Banks shares set to rise as investors dive in before dividend payouts

Macquarie says attractive valuations and historical outperformance in the lead up to ex-dividend dates could drive banks’ share prices higher. The big four banks performance pre- and post- dividend date. Photo: Macquarie Wealth Management
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The sharemarket valuations of the big banks are looking attractive after the recent sell-off and the usual buying that occurs before their dividend payouts could drive their share prices higher, Macquarie says.

The S&P/ASX 200 banks index tumbled to its lowest point since July 2013 at the end of a dismal third quarter for the sharemarket. The index has fallen 20 per cent since the market rout began in April, fuelled by volatility on macro concerns and industry-specific capital raising requirements directed by the n Prudential Regulatory Authority.

“With the sell-off that began in April the banks are currently trading at valuations not seen in years,” Macquarie Wealth Management wrote in a research note.

“While the market is primarily being driven by macro concerns at the moment, we view the upcoming dividends as a catalyst to drive outperformance as the dividends focus the market on the attractive valuations these companies are currently trading at.”

Westpac Banking Corporation, National  Bank, ANZ Banking Group and Bank of Queensland are all going ex-dividend in November and Macquarie said the buying in the run up could push their share price valuations back to more normal levels relative to the market. Commonwealth Bank of went ex-dividend in August.

Higher-yielding stocks, including the big banks and real estate investment trusts, tended to outperform the market in the lead-up to their ex-dividend trading dates, Macquarie said, because investors priced in the dividend before the ex-dividend date.

On average, the banks outperformed the market by 2 to 4 per cent in the weeks leading up to their ex-dividend date and then underperformed after that date, Macquarie said.  Run-up shifting earlier

“We also observe the run-up has been shifting earlier for the banks, with the peak often occurring well before the ex-date, with the banks then selling off in the final weeks just before their ex-date.”

The banks index fell to a low of 7620.8 on September 29, the day the sharemarket shed 4 per cent to plummet to less than  5000 for the first time in two years, but since then it has risen more than 5 per cent.

“The recent sell-off in the banks presents substantial opportunity,” Macquarie said.

ANZ was the most heavily sold-off stock in  August, and at the end of the third quarter was trading at a multiple of 10.2 times forward earnings, with a yield of 9.7 per cent. The last time it was trading this cheaply was in January 2013.

“We believe the upcoming dividend will act as a catalyst for investors to trade on the attractive valuations and as a result we expect ANZ to outperform in the lead-up to its ex-date,” Macquarie said.

Westpac was trading at a forward price-earnings ratio of 11.6 times earnings, with an earnings yield of 8.6 per cent. The last time Westpac traded at its September 30 price was in July 2013.

“With the dividend around the corner, our view is the market will become increasingly aware of these attractive valuations and we will see the run-up commence late and supported by a valuation tailwind,” Macquarie said.

National Bank’s valuation is at its cheapest since October 2014. It is trading at a forward price-earnings ratio of 11 times, with an earnings yield of 8.8 per cent. Macquarie also expects this attractive valuation to lead NAB to outperform the market in the lead-up to its dividend.

Solar and wind power just passed another big turning point

As more renewables are installed, coal and natural gas plants are used less, making them less cost-effective. Photo: Nicolas WalkerWind power is now the cheapest electricity to produce in both Germany and the UK, even without government subsidies. It’s the first time that threshold has been crossed by a G7 economy. But that’s less interesting than what just happened in the world’s largest economy, according to a Bloomberg analysis. To appreciate what’s going on in the US, you need to understand the capacity factor. That’s the percentage of a power plant’s maximum potential that’s actually achieved over time. Consider a solar project. The sun doesn’t shine at night and, even during the day, varies in brightness with the weather and the seasons. So a project that can crank out 100 megawatt hours of electricity during the sunniest part of the day might produce just 20 per cent of that when averaged out over a year. That gives it a 20 per cent capacity factor. One of the major strengths of fossil fuel power plants is that they can command very high and predictable capacity factors. The average US natural gas plant, for example, might produce about 70 per cent of its potential (falling short of 100 per cent because of seasonal demand and maintenance). But that’s what’s changing, and it’s a big deal. For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That’s because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero-free electricity – while coal and gas plants require more fuel for every new watt produced. If you’re a power company with a choice, you choose the free stuff every time. It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed. The virtuous cycle has begun
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Wind and solar have long made up a small fraction of US electricity – about 5 per cent in 2014. But production has been rising at an exponential rate, and those two energy sources are now big enough to influence when coal and natural gas plants are kept running, according to Bloomberg New Energy Finance (BNEF). There are two reasons this shift in capacity factors is important. First, it’s yet another sign of the rising disruptive force of renewable energy in power markets. It’s impossible to brush aside renewables in the US in the same way it might have been just a few years ago.  “Renewables are really becoming cost-competitive, and they’re competing more directly with fossil fuels,” said BNEF analyst Luke Mills. “We’re seeing the utilisation rate of fossil fuels wear away.” Second, the shift illustrates a serious new risk for power companies planning to invest in coal or natural-gas plants. Historically, a high capacity factor has been a fixed input in the cost calculation. But now anyone contemplating a billion-dollar power plant with an anticipated lifespan of decades must consider the possibility that as time goes on, the plant will be used less than when its doors first open. Capacity Factors Take a Sharp Turn

Most of the decline in capacity factors is due to expensive “base-load plants that are being turned on less because of renewables,” according to BNEF analyst Jacqueline Lilinshtein. Plants designed to come online only during the highest demand of the year, known as peaker plants, play a smaller role. In either case, the end result is that coal-fired and gas-fired electricity is becoming more expensive and the profits less predictable. The opposite is true of wind and solar, as well as new battery systems that can be paired with renewables to replace some peaker plants. Wind power, including US subsidies, became the cheapest electricity in the US for the first time last year, according to BNEF. Solar power is a bit further behind, but the costs are dropping rapidly, especially those associated with financing a new project. The economic advantages of wind and solar over fossil fuels go beyond price. Still, it’s remarkable that in every major region of the world, the lifetime cost of new coal and gas projects are rising considerably in the second half of 2015, according to BNEF. And in every major region the cost of renewables continues to fall. Bloomberg

Chinese $36.6m offer for Armour Energy too little, expert says

Armour chairman Nick Mather has told shareholders the Landbridge offer is inadequate. Photo: Robert ShakespeareThe battle for control of shale junior Armour Energy has heated up after a $36.6 million takeover offer by China-owned WestSide Corporation was deemed inadequate.
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The judgment by the expert hired by Armour to assess the offer lends weight to the shale explorer’s advice that shareholders rebuff the hostile bid

Armour’s shares are worth  22¢ to 37¢, according to BDO Corporate Finance. The mid-point of the valuation range is more than double WestSide’s cash offer of 12¢ a share, which itself was almost double the 6.8¢ at which Armour’s shares were trading before the bid.

Armour directors unanimously told shareholders to reject the “inadequate, unsolicited and opportunistic” offer and said WestSide, which is part of privately owned Landbridge Group, “wants to extract value at your expense”.

Shares in Armour, which is being advised by Morgans, rose 4.2 per cent to 12.5¢.

Shareholders, including Armour directors controlling 29.51 per cent of the stock, don’t intend to accept the offer as of Wednesday, the Brisbane-based company said.

Armour is asking shareholders to instead support a proposed $US130 million ($182 million) exploration venture with American Energy Partners, the company of US shale pioneer Aubrey McClendon, that would have AEP buy 75 per cent of the n player’s vast acreage in the McArthur Basin in the Northern Territory and western Queensland.

The investment would be Mr McClendon’s first outside North America in what some regard as a vote of confidence in the potential of Armour’s exploration acreage, despite the dive in oil prices that has caused other foreign investors to abandon shale exploration in .

Nicholas Mather, executive chairman of Armour who leads DGR Global, its biggest shareholder, said the offer from the Chinese group “is inadequate and does not reflect fair value for Armour shares”. He said it offers no value for the proposed value of Origin Energy’s idled oil and gas production assets on the Roma Shelf in Queensland.

Mr Mather said the AEP farm-out deal “values Armour substantially higher, on a non-control basis”, noting that a proposed equity placement to AEP at 20¢ a share suggests a $60.9 million valuation.

WestSide, which is being advised by JB North & Co, has yet to respond.

Wednesday, October 7

Compelling drama: The Principal.FREE TO AIR
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Caught on Dashcam, Seven, 7.30pm 

There’s voyeurism then there’s dashcam videos, a long-time internet favourite, particularly the Russian variety (they’ve been using dashcams for years, reportedly because insurance frauds are so rife there), which make up the bulk of this program. That’s right: brief videos from people’s in-car dashboard cameras (although there’s also a lot of mobile phone footage here) augmented by some truly awful ‘‘zany’’  voiceovers.  Caught on Dashcam should win an award for the least expensive series ever produced, if nothing else.

The Principal, SBS, 8.30pm 

SBS’s first original drama in years was created by producer Ian Collie (Rake), writers Rachael Turk and Kristen Dunphy (East West 101) and is directed by Kriv Stenders (Red Dog) – and its cast (Alex Dimitriades, Aden Young, Mirrah Foulkes among them) is equally impressive. Dimitriades is Matt Bashir, the new principal of the notoriously rough (fictional) Boxdale Boys’ High School in Sydney’s west, an ethnically diverse school where the staff are burnt out and cynical and the students not much better. But Bashir is determined to turn the place around, instantly ruffling feathers with his inspirational platitudes and determination to instil self-respect among the worst students. This is no Heartbreak High though; The Principal is a hybrid school/crime drama set in a post-9/11 high school, where multiculturalism and radicalisation are bigger concerns than peer pressure or schoolground bullying. Newcomers Rahel Romahn as troubled student Tarek Ahmad and Tyler De Nawi as his brother Karim are standouts among the young cast in this compelling new drama.

Celebrity Apprentice  Nine, 8.40pm 

It’s bad enough that the ‘‘celebrity’’ spin-off of The Apprentice bears little resemblance to the original’s premise, but the producers of this n series haven’t even concerned themselves much with the ‘‘celebrity’’ part – the line-up is, frankly, bizarre and even those who have only reality TV experience to draw on (which is most of them) seem unable to even conduct  faux-arguments very well. Unless the producers poke these ‘‘celebs’’ into some proper in-fighting soon, there’s so little reason to tune in, it’s actually embarrassing.Kylie Northover


The Hobbit: The Battle of the Five Armies  (2014) Premiere Movies (pay TV), 8.30pm

The Battle of the Five Armies, one of the climactic events in J.R.R. Tolkien’s The Hobbit, is essentially a background event, a big picture clash seen from a distance as the individual protagonists are caught up in the Middle Earth clash for the vast treasure of the felled dragon Smaug. It took three pages in the book, but it lasts a good part of this 144-minute film, the final instalment of Peter Jackson’s dreary trilogy where the economy and insight of his previous Lord of the Rings series is replaced by excess and indulgence. While it’s nice that Orlando Bloom got paid work, bringing back his elven character Legolas was just one of many sloppy inventions that marked Jackson’s preference for his own legacy over the source material, and the perpetual usage of digital effects turns the picture into a dull fantasy that lacks the physicality and endeavour of Jackson’s initial Tolkien adaptations. One of the elements added by the filmmaker, foreshadowing his Lord of the Rings films, was the return of the Dark Lord Sauron, but by the end of this ham-fisted, repetitive blockbuster the only threatening force looming over these films is Peter Jackson himself, battering his own legacy.

Pineapple Express (2008) Ten, 10pm

In a stoner comedy you have to believe  the leads know how to get high and do everything associated with the fuzzed-out state: that is talk rubbish, hatch grand plans, flip out without warning, and get a bad case of the munchies. In that regard Seth Rogen, as amiable process server Dale Denton, and James Franco, as his slacker dealer Saul Silver, have all the bases covered in David Gordon Green’s Pineapple Express – fleeing to the woods at one point they even play leapfrog together. The film itself, one of many co-written by Rogen in the long period when no one would pay him to act, is actually more of an ’80s action adventure, albeit with a ludicrously warped sensibility. It has various criminal gangs, plus Rosie Perez as a corrupt cop, goons borrowed from the era of The Last Boy Scout and a massed battle for the finale. But it never surrenders to these impulses, remaining an improbable adventure between the mismatched Saul and Dale, with Danny McBride’s Red – one of his stream of overly confident American misfits – as their travelling companion. When the bullets stop flying they get breakfast together and laugh about their journey, bud(dies) forever.Craig Mathieson

Most isolated places in the world: Top 10 places to feel complete isolation

Torres del Paine mountains, Patagonia, Chile Photo: iStock Torres del Paine mountains, Patagonia, Chile Photo: iStock
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Torres del Paine mountains, Patagonia, Chile Photo: iStock

Atacama Desert: The Atacama is the ultimate expression of the phrase “high and dry” – a desert 4000 metres above sea level, where only a couple of millimetres of rain falls every year. It’s also almost completely uninhabited, a place in northern Chile where you can see for mile after mile in the thin, dry air – but you still can’t see anything of note. There’s a beautiful stillness to the Atacama that will never be shattered. Photo: iStock

Torres del Paine mountains, Patagonia, Chile Photo: iStock

There’s getting away from it all, and there’s getting away from it all.

For some people, just leaving their home city is enough of a break. Maybe relaxing on a beach with a few other people will do it. Or climbing a mountain and breathing in some clean air. It recharges the batteries. It makes you feel alive.

However, if you really want to get away from it all – if you want to experience total and utter isolation, the feeling that you’re the only person left on the entire planet – then you need to visit these places. Mongolian steppe

Ulan Baator is pretty horrible. The Mongolian capital is polluted and cramped, and not a lot of fun. However, drive just a few hours in any direction and suddenly you’re in the most perfect, complete wilderness you’ve ever seen. The Mongolian steppe is a seemingly never-ending series of rolling plains, of treeless valleys and hillsides dotted with just the occasional white blob of a ger. The silence is eerie. Especially compared to UB. Antarctica

When the nearest gathering of human civilisation is an entire ocean away; when the nearest point of interest is just a notional spot somewhere over the snowy hills that marks the end of the Earth; when your only friends are penguins and seals – then you know you’ve achieved isolation. Antarctica is the perfect place to be if you’ve grown weary of the worries of the world. The Red Centre

ns don’t have to go far to be in the middle of nowhere. Out in the centre of this great land lies a fairly big patch of absolutely nothing. When you’re wandering the Red Centre you could very easily imagine that the rest of the world has ceased to exist. And when it gets dark, and all those stars come out, you’ll become obsessed with worlds much further away. Lake Uyuni

During the day, this huge salt pan in central Bolivia is isolated. It’s an endless stretch of bright white merging with a shimmering horizon that dips and swirls and fools you into thinking you know where you’re going. But even still, during the daytime you’ll see other people, other tourists, other 4WDs. At night it’s another story. Camp out on the lake, and all those other people disappear. It’s just you and the howl of the wind. It’s a little scary. And very cold. The Yukon

You’re not completely isolated in northern Canada. You’re not the only one around. That is, if you count the bears, the blacks and the grizzlies, the coyotes, the cougars, the beavers and even the hares. If it’s humans you’re thinking about, however, there aren’t any. You can be helicoptered in to some of the most beautiful, remote places on Earth in the Yukon. French Polynesia

While islands like Bora Bora and Moorea have been well and truly colonised, there are still places to get away from it all in French Polynesia. Try the Tuamotus, an hour-long flight from Tahiti. This group of atolls and islands is paradise of the classic kind, palm-tree-lined beaches stuck in the middle of the Pacific, where barely another soul has walked. It’s another world, and it’s a serious adventure even getting there.  Patagonia

Silence. That’s what you notice most in Patagonia. When you’re out on the steppe, hiking rugged mountains, passing rivers, looking down over glaciers, the sound you hear is silence. There’s no one else and nothing else around in the south of Argentina and Chile. If you’re trying to get away from it all, then this is where you want to be. Franklin-Gordon Wild Rivers National Park

Do a rafting expedition in this patch of south-west Tasmanian wilderness and you’ll come to know isolation. This is world heritage-listed beauty we’re talking about, a place strictly controlled for preservation, where you’ll come to realise that your rafting party makes up just about the only human presence for miles and miles around. Purros, Namibia

Purros, officially, is a town, but it doesn’t look like any town you’ve ever seen before. It’s more just a collection of a few shacks and a dusty campground, a place that takes days to reach by 4WD from the nearest thing you could refer to as civilisation. This is the home of the Himba tribespeople, although only a small number of them exist. It’s also as far from anything you know as you’re likely to have ever been. Atacama Desert

The Atacama is the ultimate expression of the phrase “high and dry” – a desert 4000 metres above sea level, where only a couple of millimetres of rain falls every year. It’s also almost completely uninhabited, a place in northern Chile where you can see for mile after mile in the thin, dry air – but you still can’t see anything of note. There’s a beautiful stillness to the Atacama that will never be shattered.

Where would you go to feel cut off from the rest of the world? Where’s the most isolated place you’ve been?

Email: [email protected]上海龙凤论坛

Instagram: instagram上海龙凤论坛m/bengroundwater

See also: 12 signs that say you’re a real traveller See also: The 15 coolest Airbnb rentals

Sydney weather: The moment the southerly buster swept in to end high temperatures

The return to more typical October daytime temperatures follows Sydney’s hottest trio of days this early in the warming season on record. Photo: Nick Moir Classic ‘roll cloud’ over Turrmimeta Beach. Photo: John Grainger, via BoM
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A roll or shelf cloud over the northern beaches in 2014. Photo: Nick Moir

You might have set your alarm clock by it – or the southerly buster may have woken you up anyway.

Meteorologists predicted the strong cool change would hit the city from the south at about 5am on Wednesday, and that’s precisely when it swept over Sydney Airport, Anthony Duke, a meteorologist with Weatherzone, said.

Minutes later, as shown in the Doppler radar image in the video above, the strong winds had reached Sydney Harbour, buffeting any boaties mad enough to out for an early sail.

The Bureau of Meteorology has since cancelled its severe weather warning for damaging winds that it had issued late on Tuesday for a region stretching from the south coast up to the Hunter district

Wattamolla, on the cliffs of the Royal National Park to Sydney’s south, recorded the day’s strongest winds of 95 km/h, also just before 5am.

Around Sydney, the harbour recorded 76 km/h and Norah Head up the coast collected 78 km/h gusts, the bureau said.

“The winds will gradually ease through the day,” Mr Duke said, adding that the haze, dust and pollen kicked up by the change will start to settle.

Unlike in Melbourne, where the cool change sent temperatures tumbling about 13 degrees in just eight minutes, Sydney’s buster arrived around sunrise, leaving the mercury hovering just below the 20-degree mark.

The bureau defines classic southerly busters as bringing wind gusts of at least 54 km/h and a temperature drop of at least five degrees over three hours.

Instead, maximum temperatures for the city may remain close to the 21.5 degree peak reached just after 9am for the most of the day, with a similar top forecast for Thursday. Gusty southerly change in #Sydney shown on the doppler radar. Gusts have reached up to 76km/h at @SydneyAirportpic.twitter上海龙凤论坛m/r5NTYGHajz— Weatherzone (@weatherzone) October 6, 2015

Sydney typically receives about five such abrupt changes, also known as southerly busters, each year, the bureau said.

Tasmania, New Zealand and even Argentina lay claim to similar events.

In Sydney’s case, cool air gets trapped against the Great Dividing Range, intensifying the severity of the winds. A “roll cloud” often accompanying the change as it moves north.

Wednesday’s return to more typical October daytime temperatures follows Sydney’s hottest trio of days this early in the warming season on record, according to Weatherzone.

For any time of the month, the three days were hottest in October since 2004, Mr Duke said.

NSW fire authorities are not expecting the gusty winds to cause major flare-ups among the 15 fires still burning uncontained in the state as of Wednesday morning, a NSW Rural Fire Service spokesman said.

The RFS dispatched two of its main firefighting aircraft from Richmond air base to Victoria for a single drop of fire-retardants on Tuesday, the spokesman said, adding the planes remain ready to fly south again if needed by Victorian counterparts.

The string of record-breaking heat across south-eastern may prompt many in NSW to consider their fire plans.

“This may be the trigger they needed to think about the fire season,” the spokesman said. “We’re in the fire season and we need to be prepared.”

The powerful El Nino developing the Pacific – already one of the most intense on record – is combining with Indian Ocean conditions that have become less conducive for rainfall over the n continent.

Last month was the country’s third-driest September on record, with only about one-third of the typical rain falling across the nation.

Weatherzone is owned by Fairfax Media, publisher of this website

High Court upholds state-wide ban on political donations from property developers

Former Newcastle mayor Jeff McCloy outside the ICAC in 2014. Photo: Cole BennettsThe High Court has upheld a state-wide ban on political donations from property developers, bolstering a corruption inquiry into secret donations from Nathan Tinkler and other business figures.
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In a judgment delivered on Wednesday, a majority of the court rejected a claim that the ban was an impermissible restriction on the implied freedom of political communication in the Constitution.

It also upheld the validity of caps on the maximum amount that can be donated to individual candidates and parties in NSW, which are set at $2000 and $5000 respectively.

The decision removes a major obstacle to the Independent Commission Against Corruption releasing findings following its explosive inquiry last year into illicit political donations.

“These are provisions which support and enhance equality of access to government, and the system of representative government which the freedom protects,” Chief Justice Robert French and Justices Susan Kiefel, Virginia Bell and Patrick Keane said in a joint judgment.

In a separate judgment, Justice Stephen Gageler said the provisions met the “compelling statutory object … of preventing corruption and undue influence in the government of the state.”

Justice Michelle Gordon arrived at the same conclusion, saying in a separate judgment that the “burden on the freedom of communication in relation to a property developer is slight” and would not stop developers voicing their support for a party or candidate.

But in a dissenting judgment, Justice Geoffrey Nettle said the ban on developer donations was constitutionally invalid, while the caps on donations were valid.

Premier Mike Baird said the state government had “argued the case for the validity of our state’s stringent campaign finance laws during the High Court challenge” and it was pleased with the result.

“The decision opens the way for consideration of national reforms to political donations laws at COAG,” Mr Baird said.

The Labor Opposition and the Greens said the majority decision pointed to the need for Parliament to act immediately to extend the caps on donations to local government elections.

“The High Court has put beyond doubt that these caps are legally valid,” Opposition Leader Luke Foley said.

“It’s crazy that Mike Baird and I can run for Premier and be subject to strict caps, while at the same time you can run for a ward of a suburban council without any limits on what you can raise and spend.”

The Greens’ anti-corruption spokesman, Jamie Parker, went further and said the donations bans “should also be extended to the mining sector where the potential for corruption has been exposed by the ICAC”.

“Elections should be about the contest of ideas, not the contest of cash. Whether it is cash in a brown paper bag or buying a table at a fundraising event the community needs to be sure that politicians aren’t being bought,” Mr Parker said.

The challenge to the political donations laws was brought by developer and former Newcastle mayor Jeff McCloy, who admitted at ICAC to giving envelopes stuffed with $10,000 in cash each to then Liberal candidates Tim Owen and Andrew Cornwell in the back of his Bentley.

The corruption watchdog had delayed releasing its report in its inquiry into political donations, dubbed Operation Spicer, pending the High Court’s ruling. However, it may still have to wait until the Supreme Court rules on a separate case brought by Mr McCloy, who is seeking an order restraining ICAC from delivering its findings because of an alleged appearance of bias.

In 2009 the Rees Labor government passed laws banning property developers from making political donations. The laws took effect on January 2010.

The same section of the Election Funding, Expenditure and Disclosures Act that bans donations from developers also bans donations from the alcohol, tobacco and gambling industries.

Operation Spicer resulted in 10 NSW Liberal MPs joining the crossbench or resigning from politics. It investigated allegations the NSW Coalition accepted money from developers before the 2011 election.

One of the donors was former coal billionaire Nathan Tinkler, whose property development company Buildev was lobbying for approval for a coal loader in the Newcastle suburb of Mayfield.

ICAC heard Mr Tinkler donated about $45,000 to the Nationals and another $66,000 to an alleged Liberal Party slush fund, Eightbyfive.

Chief Justice Robert French and Justices Susan Kiefel, Virginia Bell and Patrick Keane noted that ICAC and other bodies had published “eight adverse reports since 1990 concerning land development applications”.

“Given the difficulties associated with uncovering and prosecuting corruption of this kind, the production of eight adverse reports in this time brings to light the reality of the risk of corruption and the loss of public confidence which accompanies the exposure of acts of corruption.”

They also noted that “the risks that large political donations have for a system of representative government have been acknowledged since Federation”, adding that “capping of political donations is a measure which has been adopted by many countries with systems of representative government. It is a means that does not impede the system of representative government for which our Constitution provides”.

Mr McCloy was ordered to pay costs.

with Emma Partridge

Samsung, Ikea, Coca-Cola, NAB and Kleenex head list of Choice Shonky Award winners for 2015

All the winners. Photo: suppliedIkea’s “leather” couches, Kleenex’s “flushable” wet wipes and NAB’s “low” rate credit cards have each snagged a Shonky Award for delivering the opposite of what was sold to consumers.
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At its annual awards ceremony, consumer advocacy group Choice bestowed its nameand shamegongs on what it rated the eight dodgiest products and companies in2015, including Coca-Cola and Arnott’s.

“From payday lenders that prey on the vulnerable to laundry products that just don’t work, it is clear business still needs to sharpen up its act,” said Alan Kirkland, chief executive of Choice.

It criticised electronics giant Samsung for its ineffective recall of washing machines with a fault that has sparked house fires. There are 58,000 machines yet to be fixed, replaced or refunded across the country.

Coca-Cola was blasted for funnelling money to the front groupGlobal Energy Balance Network thatcontends consumersworry too much about what they eat and not enough about how much they exercise.

“We think funding an organisation that suggests we should keep drinking sugary drinks and just exercise more is a load of fizz,” Choice said.

It slammed Swedish furniture giant Ikea for flogging “leather” couches on its n websitethat turned out to be made out of polyester and polyurethane.

The groupalso derided Kleenex for falselyclaiming its “flushable” cleansing cloths would disintegrate like “toilet paper”. Used wipes are causing sewer chokes.

“Wipe-related damage to sewerage systemsis estimated at $15 million annually. We think the ‘flushable’claim misleads consumers,” it said.

Big bank NAB collected a Shonky for failing to pass on official interest rate cuts to credit card customers. It also hiked rates for its “low” rate card customers from 12.99 per cent to 13.99 per cent.

Also in the financial sector, the payday lending industry nabbed an award.The federal government is in the middle of reviewing the laws regulating the loan sharks, which can offer rates of more than200 per cent, typically to cash-strapped borrowers.

“In one recentcase,Cash Converters irresponsibly issued a pensioner 63 loans over six years. We think payday lenders are a school of predators, telling consumers to take out high interest loans so they can devour them in frenzy of debt,” it said.

Choice gave an award to Nanosmart for spruiking laundry balls, priced at $50 a pop,it misleadingly claims allows you to wash without detergent.

“[Our] test found water alone did a better job. [We have]informed Consumer Protection Western which is taking action,” it said.

It also bestowed an award onArnott’s forcreating its own “school canteen – meets amber guidelines” logo. It said the logo gave a “healthhalo” to Tiny Teddies that are “littered” with 100s and 1000s and classified as confectionery.

Mr Kirkland said more than 400 dud products were in contention this year.

“We hope the Shonkys encourage consumers to look critically at the goods and services they use, question poor service, hidden costs and the fine print beneath claims that seem too good to be true,” he said.

Samsung for its recall efforts of faulty washing machinesKleenex for its “flushable cloths” that donot disintegrate for yearsCoca-Cola for its gifts to front group Global Energy Balance NetworkIkea for selling “leather” couchesmade of polyester and polyurethaneNAB for hiking rates on its “low” rate credit cardsPayday lending industry for preying on vulnerable nsNanosmartfor flogginglaundry balls that do not workArnott’s Tiny Teddiesfor creating a false impression of health

Consumers concerned about their washingmachine should call Samsung’s Product Safety Hotline on 1800 239 655 or visit thecompany’swebsite.


Landmark High Court ruling on BRCA1 gene patent as pensioner wins legal case

Yvonne D’Arcy, who fought to have the breast cancer gene patent overturned, outside the Federal Court after it first ruled that mutations in the BRCA1 gene could be patented. Photo: Peter RaeA 69 year-old pensioner from Queensland has succeeded in a David-and-Goliath battle against a multinational corporation that claimed a patent over the “breast cancer” gene.
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‘s highest court has unanimously ruled that a mutated gene that causes cancer cannot be subject to a patent, or the right to control use of the gene.

The decision has been hailed as a “revolution in intellectual property” and a victory for public health and medical research.

The case is a massive win for cancer survivor and grandmother Yvonne D’Arcy and the law firm that represented her, Maurice Blackburn, which took the case all the way to the High Court after repeated losses in the Federal Court. It argued that mutations in the so-called “breast cancer gene” BRCA1 were naturally occurring component of the human body that had been discovered, rather than an invention that could be patented.

But Medicines and some intellectual property lawyers say the decision could slow access to new drugs.

Ms D’Arcy said she was extremely excited and relieved.

“I have had breast cancer twice, and although mine’s not genetic, I’ve always been of the view that you can’t own a part of me, or anyone else,” she said.

BRCA1 mutations put a woman at far higher risk of breast and ovarian cancer. Many carriers, such as actress Angelina Jolie, choose to test for it so they can have preventative surgery if they are a carrier. The patent was held by US company Myriad Genetics, which had licensed it for use in by a company called Genetic Technologies.

Maurice Blackburn principal Rebecca Gilsenan said the case would end years of uncertainty for people with BRCA1 mutations.

“The High Court has found that a company cannot lay claim to ownership to our genetic information,” she said. “[It] recognised that genetic information is not something that is ‘made’ or ‘artificially created’.  Myriad did not ‘create, make or alter’ the genetic code. This is what we have argued since the outset,” she said.

“Justice Gordon stated that the specific mutations and polymorphisms are indicative of a predisposition to breast cancer and ovarian cancer is a fact. That fact existed before Myriad worked it out.”

“This judgment invalidates the patent on the BRCA1 gene. It provides certainty that testing and research on the BRCA1 gene cannot be monopolised in and can be carried out widely and cost-effectively.”

Director of Public Policy at Cancer Council Paul Grogan said the decision would hopefully also give certainty to other people who needed genetic testing.

“It has been a very emotional and difficult journey, and I really want to acknowledge the courage of Yvonne D’Arcy in this case, as it really was a David and Goliath battle,” he said.

Mr Grogan said cancer patients had been in limbo since 2008, when Genetic Technologies had written to providers of public testing programs to tell them that they could no longer test for BRCA mutations as it was enforcing its patent. It eventually withdrew the claim after public outcry.

“They only did it because it was a PR disaster,” Mr Grogan said, noting that other cancers that attracted less advocacy and support may not have been able to win a public relations battle.

“[It] was always our biggest concern, that because of the out-dated nature of patent law, that we were going to see [it impact on the] rapid acceleration in the development of genetic testing and the importance of biomarkers for the risk of future diseases.”

Matthew Rimmer, a professor of Intellectual Property and Innovation Law and the Queensland University of Technology, said the victory would be a boon for research and innovation.

“There was concern in the scientific community about the threat of patent litigation,” he said. “The ruling will also be an important precedent for public health administration. It will mean that the provision of genetic testing will be for public good, rather than private profit.”

He said the ruling was also likely to be important in regards to other international cases, including one underway in Canada challenging a patent on the mutation causing Long QT Syndrome, a rare heart problem.

“The pharmaceutical and biotechnology industry will be upset about the decision,” he said. “The biotechnology industry will perhaps consider an action under investor-state dispute settlement – like big tobacco did after losing the plain packaging case.”

But Grant Shoebridge, a partner at Shelston IP who has a PhD in immunology, said he believed the judgment may still leave room for patents on genetic material that had been isolated from nature.

Maurice Blackburn had previously suffered two crushing victories, with the Federal Court first finding that genes are the same inside and outside the body, but the act of removing them means they can then be subject to a patent.

On appeal, the full bench of the Federal Court found in February last year overturned the first decision, but decided that the very act of isolating a gene from the body means that it is no longer in its natural state and so is subject to a patent.

Dr Shoebridge said naturally occurring materials other genes that could be isolated could still be patented, and it may if that genetic material isolated was then used as a product rather than a test it would still qualify.

“I think there would be a strong argument that would probably still be eligible,” he said.

He said patents on genetic material did not stifle innovation, but researchers needed the money that came from patents to ensure that they could develop new treatments.

Krystal Barter, a BRCA mutation carrier and founder of Pink Hope, said the decision was a win for the people, while Sally Crossing from the group Cancer Voices said she was thrilled.

“After all these years of being involved and thinking this was the commonsense ethical thing to do, it really gives you faith in the judicial system,” she said.

The Consumers Health Forum said gene patents were an “indefensible barrier” to both research and ultimately patient treatment, as medicine became more personalised it was more important than ever the patents were overturned.

High Court case challenges government’s power to run offshore detention centres

The detention centre on Nauru. Photo: Angela WylieNauru rape victim begs Malcolm Turnbull for abortion in Nauru ‘safer than ‘, local justice minister claims
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The n government asked Nauru to establish a detention camp, organised a perimeter fence to keep people inside and effectively controls the detention of asylum seekers at the island, the High Court heard on Wednesday.

This argument is central to a legal challenge to the lawfulness of n-funded detention centres at Nauru and Manus Island, which argues the federal government does not have the power under the constitution to detain people in other countries.

But lawyers for Immigration Minister Peter Dutton and the government’s detention centre operator, Transfield Services, say the centre was established under Nauruan law, and a new “open centre” arrangement means asylum seekers are no longer detained.

The test case is being run on behalf of a woman from Bangladesh who was brought to from Nauru in August last year for medical treatment. Her daughter is now 10 months old and supporters say the mother is “terrified” of returning to Nauru.

Cases have also been brought for about 200 people who have been detained offshore and are now in temporarily, including men who have been victims of violence on Manus Island, women sexually assaulted on Nauru, and more than 50 children.

The case, which was heard by the full bench of the High Court on Wednesday, followed the Nauru government’s decision on Monday to fling open the gates of the detention camp to create an “open centre” 24 hours a day.

Counsel for the Commonwealth Justin Gleeson SC said asylum seekers were now “under no obligation to remain at the centre” and it is simply an optional place of residence.

However counsel for the plaintiff Ron Merkel QC told the court the laws surrounding detention on Nauru remained unchanged and a “critical event” might occur that caused the Nauruan government to say “the open centre is now finished”.

Mr Merkel told the court that through a contract with Transfield Services, the Commonwealth funds, controls and implements the powers of detention. The plaintiff claims this contract is unlawful and invalid.

Mr Merkel questioned if Nauru had any involvement in the day-to-day operation of the centre, saying “this is effectively detention provided … at the will of the Commonwealth”.

Lawyers for the plaintiff submitted to the court that the Commonwealth caused the detention of the woman by asking the Nauruan government to create the camp and selecting who is detained there.

The Commonwealth procured the construction of a perimeter fence and other security infrastructure that kept the detainee inside, and applied and paid for a type of Nauruan visa that required her detention.

Commonwealth contractors controlled her movements and if it weren’t for the federal government, Nauru “would have had no interest in the detention of the plaintiff,” the submission said.

Lawyers for the Commonwealth submitted that the plaintiff “lacks standing to challenge” the Commonwealth’s conduct, and said the conduct is authorised by the Migration Act and other laws.

They say under the law, the woman should be taken to Nauru “as soon as reasonably practicable”.

Mr Gleeson told the court that the woman would be free to come and go from the detention centre should she return to Nauru, but would require separate permissions to leave the island.

He asked the court to reject the plaintiff’s claim that Nauru centre was “the Commonwealth’s detention”, saying this would mean Nauru had become a “territory” of .

Mr Gleeson said the logic of the plaintiff’s case meant no arm of the n Commonwealth has the power to ask another country to process asylum seekers, if this would involve detention – even though has the power to detain asylum seekers onshore.

The hearing continues on Thursday.

Outside the court before the hearing, Human Rights Law Centre legal advocacy director Daniel Webb said the case looks at the lawfulness of both past and future detention.

“Irrespective of [the open centre] changes there remain important and untested constitutional questions about the power of the n government to pay and control the detention of innocent people in other countries,” he said.

“Without doubt the questions at the heart of this case really strike at the core of the current offshore detention arrangements … the answer to these legal question will have significant implications going forward.”

Mr Webb said while the government has the power to detain people in and remove people from the country “it’s quite an extraordinary thing … to then fund and control the detention of those innocent  people in the territories of other countries and it’s that detention and that spending that this case challenges”.

” should not be warehousing anyone on remote Pacific islands, especially not 10-month-old babies.”

He welcomed the open centre policy at Nauru but said “allowing people the freedom to go for a walk” does not address the “fundamental injustice inherent in leaving them languishing indefinitely”.

Mr Webb said under the separation of powers between the courts and the government “there are very clear limits on the power of the government to lock people up … the question is are those limits exceeded by our government’s involvement in detention offshore”.

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