Page 1

GSR May 2015 | Issue 152


EDITOR-IN-CHIEF Lauren Hutchinson

EXECUTIVE EDITORS Subarna Raut & Josh Lane


Ellie Chicchio, Lucy Court, Joy Du, Nicholas Ireland, Lee Hall, Lauren Hutchinson, Shannon Lambert, Barry Newell, Blake Nicolson, Subarna Raut, Izzy Silberling & Jack Simmons

George Street Review | 2015

Inside 4 Chair's Report

5 2015 Federal Budget 8 What the Franc? 10 Hedge Funds 13 Profit Shifting 14 Putin’s Empire 16 Essay: Capital Punshiment

From Boom to Bust 18 The U.S Jobs Market 20 The Money Box 22 When the Tide Goes Out 24 NetFlix 26 Insight:180° Consulting 29 Gail Kelly & Success 30 10 Campus Life Hacks 32 GSR 152 | 3

Welcome to the 152 edition of the George Street Review! Firstly, a BIG thank you for everyone who voted for us last semester. We are very excited to have been awarded Best Cultural Club and Best Cultural Event (Women in Business Evening) for 151, and I only hope we keep executing great events and BIG services that our fellow students appreciate. Over the holidays, we have also revamped the website, so if you have a spare moment, be sure to check it out. This semester, we’re holding a bunch of oneoff yearly events so make sure you keep up to date with BIG. We also have a new initiative that I’m very excited to share with you this semester.

stocks in order to make the best trades. Once the game is over, you will be able to exchange your tokens for drinks. I can’t think of a better way to learn the basics about investing, while also being able to enjoy a beverage, or 10. Details will be posted soon so make sure you like our Facebook page to keep updated. Investment Banking Seminar June and July marks an important time of the year for all aspiring investment bankers. As such, this year we are choosing once again to run a special Investment Banking Seminar that will give students interested in applying for summer internships all the tips and tricks to succeed in their applications.

What to Look Forward To The Pitch Competition Last held in 142, this competition is open to all students, not just business or commerce students, looking to improve their soft skills. This competition is based around a company acquiring one of 3 options, with your team ready to ‘pitch’ the best choice to the executive board. This is also great practice for anyone who is about to attend assessment centres involving case studies.

Alcohol Arbitrage This is a brand new event looking to combine the educational aspects of investing through a stock exchange game with a more social side – a complete game changer (See, I’ve stopped with the BIG puns now)! Starting off with some tokens, you can choose to buy or sell

4 | GSR 152

We will also have our semesterly speaker series coming up towards the end of this semester, so keep an eye out for that. As for 153, we have decided to move the 2015 Titans of Industry Forum until then so that we can run a BIG event. We won’t divulge all the information just yet but make sure you stay tuned for this year’s panel of exciting guest speakers, networking opportunities and further skills development for your careers. Good luck for the upcoming semester, and I hope to see you at some of this semester’s events. As always, remember to think BIG! Joy Du Chair Bond Investment Group

George Street Review | 2015

The 2015 Federal Budget by Josh Lane

The announcement of the 2015 Federal Budget saw Treasurer Joe Hockey adopting a more modest and subdued plan for returning to surplus. While many contentious aspects of last year’s budget, such as alterations to the welfare system, remain, budgetary concessions have all but guaranteed a deficit in 2015/16 and 2016/17. This year’s budget deficit has been reported at $6 billion below market expectations at $35.1 billion, with it dropping to $25.8 billion in 2016 and continuing to fall before a return to surplus again in 2019. Although some economists believe these estimates are overly optimistic, Abbott’s government has outlined its goals for the future, and is of the belief, that if the measures make it through, surplus can and will be reached. In releasing this year’s installment, Hockey outlined that the government’s two key priorities

were: (1) job creation and; (2) economic growth. A priority of the Treasurer’s office, economic growth forecasts indicate it could fall from its current position of 3% to as low as 2.8%, which could push the jobless rate over the 6% mark and beyond.

care costs for parents, dependent on family earnings. Although the policy appears expensive at first glance, it is entirely dependent on last year’s $5 billion in welfare cuts the government outlined as necessary to rein in the budget deficit.

In order to effectively achieve the aforementioned objectives, Mr. Hockey highlighted a number of strategies that were to be utilised, assuming their approval. Each of these leaves various groups in different positions. Please see the table below for a basic overview of who the changes impact.

Another major point of contention in the Coalition’s last budget is the university deregulation measures. The 2015 budget has clearly expressed that the government is acting under the assumption that full university fee deregulation will go ahead. However, the legislation remains stuck in senate gridlock. Also concerning education is the government’s decision to chase outstanding university HECS-HELP loans, even if the debtors have moved overseas. Widely expected, this was one of the less contended measures introduced

One of the major talking points of the budget this time around is the $3.5 billion committed to the expansion of childcare. The introduction of the Child Care Subsidy benefit has been earmarked as one of the budget’s main sweeteners, promising to subsidise between 50% and 85% of child

GSR 152 | 5

this year. It is expected that the overseas citizen repayment scheme will bring in nearly $140 million over the next ten years. Controversial amongst those with a vested interest and understanding of international relations, the government’s foreign aid cuts included a 40% cut to Indonesia and a 70% reduction in aid to Africa. Defence and National security budgets were bolstered by this year’s budgetary measures, with nearly $300 million going to Australian Secret Intelligence Service, $335 million to embassy upgrades and $360 million being committed next year to the war on Islamic State in the Middle East. The emphasis placed on domestic jobs creation has also lead to the reversal of industry support cuts for car manufacturers in the hope that it will spark a revival in growth figures from the former industrial giant. Similarly, talks are underway regarding the privatisation of Australian Rail Track Corporation, which could open the door to new growth for the company and assist in bolstering economic stimulation. Although this article serves as a concise overview of the 2015/16 Federal Budget, it is strongly suggested that you read and understand the measures yourself to see how each of them impact you and the future of Australia. The budget in its entirety can be found at, along with a plethora of additional resources to assist in your understanding, and smooth implementation of, the 2015 Budget.


6 | GSR 152

43 38 46

35 40 33

George Street Review | 2015

The Millenials by Joy Du Millennials are often seen as lazy, selfish or shallow by the older generations. The Future Leaders Index was recently released by the Co-op and BDO examining the financial mindset and behaviours of these 18-29 year olds. Through thorough research, this paper debunks the common concerns towards ‘lazy millennials’. In an era of extensive government spending cuts and a prevailing weak economic environment, the emerging picture is one of a careful, canny young consumer. Against the backdrop of some of the most expensive property and living costs globally, Australia’s 18-29 year olds are highly concerned about the potential looming debt they will face during their lifetime. There are a number of key emerging issues facing millennials today. Firstly, there is an increasing unemployment rate. This is coupled by a truly global job market, continued house price inflation alongside the potential introduction of macro prudential legislation by APRA, as well as the end of the resources boom. As such, these factors have meant that most millennials seem to possess the following behaviours.

Property In fact, with low interest rates continuing to drive up house prices, young Australians are feeling more and more pressured to buy a house ‘now’. While Millennials do not like the level of future debt levels, 75% are still willing to take on debt for a mortgage and 72% still believe buying a home as soon as possible is preferable to renting. Ironically, those experiencing the highest house price rises remain the most ardent advocates of buying property. While Sydney-siders face the most expensive properties even seen in Australia, Sydney-based millennials still remain significantly more committed to buying as soon as possible, understanding and accepting that many of their generation will never own their own home outright.

Savings The 2015 Future Leaders Index continues to paint a generational portrait that is not only astute and practical in a broader sense, but also prudent and planned regarding their finances. Only 3 in 10 claim to ever buy things without checking whether or not they can afford them. Further, over 9 in 10 millennials have at least some money saved. On average, 18 – 29 year olds have $8271 in savings. This is a bit higher with Sydneysiders and Melbournians, with an average of $12,979 and $10,932 respectively.

Financial Plans When asked about reasons for saving, the most frequently stated reason given by Australian millennials is that they simply want to have some money or savings in the bank, with the next strongest motivation for saving being to ‘buy a property’ and for holidays (under 1 month in length). Millennials are generally using many means and ways to avoid spending discretionary income, with the top strategies including making meals at home, buying groceries on special, staying in rather than going out and only upgrading technology when really needed. Additionally, 7 in 10 of all Future Leaders are working either full time or part time. 52% of millennials who are tertiary students are working either full time or part time. However, despite most millennials having some sort of savings, half are still in some kind of personal debt. 27 – 29 years olds, as well as those residing in Sydney, tend to be more debt laden compared to 18 – 20 year olds, who are more debt light. Interestingly, Brisbane based millennials are relatively debt light, with Melbourne based millennials being even more debt light than their Brisbane counterparts. Looking at this data, it has been found that higher educated future leaders, Melbournians and Sydney siders have the best net financial positions of all 18 – 29 year olds, with regional Future Leaders having the weakest net financial position of all in 2015. How do you fit in with the financially aware millennial?

GSR 152 | 7

What the Franc? by Josh Lane

The European markets saw a turbulent start to 2015, with the Swiss National Bank shocking traders worldwide, ending its capping of the Swiss franc against the Euro, following speculation that quantitative easing by the European Central Bank was on the horizon. A currency cap, such as that implemented by the Swiss National Bank (SNB) in 2011, involves setting a limit to how far a currency’s value can move against another currency, in the form of a price floor or ceiling. The SNB declared in September 2011 an exchange rate floor of 1.20 francs (CHF) per euro (EUR), despite the currency trading at 1.10 leading up to the decision. 8 | GSR 152

The decision was intended to help stabalise the Swiss economy in the aftermath of the global financial crisis and to shield the Franc from the euro zone’s sovereign-debt crisis. Following the crisis Switzerland, considered a safe haven for investors, experienced large inflows of foreign capital, which drove up the value of the franc. The rising exchanged rate posed a threat to the country’s export and tourism industries, both of which comprise a significant chunk of the Swiss economy, and thus the SNB elected to implement their currency cap. To support their floor, the SNB accumulated large foreign currency reserves, amounting to approximately 70% of Swiss GDP, 45% of which denominated in euros (~225 Billion CHF).

George Street Review | 2015 The price floor provided stability in a struggling region but meant the SNB had to actively defend their cap by printing francs to buy euro-denominated assets, which reduced the market value of francs relative to euros. While this active management was possible and a responsibility the SNB had understood and accepted, when word spread that the European Central Bank was seriously considering Quantitative easing in the region, the reality was that maintaining the cap became too risky. Quantitative easing as a stimulation strategy for the European region would mean significant falls in the value of the euro, which would leave the SNB exposed to potentially large valuation losses on its euro-denominated reserves. Furthermore, if it were to maintain the cap following this easing, it would have required the SNB to continue to buy euros, further increasing its exposure to potential losses. As such, the decision was announced on January 15th that the SNB would end its threeyear-old cap of 1.20 franc per euro. The impact of the decision was felt immediately across foreign currency and stock markets, with the franc peaking as high as 0.78 against the euro before settling at parity, and the Australian dollar falling nearly 17%. The extreme reaction to the announcement in part resulted from the fact that it truly was a surprise to the international community. The SNB deliberately kept its decision a secret to prevent traders from engaging in improper trading. However, some analysts believe the SNB’s secrecy has only heightened volatility in global markets and further eroded confidence in central banks, something which could ultimately hamper further recovery. Switzerland’s export and tourism industries are particularly concerned about the effect that the SNB’s decision will have on their businesses. A stronger franc makes exports more expensive and therefore less competitive abroad. Swiss companies – who rely heavily on the Eurozone as a market and on exports in general for revenue – may see their profits and margins suffer. Particularly worrisome are the machinery and electrical goods industries, which export close to 80 percent of all of their production, 60 percent to Europe alone. And while the Swiss Alps have always been a popular tourist destination, skiers may now decide to spend their vacation days elsewhere. International businesses that were caught off guard by the SNB decision were also hit hard, with firms holding significant short positions in francs recording expensive, and in some cases unrecoverable, losses. Nearly 25,000 short position contracts on the franc were active when the ‘Francegeddon’ decision was announced, according to the Commodity Futures Trading Commission. These short positions totaled over US$3.5 billion, and considering the additional 2.6% of the US$288 billion in assets held by global macro hedge funds, the losses caused directly by the franc movement are crippling, with many hedge funds across the globe closing as a result.

Everest Capital Global Fund, based in Miami and specialising in emerging markets, had been betting that the Swiss franc would decline. Reportedly, the entirety of the fund’s capital had been lost following the SNB uncapping, with figures suggesting the branch held nearly $US830 million in assets. Alpari, a foreign exchange broker based in the United Kingdom announced on the 16th, the day after the SNB decision went public, that it too would be entering insolvency, outlining that: “The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency.” Although the foreign exchange and currency-dependent funds were directly hit by the announcement, the ramifications extended deep into international stock markets as well, with many major index funds, both in Europe and elsewhere, reporting heavy movement. As the Franc rose to 41% higher against the euro, the benchmark Euro Stoxx index saw gains of 2.2 per cent and London’s FTSE, 1.7 per cent to 6,449. Across the Atlantic, US markets felt the inverse, with the Dow Jones industrial average closing 0.6 per cent lower and the S&P 500 losing 19 points to solidify the US market’s worst start to a calendar year since the global financial crisis. With the future of Greece’s economy and place in the Eurozone uncertain, the political turmoil in the Middle East and Russia, and the recent terror attacks in France and Copenhagen, international markets are on edge and easily spooked. The SNB’s decision is just one among many announcements this year that have underscored the recent volatility and uncertainty in the global markets. Although the SNB is resolute in its support to allow the franc to float, it remains to be seen whether its decision will only further exacerbate Europe’s economic woes.

GSR 152 | 9

HEDGE FUNDS by Shannon Lambert

What is a hedge fund? How do we recognise them? What do these ‘alternative investment vehicles’ do? These are a few of the questions that students, investors and many others with limited financial literacy frequently find themselves asking. So, lets break it down to make it clear. Unlike managed funds, which are constrained by burdensome regulations and investor expectations, hedge funds cover a wide variety of territory and have the flexibility to adapt their strategies to exploit changes in the economic environment in which they operate. While many funds won’t title themselves ‘hedge funds’, there are a number of identifiers that enable us to recognise them as such. Some – but by no means all – of these identifiers include:

10 | GSR 152

• The pooling of assets from multiple investors in a limited partnership structure with a general partner and investment manager; • A restricted investor group that satisfy the criteria as qualified investors; • The inability to market themselves publicly to solicit investment; • Large minimum investment – typically upward of $1,000,000; • Restrictions on the redemption of units or shares in the fund from anywhere between three months and two years.

George Street Review | 2015 Another key identifier is the fee structure. The prevailing trend in the hedge fund industry is to lean toward a 2 and 20 fee structure; that is, a 2% fee p.a. on assets under management (AUM) and a further 20% performance fee taken for any return the manager earns in excess of the fund’s high-water mark – the monetary level the fund must reach before incentive fees kick in. Now that we know some of the key identifiers, I’m sure you’re asking yourself what it is that hedge funds actually do. The goal of a hedge fund is to provide absolute returns to its investors; that is, positive returns in up or down markets. How do hedge funds achieve absolute returns? The truth is that a lot of the time… they don’t. Hedge funds actively trade in pursuit of this goal through the use of derivatives, short selling and often the extensive use of leverage. Interestingly, it is often the funds that utilise excessive leverage to amplify otherwise negligible profits that lose it all and go bust. Unfortunately, this happens quite frequently much to the dissatisfaction of hedge fund investors. In any case, there are over 10,000 funds in existence, many of which have achieved mind-boggling success through a variety of management styles. Lets look at a few. Hedge funds can be categorised into four key classes, each of which is made up of a variety of different management strategies. These classes are Global Macro, Event Driven, Relative Value and Equity Hedge. To keep things simple, we’ll look at three very different examples of fund strategies.

Global Macro Global Macro (GM) hedge funds use a wide variety of strategies and instruments to take long and short positions in global markets for equities, fixed-income, currency and commodities. One feature that differentiates GM funds from others is their extensive use of stock and bond market indices rather than individual stocks and bonds to implement the fund manager’s views on prevailing macroeconomic trends. One example of a GM position frequently utilised in order to reap a respectable return is a currency carry trade. The fund will take a short position in a low-yielding currency (historically the Japanese Yen) and use the profits to take a long position in a high-yielding currency (resource rich currencies like the Aussie Dollar). The transaction is executed through a currency forward contract. Much like commodity futures, funds earn the positive carry if the spread between the respective yields doesn’t tighten before the maturity of the contract but also bear the risk of adverse movements in the exchange rate. Perhaps one of the most successful GM funds in history is Ray Dalio’s Bridgewater Associates. The fund is based in New Haven, Connecticut and has $120 billion AUM.

Activist Activist hedge funds are a different breed altogether. An activist fund will take a significant minor shareholding in a publicly traded target with the goal of effecting changes that will serve to increase the company’s value and share price. Unlike most funds, activist funds have a comparatively longer investment horizon that can range from six months to two or more years. After taking a minor position in the target, an experienced fund manager will take a seat on the target’s board and pursue financial restructuring, operational turnaround, strategic turnaround and corporate governance strategies with the goal of revealing the company’s true underlying value to the market and reaping a handsome reward for the fund’s investors in the process. Undoubtedly the most successful activist fund manager is William (Bill) Ackman of Pershing Square Capital Management.

Short Bias Short-bias hedge funds take short positions in stocks that they believe are overvalued by the market. Like long-bias and even long-short equity funds, short bias funds use fundamental and quantitative techniques to find shortable stocks. Obviously, there are significant complexities associated with shorting stocks and accordingly, short-bias fund managers are typically experts at managing risks such as those arising from margin calls and the unlimited potential loss of a short position. Historically, financial regulators have pointed their fingers at short-bias funds, blaming short-sellers for the implosion of Investment Banks and for placing undue pressure on financial markets. However, quite the opposite is true. Through extensive fundamental analysis and the research of ‘financial detectives’, short-bias firms have improved markets by promoting price discovery, deepening liquidity and solving many financial mysteries. Most notably is the expose into large-scale corporate

GSR 152 | 11

fraud by companies such as Enron and Tyco in the United States. The most esteemed short-bias fund manager is James Chanos of Kynikos Associates LP. The descriptions of the above management styles only barely scratch the surface of the fascinating complexities associated with the strategies employed by hedge funds in their pursuit of absolute returns for investors. Again, these are only three of a very large number of management styles that exist in the universe of hedge funds. For a better understanding of the strategies employed by different hedge funds under each of the four fund classes, you may wish to do some research on the following management styles:

• Long-Bias

Equity Hedge

• Equity Market-Neutral

• Credit Arbitrage

• Fundamental Growth

• Distressed/Restructuring

• Quantitative Directional

• Merger Arbitrage

• Sector (Energy; Technology; Healthcare)

• Special Situations

• Multi-Strategy

• Multi-Strategy

Global Macro • Active Trading

Relative Value • Fixed Income – Asset Backed

• Commodity (Agriculture; Energy; Metals)

• Fixed Income – Convertible Arbitrage

• Currency (Discretionary; Systematic) • Discretionary Thematic • Systematic Diversified • Multi-Strategy

12 | GSR 152

• Activist

Event Driven

• Fixed Income – Corporate • Fixed Income – Sovereign • Volatility • Multi-Strategy

George Street Review | 2015

PROFIT SHIFTING by Joy DU Recently the government has been exploring the ability of the Australian Tax Office to successfully pursue multinational companies for shifting too many of their profits offshore. While this is a growing problem for governments all around the world, addressing it through legislation isn’t always the best solution without also taking into account the practicalities of how to administer the tax. Firstly, the Obama administration has been pressuring the Abbott government to back away from plans to target American or ‘non-resident’ technology multinationals with higher taxes in the federal budget. Further, the US Treasury’s top international tax official, Robert Stack, has articulated his thoughts about Australia forming an alliance with Britain with a potential Google tax. However, these changes would divert to Australia money that could have potentially been forwarded to the SU government. This may trigger a cross-country fight over taxing rights. While there is an international effort moving slowly forward against tax avoidance, Stack also mentioned that it was critical that G20 countries like Australia who were participating in global tax negotiations did not pass laws on their own that would contradict international agreements. These tax changes are all in line with Joe Hockey’s plans to raise more revenue to fill budget deficits. For example, Apple has shifted an estimated $8.9 billion in untaxed profits from Australia to Ireland over the past decade. As such, while Australia and the UK are pursuing their own initiatives, including the UK’s diverted profits tax, also known as the 13 | GSR 152

‘Google tax’, Australian officials are mindful of the fact that the UK’s diverted profits tax does not comply with OECD rules and potentially violates international treaty obligations, according to some top US tax lawyers. Thus Australia has been pushing for the OECD to change the permanent establishment and transfer pricing rules so that they can tax digital companies more. This has been further urged by Managing partner of PwC’s tax arm, Tom Seymour. If Australia is seeking to tax the fleeing money from these tech multinationals, this means there will be less potential revenue available for the US Treasury. Thus, the US Treasury is advocating for other countries to impose value-added taxes (VAT), like the 10 per cent GST levied in Australia on the digital sales. In fact, the budget just released details the Netflix Tax, in which 10 per cent GST will be extended to digital downloads from abroad. The Federal Treasurer states that this would raise about $350 million over four years, all of which would go to the states. In an attempt to fill the budget deficit, 30 companies that pay little or no tax in Australia will be forced to pay tax or face fines of 100 per cent of unpaid taxes plus interest. This change will commence from January 1 next year will expand the general anti-avoidance provision in the tax laws. It will be interesting to see how the tax avoidance and transfer pricing laws continue to develop in the next 6 months, particularly with or against the UK and US.

GSR 152 | 13

Putin’s EMpire by Lee Hall

Vladimir Vladimirovich Putin can be described as a ruthless dictator, a fearless leader or a heartless murderer. Whatever opinion you hold of the Russian President his story remains quite an intriguing one. Born into poverty in Leningrad (now St. Petersberg), he and his parents shared a tiny rat-infested apartment with another family. Although poor, Vladimir’s education commenced early. He learned a great deal about the workings of the world, war and politics from his grandfather Spiridon, who was employed by three of the most prominent figures in Soviet history. The elder Putin served as a cook to Grigory Rasputin, Vladimir Lenin as well as Joseph Stalin, quite a list to have on the résumé. Although his grandfather passed when Vladimir was only 13, the influence he had on the boy would last a lifetime. His quest for power began in earnest at age 22 when he graduated with a Law Degree from Leningrad University. He joined the infamous Soviet Secret Service, the KGB where he spent 16 years mastering the art of manipulation and human relations while serving in various parts of Europe as a spy. Some years later after leaving the KGB he returned to university to 14 | GSR 152

complete a PhD and begun his political career in his hometown of St. Petersberg. He used this time to build a loyal following, planting the seed for friendships with influential men such as Dmitry Medvedev , current Russian Prime Minister and former President, and Igor Sechin, head of Rosnoft Russia’s largest oil company. Putin’s focus turned to Moscow, where he skyrocketed to power in 2003 on the back of popularity gained from Russia’s involvement in the second Chechen war. This reinvolvement was sparked by a wave of terrorist bombings which destroyed four Moscow apartment blocks and cost more than 300 civilian lives. Although Chechen rebels were blamed for the attacks, many point to Putin as the orchestrator of the bombings as he was in a position to leverage off the public’s approval of the conflict. He rose from being relatively unknown to getting voted in as President within the space of a few short years. Adding to the scandal, a large amount of undetonated explosives were uncovered in the basement of a fifth apartment block which further cast a dark shadow over the Russian

George Street Review | 2015

president. The exact type of explosives discovered matched those available to members of the Federal Security Service who were indirectly under Putin’s control at the time. When questioned on the matter the agency’s director explained that it was merely a training exercise. S somewhat coincidently the bombings immediately ceased after the event. Unfortunately, as so often occurs with those in positions of power, the evidence and claims were dismissed as ridiculous and the issue seemed to fade all too quickly into the background. Reminiscent of Soviet times five individuals have met their untimely deaths attempting to uncover the truth. The Russian leader’s personal wealth is another highly dubious matter. Allegedly built on corruption dating as far back as 1991 after first entering public office, he is suspected of involvement in a wide range of criminal activities, money laundering, the syphoning funds from both state and private organisations and out-and-out murder. Recent estimates of his wealth go as high as US$200 billion. Although this figure may seem a little farfetched, a more conservative assessment by one of Russia’s top political analysts estimated Putin’s wealth to be around US$40 billion. This estimate was close to the mark that the CIA had come to in a previously unreleased report in 2007 and potentially places him amongst the top ten richest people in the world. Under Putin’s reign, the Kremlin has maintained a Machiavellian attitude when it comes to the motherland. He is seemingly hellbent on nothing short of restoring the country to its former glory of the cold war era, no matter what the cost. As we saw in Ukraine last year he cares very little about whose toes he has to step on in the process. Whether it be the collapse of the Ruble, the demise of Moscow Stock Exchange, any number of various sanctions imposed against his comrades or even the hotly anticipated Tony Abbott shirt-fronting, Putin remains icy-cold and unapologetic. His focus remains solely upon the interests of himself and those of his country. Since the fall of the Soviet Union in 1991, Russia has cast off the chains of communism and endorsed their own version of a free-market. This new age has seen a steady rise in the country’s economy which may provide an illusion of prosperity. Unfortunately it is not the case, Credit Suisse reported last year that the top 10% of Russia’s elite now own around 85% of the nation’s wealth - a huge disparity. With a reported median wealth of just US$2360 per capita, funds are going everywhere but where they are truly needed. Despite these social problems and the recent currency crisis there are numerous benefits which stem from being the largest country in the world. What really makes Russia a force to be reckoned with is the sheer quantity of the natural resources the country holds. Russia is the world’s largest source of natural gas and uranium, as well as home to vast amounts of oil. In fact, the Russian Federation is currently the world’s 2nd largest oil net exporter trailing only Saudi Arabia. Although the price 15 | GSR 152

of the commodity has tumbled in the last six months, recently it has managed to rebound and steady at $60 a barrel. Natural gas is another resource in which Russia holds an irongrip. Putin’s nation has by far the largest amount of natural gas reserves. Interests fronted by Gazprom, the largest producer, and oil giant Rosnoft give Putin significant say in supply and demand. A recent display of power occurred last year when the Ukraine failed to pay its gas bill, Gazprom simply shut the supply off. With half of the transit pipelines to Europe passing under Ukrainian soil, this move has proved extremely effective as cutting the supply to its neighbour leaves a total 18 countries literally out in the cold until bills are paid. Another resource on Russia’s radar is uranium. The price of uranium has been in freefall since the Fukushima disaster in 2011. Although the tragedy has dampened confidence in the containment of nuclear power, it does not change the fact that there are currently 435 nuclear reactors operating worldwide with another 70 under construction. Russia, as both the number one source for uranium and its enrichment process, looks to be in the prime position to capitalize on a shift towards this controversial source of energy. As it produces no carbon footprint, nuclear power looks to be the way of a future, if only its dangers can be appropriately managed. Russia by numbers: - 5% of the world’s oil reserves. Potentially another 5% in the hotly contested Arctic reserves for which Russia is the frontrunner for. - 25% of the world’s proven natural gas reserves. - Source of 32% of the world’s uranium as well as 40% of the world’s enrichment capacity. - Supplies the European Union with 32% of its natural gas needs as well as 34% of its crude oil. What these figures boil down to is the European Union currently importing just under 25% of its entire energy supply from Russia. This means some 126 million people (or 5.5 times the population of Australia) currently depend on Russia (and Putin) to power their stoves and heat their water at night. Explaining why the Russian President seems so unfazed by idle threats is that he can leverage state resources to great effect. Until Europe is able to address its reliance on Russian energy they will have little choice but acknowledge the Kremlin’s demands for the foreseeable future. By no means am I advocating the actions of President Vladimir Putin but, despite recent events, Russia has many things moving in its favour. Its leader will continue to forge a path toward his vision. Whatever the future holds, this story of power promises to remain as colourful as the famous cathedrals in the streets he was raised.

GSR 152 | 15

An Essay on Capital Punishment

by Barry Newell

Throughout history few methods of punishment have been so avidly and vehemently contended as the death penalty. Most recently, Australians have become acutely aware of its seemingly anachronistic contemporary presence with the executions of Andrew Chan and Myuran Sukumaran. In support of capital punishment, arguments of deterrence, adequate retribution, and economic efficiency are employed; in opposition to it, the incontrovertible history of wrongful executions, contrary postulations over its costs, and discord over its ability to deter criminal offences. In many societies the reasons against its implementation have seemingly outweighed the beneficial results it may produce. Thus it remains a marginal mechanism of punishment globally (Amnesty International, 2012). In first-world countries, the United States of America has become its primary proponent, thus it can be understood as being a microcosm for capital punishment’s interactions in a Western society. Detractors of the death penalty have cited a plethora of deleterious consequences ensuing from its implementation, with an accumulating amount of evidence that supports their assertions (Stuart, 2007). We can scrutinize the validity of proponents’ arguments in light of this evidence to determine whether capital punishment can be justified economically or ethically within the modern era.

Deterrence The death penalty’s ability to deter potential serious criminal offences has become increasingly questionable in recent times. Amongst those that are considered experts on criminal infractions, there is almost complete unanimity on the ineffectiveness of the death penalty in deterring severe acts of violence. In a study performed on a group of elite professional criminologists it was discovered that “there is a wide consensus among America’s top criminologists that scholarly research has demonstrated that the death penalty does, and can do, little to reduce rates of criminal violence” (Radelet & Akers, 1996). The death penalty attempts to deter criminal behaviour through the severity of the punishment itself. The rationale is that when considering the prospects of violating a law, a person will 16 | GSR 152

recognise the severe ramifications of doing so and determine that the action is unwise.

from society with absolute certainty, however life without parole theoretically produces the same effect.

The underlying premises involved with this argument for deterrence are, firstly, that potential criminal offenders possess a sufficient level of rationality to consider the consequences of committing capital offences, and secondly, that these criminal offenders possess knowledge of the subsequent punishments associated with these offences (Fagan et al., 2012).

Even despite the noteworthy additional costs involved in prosecuting capital offences, only a minute fraction are ever executed (Alarcon & Mitchell, 2011). That is to say, the additional costs incurred in bringing forth a capital punishment case do not necessitate even a strong likelihood for execution. With such evidently uncertain results and the seemingly unquestionable increased expenditure, the financial justification of the death penalty has become progressively more dubious as time passes.

It can be suggested that any person who would commit these particularly severe capital offences may not be a rational person and therefore they would not satisfactorily consider the ramifications of their actions before committing them. Therefore the severity of the punishment itself would be inconsequential. Supplementing this notion, Fagan et al. (2012) also identifies the absence of reductions in capital-eligible homicide rates following the implementation of capital punishment. Compounding this, the death penalty may instead desensitise citizens to executing human beings, consequently making them less critical of its use in a wider range of less regimented and regulated situations. A report in the Journal of Criminology finds that state-sponsored capital punishment actually encourages the use of extreme measures to settle conflict: “the use of capital punishment is expected to weaken social-based inhibitions against the use of deadly force to settle disputes, thereby encouraging some segments of the population to kill” (Lang, Teske Jr & Hui, 2012). Moreover, the inherent hypocrisy involved in murdering citizens convicted of the murder of other citizens is inconsistent with its primary purpose: to deter capital offences. The deterrent effect of capital punishment, therefore, appears to be contentious at the very best and encouraging of capital offences at the very worst.

The Retribution Argument Advocates of the death penalty have argued that it is the single judicial punishment that offers adequate retribution for the most severe of crimes that constitute capital-eligible offences. The justice system therefore has a moral obligation to the families of the victims to provide a sentence that is commensurate with the severity of the crime committed. In cases of particular cruelty and brutality, the notion of considering anything less than the most uncompromising method of punishment may seem unacceptable. This is however predominantly an emotional not ratiocinative - response. The justice system has an obligation to each and every citizen within its jurisdiction, including those accused of capitaloffences. The inherent hypocrisy of acceptable murder is a serious ethical quandary, which should not be justified merely as a means of consolation for the families of a victim. Given the additional possibility for the wrongful execution of innocents, the death penalty cannot be justified solely based upon its retributive effect; to do so would privilege the emotional desires of a few, over the potential for irrevocable injustice being dealt to any member of a population.

Expense The death penalty, as implemented in American society, has been heavily criticized as being unjustifiably expensive in comparison to other methods of punishment for serious criminal offences. A study on the average cost of death penalty cases published in the American Law and Economics Review Journal concludes that “on average, a death notice adds about $1,000,000 in costs over the duration of a case” (Roman, Chalfin & Knight, 2009), when compared to non-capital prosecutions. Aside from these case-related costs, it is also estimated “that the cost to house a death row inmate is approximately $90,000 more than the cost to maintain an inmate in the general population” over the duration of the sentence (Alarcon & Mitchell, 2011). To justify these additional costs, the death penalty must provide some added functionality that other incapacitating punishments cannot provide. Advocates may suggest that it is the sole method of punishment that effectively removes a serious criminal offender

Conclusion Economically, ethically, the death penalty cannot be justified as a component of any contemporary Western justice system. Its deterrent ability is ineffective, yet the past occurrence of wrongful executions is incontrovertible. The often-touted obviation of prisoner housing costs produced when utilising capital punishments is erroneous, and evidence suggests that by the time a case progresses to final conviction stages exponentially higher costs are incurred in contending the sentence. Morally, the concept of retributive justice through legally permitted murder is base and hypocritical. In my opinion, the death penalty is simply unjustifiable; it is an ethical and economic malfeasance of monumental proportions.

GSR 152 | 17

From Boom to BUSt

The spectacular fall OF iron ore 18 | GSR 152

George Street Review | 2015

At the height of Australia’s mining boom in 2011, spot iron ore prices peaked at a record $187 per wet metric tonne. Large-cap Australian miners such as Rio Tinto, BHP and Vale enjoyed surging share prices, flowing on from unprecedented demand for iron ore from Australia’s largest export partner; China. Australian’s all over the country were relishing the benefits of a once in a lifetime mining boom, particularly in the epicentre of iron ore production, Western Australia.

7.4%, the lowest level since 1990. Conversely, for China, the worst is yet to come.

It is hard to imagine that Australia’s once bustling iron trade has been met with such a spectacular fate. Over the past two years, iron ore prices have plummeted 58%, reaching a record low of $48 per wet metric tonne in March 2015. High cost producers such as Western Desert Resources and Northland Resources simply could not compete with the low-cost, high volume producers, filing for bankruptcy in late 2014. Even mid tier miners, such as Atlas Iron, is continuing to bleed cash, entering a trading halt in April 2015 and ceasing production at its Pilbara mine.

In addition to bleak property markets, Chinese manufacturing has entered unchartered territory. The China Purchasing Manager Index (PMI) has remained under 50 points for the majority of 2015, indicating a contraction in the manufacturing industry. A drop in global demand has seen the Chinese manufacturing sector operate at 70% capacity, compared to a healthy 80% in the United States.

So why has the iron price taken such a spectacular tumble and what effect will this have on the future of Australian iron ore stocks? Iron ore’s primary use is in the production of steel and other alloys. Australia’s largest iron ore export market, China, is the world largest consumer of iron ore, and is also the largest steel producer. China accounts for 50% of worldwide steel production, followed by the European Union (10%) and Japan (6%). With over 80% of Australian iron ore exports destined for Chinese ports, Australian producers are highly exposed to economic events in China. Between 2007-2011, Chinese GDP grew at an unprecedented average rate of 10.5%, buoyed by strong fiscal stimulus, a booming property market and strong demand from Western countries for low cost Chinese made goods. China’s robust economic growth was in stark contrast to Western markets, which were gripped by the effects of the 2008 financial crisis. However, although China has continued with infrastructure, construction and manufacturing investment, it is becoming increasingly difficult to maintain the same levels of growth enjoyed throughout the 2000’s. GDP growth in 2014 reached

China is facing a property bubble, with over 60 million empty apartments awaiting buyers. In 2014, the Chinese property market witnessed a 4.5% drop in housing prices, with further price deterioration forecast. With China’s property market accounting for 30% of GDP, it is impossible for the Chinese economy to grow at historical levels without stimulating this sector.

Whilst demand from China has softened on the back of domestic uncertainty, forces of supply have also wreaked havoc on the iron ore price. Supply from Australia’s big three iron ore producers, BHP, Rio Tinto and Brazil’s Vale, have ramped up significantly over the past year. BHP has cut its production price to under US$20 pwmt, whilst increasing production capacity by 16%. With break-even prices nearly four times higher than BHP, it is no surprise junior miners such as BC Iron and Atlas Iron are feeling the crunch. The big three miners have a simple strategy; flood the market with low cost iron ore, and reap the benefits of decreased competition when other miners go bust. This strategy has led to the decline of several high cost iron ore producers and seen over $74 billion wiped from the market value of iron ore mining stocks. Although the strategy has been met with fierce opposition, both by industry and government, the big three continue with plans to ramp up production well into 2020. With analysts predicting a stabilisation in iron ore prices to US$66 pwmt over the next five years, it is do or die for Australia’s high-cost marginal producers in a quest to slash costs and ramp up production to remain a contender in Australia’s second biggest export market.

by Blake NiCHOLSON

GSR 152 | 19

THe U.S. JOBS MARKET After less than inspiring March numbers that produced only half the jobs that were widely expected, the April figures were a welcomed rebound. The 223,000 Jobs added to the US labour market in April eased fears that the economy was on the brink of another extended slowdown. April’s recovery from March’s disappointing result of 85,000 new jobs, and the fall in unemployment from 5.5% to 5.4% was certainly expected. However, these figures were certainly a downward revision to expectations. Many economists also predicted that wages would improve, with estimates of 0.2% bump in average hourly rates. Had this occured, it would have provided a strong signal to the markets that the US is far from a downturn. In this period, hourly rates only rose by 0.1% which is beginning to fuel frustration amongst workers and gain traction in the political arena. Critics of the polices employed by the current administration cite the lack of wage growth as evidence that the economy remains weak.This is despite other economic indicators such as the falling unemployment rates, healthy corporate profits and a buoyant stock market, suggesting otherwise. The wage issue brings to light another topical matter – interest rates. Economists predicted that June 2015 would see the Federal Reserve increase interest rates from the near zero they have been at since 2008. However the lack of wage pressure means that the bank won’t be in any rush to push the increase, with September now being the most probable month to see any sort of rise. Although wage growth is not a target measure to raise interest rates, the Federal Reserve wants to be confident that a wage rise is on the way to ensure households and borrowers are confident. The general consensus is that until paychecks really start to grow, it won’t feel like the economy has recovered.

20 | GSR 152

The Unemployment Figures At 5.4%, the headline unemployment rate is down sharply from the near 8% it was at two years ago and economists predicting it could fall below 5% by the end of 2015. But the broadest measure of unemployment, which includes people who were forced to take part-time positions because they could not find full-time work, remains high for nonrecessionary times at 10.8%. It must also be considered that, since 2008, millions of workers have given up the search for jobs and dropped out of the work force entirely, lowering the labor participation rate. This has been stuck for years now at multi-decade lows. For policymakers, questions need to be asked about where these workers have gone. Is it due to longer-term demographic forces like the retirement of the baby boomers or are many still waiting in the wings and will return to the job market as the economy continues to improve and employers reach beyond the existing pool of employees? While it would certainly be good economic news if more of those discouraged workers returned to the labor force and landed jobs, one possible consequence would be a continuation of slow wage growth. As the statistics look positive for the US, please note that the downward trending official unemployment rate does not account for the millions of long-term unemployed (potential) workers. Currently there is a record number of 101.6 million working age Americans without employment. .

by Lucy Court

22 | GSR 152

George Street Review | 2015 On May 2nd Floyd ‘Money’ Mayweather defeated Manny ‘Pacman’ Pacquiao in what had been one of the longest awaited boxing matches of all time. It had been labeled ‘The Fight of the Century’, ‘The Richest Fight in Boxing History’ and given the astonishing projections it’s no wonder why. Boxing is all about crowning one winner and while Mayweather had his hand raised given the money that was made it is difficult to see how Pacquiao really went home a loser. The two faced off in Las Vegas’ MGM Grand Garden Arena, where Mayweather had previously fought 13 of his 47 professional fights and never lost one. It is Mayweather’s stomping ground, his money making machine and for this it has become dubbed where ‘Mayweather Gets Money.’ The purse, set at a casual $300 million was split 60/40 in Mayweather’s favour, meaning the Money Man took home a staggering $180 million and the Pac-Man an astonishing $120 million. Perhaps even more astonishing is the breakdown of these numbers. The fight lasted the full 12 rounds meaning Mayweather earned $5 million for every minute of action, and Pacquiao a cool $3.3 million. In 2013 Mayweather fought Canelo Alvarez, setting an all time gate revenue record of $20 million. The MGM Grand housed 16,800 Spectators on May 2nd with tickets selling between $1500 and $10,000 at face value. What does this mean? It means just two years later the previous record was shattered, with gate revenue reaching more than triple the previous amount at $74 million. Of this $74 million, $3 million came from Pacquiao alone, who had purchased 900 tickets for his colossal entourage. What is amazing is that only 500 tickets were actually made available to the public, which made the secondary ticket market extremely lucrative. Buyers were willing to pay anywhere from $4000 per ticket to $200,000 per ticket.

775M Pacquiao’s career fight revenue 500M Mayweather v Pacquiao fight revenue 430M Mayweather’s career earnings 425M Pacquiao’s career earnings 180M Mayweather’s minimum take home pay 120M Pacquiao’s minimum take home pay

Together HBO and Showtime broadcast the fight, with payper-view records also being shattered. Mayweather’s fight against Oscar De La Hoya in 2007 set the record at 2.5 million viewers, but on May 2nd, although figures are not confirmed, is it estimated as many as 4 million people purchased the fight at $95 a pop. This means HBO and Showtime stand to collectively make $400 million in pay-per-view revenue. Without stepping one foot into the ring, a huge winner on the night was Las Vegas tourism, particulary hotel owners. To stay in ‘Sin City’ over the fight weekend cost visitors more than at any other time in the year. Almost as soon as the fight date was announced the MGM Grand increased its rates from $900 per night to $1600 per night for the most basic room. The Wynn Hotel had increased its prices to $950 per night for a room that would normally cost $250 per night. And even the more affordable, lower budget hotels were charging premiums, with Circus Circus offering its most basic room for $284 per night rather than its usually $60 fee. Bookmakers were also a huge contender to make millions from the fight. It was estimated that Nevada sports books alone took in anywhere from $80 million to $100 million. $500,000 alone came from celebrities Mark Wahlberg and Sean Combs (P. Diddy), each putting $250,000 on the opposing fighters. With bet makers taking on punters all around the world it was bookies that stood to make a killing from the fight. Since 2009 the boxing world had wanted Mayweather and Pacquiao facing off in the ring. On May 2nd 2015, some 6 years later, they got it. Whether the fight lived up to the hype is another matter. With Pacquiao claiming to have a shoulder injury after the fight it is questionable whether he was able to put his best foot forward. At the end of the day Mayweather won, but everyone was victorious when it came to money in their pockets.


When the Tide GOES OUT...

(Side note: In 201 Carter Tour gros of which she ear same year, her ‘O which consisted raked in another it is reported tha was worth $75m

by LAUREN HUTCHINSON This past month saw a syndicate of wealthy musicians, led by rapper and business mogul Jay Z, launch the music streaming service TIDAL. The “artist-owned” platform has since endured a wave of criticism (pun intended) for its exorbitant pricing and business strategy. With such an impassioned reaction to TIDAL thus far, The George Street Review will examine the company’s marketing mishaps and its future prospects. Described as “nauseating” by CNN, TIDAL’s press conference involved the biggest names in the business Beyoncé, Kanye West, Madonna, Cold Play, Daft Punk, Alicia Keys, among others - finally taking a stand. No longer will they play the victim. No longer will they be

satisfied earning millions of dollars from touring and endorsements. The world must place higher value on their artistry. It is time that society acknowledge the cultural significance of Kanye West’s masterpiece entitled ‘That’s my B*$@#’. Labelled as a money-grab, TIDAL charges: $9.99 per month for a basic subscription and; $19.99 per month for a “lossless compression” package (for us laymen, this just means “improved sound”). With Spotify offering a no-cost platform (where users opt to listen to ads in between songs), as well as a $9.99 monthly subscription, TIDAL users will certainly be paying a premium. In Jay Z’s opinion, these price points are justified by a higher percentage of

Side note: In 2014, Beyoncé’s ‘Mrs Carter World’ Tour grossed $229million, of which she earned $100m. That same year, her ‘On the Run’ Tour, which consisted of only 23 shows raked in another $100 million for the business woman’s household. It is also reported that the entertainer’s 2013 Pepsi endorsement deal was worth $75million.

George Street Review | 2015

most insufferable aspect of TIDAL’s promotion was its social media hashtag: ‘TIDAL FOR ALL’. As a subscription-only business that charges double that of their closest competitor, Tidal was always walking a very fine line as it simultanously called for fairness in the music industry.

14, Beyoncé’s Mrs ssed $229million, rned $100m. That On the Run’ Tour, of only 23 shows r $100 million and at her Pepsi deal million. )

Having elaborated on the immediate objections to TIDAL, it is important to consider how Jay Z’s latest business venture has completely overlooked the value-additive function of no-cost streaming. The streaming service Spotify has over 60million users with 50million of these opting to listen to ads. Suddenly, 50 million individuals, who remain unwilling to pay for music, no longer turn to illegal downloads. The ad revenue generated is subsequently divided up amongst Spotify’s featured artists. Moreover, all musicians can utilise no-cost streaming to build an audience base and boost earnings when they do tour. Latest attempts to revive the company have performers (a.k.a minority share-holders) uploading

content exclusively to TIDAL. This includes Nicki Minaj’s ‘Feeling Myself’ music video (see above for discussion regarding music as a valued art-form) and Jay Z’s own “B-Sides Concert”. Unfortunately, these efforts have only compounded the bad press. In one clip, a $20000 bottle of pinot noir is poured into a hot tub – not the best visual when TIDAL is asking everyday people to fork out a significant premium so musicans are fairly compensated. Strategically, TIDAL has the potential to shift gears towards an “exclusive content” destination. That is, offering interviews, behind-thescenes footage and B-sides all for a reasonable monthly price. When you consider the public’s incessant need to feel close to celebrities, this has the potential for a viable business. While TIDAL has not paid off yet, the superstars backing the platform, for the most part, have made smart business decisions. Give it time and we can all move past the barrage of “Jay Z’s got 99 Problems and TIDAL is now 1” quips.

royalties being returned to the artists. In all seriousness, TIDAL should be commended for putting money back into creative hands. However, when the company’s management CHOSE to focus its message on the equitable distribution of profits, a press-conference of billionaires was somewhat misguided. Instead of promoting lesser known (and modestly paid) performers as brand ambassadors, TIDAL’s marketing minds decided to put mega music stars in front of the camera, expecting their legions of fans to blindly follow. In this instance, a dream-team of celebrities quickly became a PRnightmare. With that being said, arguably the GSR 152 | 25

The Best Worst Thing to Happen To You by SUBARNA RAUT

One of the necessities of being a university student is the ability to find new and meaningful ways to procrastinate. Without this skill, students would become far too industrious and skillful at managing time. Something we would wish upon no one. So it’s safe to say the release of Netflix was widely anticipated by everyone here in Australia. A top-tier streaming service that was to fill our entire days with non-stop enjoyment. Literally our entire days. So lets follow the journey of Netflix and see what makes them truly special. What is Netflix? Netflix is the world’s most popular subscription video service, allowing you to access a wide range of TV shows, documentaries and movies. The pricing is also extremely reasonable. The standard plan only costs viewers $8.99 a month. So instead of indulging on one medium sized Big-Mac meal, you can binge for an entire month on your favourite shows for the same cost. It hasn’t been all sunshine for Netflix Australia though, after it received criticism for the limited options that have been brought


LINEUP 26 | GSR 152

George Street Review | 2015

over from the US. Here in Australia we have access to 1,326 titles, in comparison to the 8,499 in the US. But whilst we may not be able to watch every single TV show created, there are still a majority of the popular programs available, such as House of Cards (this show alone should be able to sell Netflix), Orange is the New Black, Suits, Unbreakable Kimmy Schmidt and The Blacklist, just to name a few. How did it become so successful? Netflix started out as a DVD distributor. It was able to buy out DVDs from a retail store and deliver them in a more ‘consumer friendly’ manner, in an attempt to override the concept of going into a video store to hire out a movie. However, as technology began advancing to video streaming, it became more convenient for people to watch these shows on their portable devices rather than DVDs. This exposed a dwindling customer base and, to break even, Netflix had to increase their prices as drastically as 60% in July 2011. The company had to revisit their business model.

To their credit, Netflix never backed out, and in February 2013, the chief content officer stated, “the goal is to become HBO faster than HBO can become us.” Based upon current statistics, Netflix’s strategy is hard to fault. In the last quarter the revenue of Netflix jumped 24% and membership exceeded 60 million global users. Within this astounding figure consisted of more than 40 million U.S streaming subscribers and around 20 million overseas subscribers. To highlight just how rapidly Netflix is growing, there was a record 4.9 million new subscribers in the quarter, which was an increase of the 4.3 million in the previous quarter. It has further forecast another 2.5 million new subscribers in the current quarter. CEO of Netflix Reed Hastings outlined some of the factors as to why he thought the company was able to achieve its success: 1. By knowing what type of company they are: Hastings described the core principal of Netflix’s identity as being of a personalisation and user choice company, not merely as a streaming company. This has enabled them to focus on the needs of the user, rather than just

GSR 152 | 27



putting out a feature simply because they can. 2. Timing your opportunity 3. Choosing the right niche

4. Having good relationships with content providers 5. Not being afraid to test a lot 6. Pricing the product well

7. Promoting creativity from within So what now? Before you’re able to get out your/ your parents’ credit card and start subscribing, you have to decide whether you want to go with Netflix or choose an alternative such as Stan or Presto. There has been considerable debate regarding these services and, put simply, it comes down to indivual preference. Each of these services offer different programs and depending on what tickles your fancy, will be how you choose the appropriate plan. The added benefit is that most of these services don’t have lock in contracts, giving you the flexibility to leave at the end of the month if you’re dissatisfied. There truly is no legitimate reason to not get on-board this fast moving train. Going back to the beginning, if we’re all going to procrastinate anyway, why not do it well? And if it’s a lack of time or the fear you may never sleep that worries you, I’ll leave you with a quote from the great man himself, Kevin Spacey (‘Frank Underwood) :“I’ve always loathed the necessity for sleep. Like death, it puts even the most powerful men on their backs.”

28 | GSR 152

George Street Review | 2015


180 DEGREES & MANAGEMENT CONSULTING Amongst the array of career aspirations, management consulting almost invariably features in the minds of businessoriented students. For some, it is a necessary intermediate step towards the likes of private equity and venture capital firms; for others, it is an end in and of itself. Management consulting – like investment banking – is touted as being notoriously difficult to gain access to, and prior experience may provide a crucial point of difference for graduate applicants. Enter 180 Degrees Consulting, the world’s largest university-based consultancy organisation. Acting as a nexus between motivated students seeking practical experience and socially conscious client organisations, 180 is singularly focused on improving the effectiveness of not-for-profits and social enterprises worldwide through the provision of periodic consulting services. Its founder, Nat Ware, identified that socially conscious organisations often face pronounced resource constraints that act as impediments to reaching optimal levels of social impact. With management consulting firms charging a premium for their services, engaging them was prohibitively expensive for many organisations, thus a niche existed whereby the provision of high quality and low cost (or gratuitous) consulting services could flourish. The relationship is mutually beneficial: high-achieving and motivated students are selected to work with a client organisation, whereby they gain experience in creating bespoke solutions for issues the organisation is facing, in the process furthering a socially beneficial outcome. Rigorous recruitment processes are integral to the success of 180 Degrees; prospective student consultants must display the correct combination of motivation, ingenuity, problem solving ability, and belief in the value the projects create in order to be accepted into the program. Furthermore, diversity in fields of study is encouraged within the consulting groups to ensure breadth of perspective and knowledge when undertaking a project. Once selected, students are then introduced to 180’s consulting methodology within a series of training seminars. Developed in conjunction with McKinsey & Company, this consulting framework provides a structured approach to disaggregating the problems faced by client organisations, and implementing effective and impactful solutions. Within Australia, Nous Group – one of Australia’s leading management consulting firms – also has partnerships with a number of 180 branches, including Bond, within which Nous’ consultants play a mentoring role to student consultants. Although still in its relative youth, having been established only 8 years agor, 180 has opened branches in 26 countries to date, and has consulted to over 784 socially conscious organisations. Recently, 180 has undertaken projects with Oxfam, World Vision, Red Cross and White Ribbon to assist them in improving their social impact.

by Barry NeweLL

GSR 152 | 29

Gail Kelly' s K

30 | GSR 152

George Street Review | 2015

Keys to Success She rose to the spotlight as one of the most powerful women in male-dominated industry and was ranked by Forbes as the 56th most powerful woman in the world, Gail Kelly is indeed a force to be reckoned with. In 2002 she made a record as the first female to be CEO of a major Australian bank or top 15 company and in 2005, became the highest paid woman in an Australian corporation. With a net worth of A$43.3 million, 59 year old Gail stepped down from her prestigious position as Westpac CEO on the 1st of February this year. With such an outstanding portfolio and what seems to be the perfect balance between work and family life, it is easy to understand why everyone wants a piece of her success. Here are her top tips:

Choose to be positive! Gail Kelly is a big believer that being positive is a life skill that everybody should embrace. Her father was the biggest influence in this area and she describes him as having that “wonderful flavour of, you can choose in your life how you respond to situations and you should actively choose to be positive, to see the world through a glass-half-full perspective.” His optimistic attitude was staple throughout Gail’s upbringing and has influenced her own behaviour. Being positive changes your whole life around. “We’ve all seen the same situation happen to two people. One looks for the lesson, sets their shoulders back and presses on while the other asks ‘Why does it always happen to me?’ You can choose not to sit on the fence. You can choose not to criticise. You must stand as guard at the door of your own mind and choose to be positive.” (Chamber of Commerce Breakfast Function- September 2010).


Do what you love This lesson is a personal one for Gail. Originally, she studied a Bachelor of Arts/ Science at the University of Cape Town and began her teaching career in January 1978. She found though that she was not happy as a teacher and that she had turned into a different person, someone that she didn’t want to be. She then turned her life around and left her job and joined the Nedcor Bank in South Africa in January 1980 and completed a Masters of Business Administration in 1987. As we all now know, that put her on the path to the great success in the banking world. She herself explains it as “When we love what we do it holds greater meaning for us. We care more. If you don’t love what you do change it. You owe it to yourself to love your work.” (Westpac’s Ruby Connection- 2012).

Be present The last lesson could be the most important one. Learning to live in the moment is by far one of the best life skills that one can learn. And also, an effective way to ensure that life is being lived to the fullest. “If I’m watching my son play soccer, that’s what I’m doing. If I’m going to a school concert, that’s what I’m doing. I turn the phone off. I actively tune into whatever I’m doing. I walk every evening with one of my sons and for that half an hour, 45 minutes, that’s what I’m doing.” (Lateline Business on ABC- May 21, 2007)

Izzy Silberling GSR 152 | 31

10 Ways to Save on Campus by Ellie Chicchio

1. At club sign on day, join as many clubs as you can. All students love free food. If you are dedicated enough, you can get away with a number of free dinners at the beginning of semester. There are so many events, information nights, and meet and greets held by clubs and societies around campus that provide free food for their guests. Better yet, if you’re smart about it, start your own club and then pick the food and have the university pay for it… depending on whether or not you get a budget of course.

2. Don’t waste money on pens At the beginning of the semester, many clubs give out free pens, note pads and tote bags at club sign on day. Act interested enough and you may just score your semesters worth of stationary.

3. Bring a container to Wednesday by the water. If looks from the disapproving BUSA members do not discourage you, and you don’t mind feeling cheap, bring a container to Wednesday by the water and load her up with sausages and bread. This can also be done at work to take home free staff meals.

32 | GSR 152

George Street Review | 2015

4. Take advantage of target's unofficial ‘discount schedule.’ If an item on sale has a price tags ending with $0.06 or $0.08 the item will be marked down again during the next markdown cycle as long as there is inventory in the store. The item typically will remain at the next percentage off for two weeks before progressing to the next level.

Price tags ending in a $0.04 have been marked for final clearance and this is the lowest price that Target will sell the item for.

5. Sell your notes ‘Nexus Notes’ is a great way to make money from your semester of hard work. Notes can earn up to $17.50 per sale.

6. Eat as many free samples as you can. Shopping on a budget is easy as well. If you manage to hitch a ride to Robina to avoid the petrol cost you’re in luck. One can manage a decent feed by sampling all the free tasters at Bakers Delight and ‘testing’ a handful of grapes from Woolworths, followed by Coles. Everyone does it.

7. Get free week gym passes Gyms often give out free guest passes. Sign up at different facilities each week until you run out of options.

8. Celebrate Easter late Chocolate eggs go on sale following Easter so by celebrating Easter just a couple days late you can save over 70% on eggs.

9. Buy gift cards online You can buy retailer gift cards online for up to 20% off their loaded value. These can be purchased on the retailer’s site or from the Gift Card Granny:

10. DIY speakers Don’t waste money on flash new portable speakers. All you need to amplify your music is a smart phone, an empty toilet roll and two red cups.

GSR 152 | 33


INVESTMENT BANKING PANEL Q&A with J.P. Morgan Grad Joe Patrick

Wednesday Week 5



BIG Speaker Series Get the edge with industry insights.


The George Street Review - 152  

Bond Investment Group's semesterly publication 'The George Street Review.'

The George Street Review - 152  

Bond Investment Group's semesterly publication 'The George Street Review.'