

But he said he supported the increase in pokies taxes.

The Opposition's gaming spokesman, Michael O'Brien, said Mr Robinson had waited until budget day to announce the deal in an attempt to bury a bad decision. "Labor is clearly embarrassed by this gambling boost and tax grab, as it should be." (Credit: The Sydney Morning Herald)

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Thursday, May 07, 2009

National shopping spree brings predictions of a short and mild recession - Fairfax - 7th May 2009

Treasurer Wayne Swan and Prime Minister Kevin Rudd have received a ringing endorsement of their $20 billion series of "cash splashes" in a four-month shopping spree unmatched in the developed world.

The Age - 7th May 2009

Treasurer Wayne Swan and Prime Minister Kevin Rudd have received a ringing endorsement of their $20 billion series of "cash splashes" in a four-month shopping spree unmatched in the developed world.

Retail sales figures for March show a jump of 2.2 per cent in seasonally adjusted spending, more than compensating for a dive of 2 per cent in February.

Since the first stimulus payout in December, retail spending has risen by an extraordinary 4.5 per cent, a result unmatched in the United States where spending fell 2.5per cent, New Zealand (down 1.7 per cent) and Canada and Japan (both down 3.1 per cent).

Only in Britain among other developed countries did spending increase in those four months and that was by 1.6 per cent, less than half of the Australian rise.

Australians spent a seasonally adjusted $76.6 billion in the four months after the stimulus payments, more than in any four months in history.

Economists interviewed yesterday expected the good news to continue.

"We've got every reason to think sales will maintain decent momentum going forward," said ICAP Securities economist Adam Carr.

"The second stimulus package has only started to hit consumers, ensuring that retail sales are likely to remain buoyant over the next couple of months," said CommSec economist Savanth Sebastian.

The $8.7 billion December stimulus handout was followed by $4 billion in March and $7billion last month.

A belief the stimulus payments were being spent is one reason the Reserve Bank board decided at its meeting on Tuesday to leave interest rates unchanged.

Reserve Bank forecasts to be released tomorrow will show the bank is expecting Australia to return to economic growth at the end of the year after what would have been one of the mildest recessions on record.

The bank's view was endorsed by the International Monetary Fund, which predicted the Australian economy would return to growth in 2010 after shrinking 1.1 per cent this year.

In a strong endorsement of economic management in Australia and New Zealand, the fund's Regional Outlook for Asia and the Pacific said this was due to "strong policy response, healthy financial sectors and exchange rate depreciation".

Treasurer Wayne Swan accepted the compliment but noted the report also highlighted the effect of the global recession on Australia's customers including Japan, South Korea and Taiwan.

Mr Swan welcomed the retail trade news, saying the Coalition had to explain why it had opposed the measures.

At the National Press Club, Opposition Leader Malcolm Turnbull said it was unsurprising that if "you handed out billions in one hit, some of it will be spent".

"Yes, it has had an impact on retail sales figures, but it was very little bang for a very big buck. If you want to spend government money on stimulating the economy, you should spend it on infrastructure." (Credit: Fairfax)

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