Transcript of Question & Answer Session Remarks and panel participation at the Bloomberg Voices event

Ed Johnson

Good evening and welcome. My name's Ed Johnson and I'm the Managing Editor for Bloomberg News in Australia and New Zealand. Before we begin the proceedings I'd like to acknowledge and pay respect to the traditional owners of the land on which we meet, the Gadigal people. It is upon their ancestral lands that the Bloomberg office here is built. As we share our knowledge, best practices and learning, may we also pay respect to the knowledge embedded forever within the Aboriginal custodianship of country.

We're really excited to be hosting this evening's discussion, ‘Australia in the Trump Era’, and it is my absolute honour to introduce Matthew Winkler, the co-founder and Editor in Chief Emeritus of Bloomberg News who will share his unique insight on the new administration and its impact on Australia and the global economy.

Matt founded Bloomberg News with Michael Bloomberg in 1990, when the financial information company Bloomberg LP was just eight years old. During his 25 years as Editor in Chief, Bloomberg became the only news organisation to receive every top award in every form of news media, including the Pulitzer Prize. Bloomberg News comprises 2,600 print and broadcast journalists and analysts in more than 100 bureaus across the world. We publish 5,000 stories daily on the Bloomberg Terminal and also on Bloomberg.com. We produce Bloomberg Business Week and Bloomberg Markets magazines, and also Bloomberg television and radio, a 24 hour network reaching more than 350 million households worldwide. Please welcome Matt Winkler.

Matthew Winkler

Thank you Ed for that introduction, and it's my pleasure to be here this evening with everybody in Sydney. And I also want to especially thank our panellists who will be on stage shortly for what I know will be a very lively conversation. So before we get going, all of us remember that phone conversation just a couple of months back between the Prime Minister and President Trump, which prompted us to think about what is Australia, where is Australia at this point.

And what's interesting is that the Australia of today, of this moment, is actually a very different economy than it was just five years ago. And that's why it's important to put that conversation in the context of Australia today. So let's begin with what's happened since five years ago.

The most pronounced trend that we're seeing is that Australia as an economy has diversified unlike any developed economy in the past five years. It's still very much an economy rooted in resources. But what we're seeing is industries have become much more significant, other industries, and among the 200 members in the ASX S&P Index, which is as everybody knows the largest publicly traded companies in Australia, there are now barely 17% of the companies that are so-called materials, that they represent about 36 companies. But that's down from 62 companies just five years ago, which was 26% of the Index.

If we look at energy, energy today is just six companies, where it was 12 companies five years ago. If we look at healthcare today in Australia, it's 19 companies, where it was nine companies just five years ago. If we look at consumer discretionary companies there are 29 today, and there were 23 five years ago. And there was just one technology company in this Index five years ago, and today there are seven. And what shouldn't come as too much of a surprise to people in this room, today there are 50 financial companies in the Index, and just five years ago there were 37. So clearly a lot has happened in the span of five years.

Something else that's happened is the world for the most part when it thinks of Australia thinks of Australia trading in tandem with the commodities market. They like to think that there is not only a historical correlation, but a perpetual correlation. Well, the reality is that correlation between the commodity price and the equity market in Australia has diminished to insignificance at this point, since the high at least in 2000. And that gives us some idea of how pronounced the change is.

I think everybody here appreciates that Australia every year, when one looks at the World Bank data, shows up as one of the places in the world, one of the 10 places in the world, that is easiest to start a business, and that is easiest to do business. And those two things together are actually pretty important in explaining what's happened to Australia over the past five years.

Healthcare has been the best performing industry this year as an equity. The shares collectively have gained 13%, it's made healthcare the best performing industry in the country. If we looked at just returns in total dollars, Australia's healthcare is 19%. Now, what's interesting about that is that it is a much better return that the 60 or so companies in the US that have by comparison a return of 8%. And it's also better than the 132 companies that make up the MSCI, World Healthcare Index, which returned 9%.

Even with that, investors are paying a 30% premium to acquire Australia's healthcare companies when compared to their global peers, and that's on a price to earnings basis. So the average premium over the past five years is about 32%, and despite the performance of healthcare so far this year, they're actually still below the average valuation relative to their global peers. So that presumably means there's a little bit more room to go there.

When we look at the banking industry we obviously see it's become a much more significant part of the economy. And is that a good sign? It probably is, for the following reasons. When we look at what the growth has been of this economy, and we put it in the context of the group of 20 countries, Australia had the 10th largest growth in GDP, gross domestic product, in 2015. Last year it was number five. And if we go to economists surveyed by Bloomberg, they're forecasting that this economy will grow 2.5% in 2017, 2.7% in 2018, and 2.9% in 2019. You put those forecasts together, that's the best outlook of any country in the G8 over the next three years.

Why is it happening? Part of it might be explained that the fundamentals in Australia look pretty good. Again, by comparison to other developed economies, the country's debt to GDP is 46%, that's the seventh lowest among the 25 developed economies. And when we look at the 95 companies of the 19 countries of the MSCI World Bank Index, and we take a look at banks in particular, the six Australian banks are the lowest non-performing assets to total loan ratio, it's 0.53%, that's the fourth highest net interest margin, 2% in the third greatest forecasted return on equity, which is 12.4%.

When we look at the economy, again we have to take into account the currency, and of course Australia always has had a challenge not having a reserve currency. Having said that, when we look at the implied volatility of the Australian dollar, which could be another way of saying, a measure of showing how uncertain investors might be about the country, the implied volatility has declined 17.6 percentage points since 2009. And that drop actually, which is a sign of increased confidence, is actually the best among the G10 countries.

And when we look at debt, the bonds sold by Australian government and companies together produced a total return of 5.3%. And that puts Australia right now as the best issuer among developed markets. The World Benchmark Index gained 1.7%, and this is using our Bloomberg Barclays Global Aggregate Total Return Index. The country's best performance are United Energy Distribution, 9.6%, and Qantas Airways, 9.3%. If we look at the industrial sector bonds, they provided a return of 9.2% total return this year, that's the best performing bond issuer in Asia, and if we look at the five issuers in the country, they're providing transportation or construction services which is another way of saying infrastructure.

Money managers that we talk to and we survey and we look at at Bloomberg around the world. Among the 61 companies in the Bloomberg Intelligence Global Large Investment Management Index, 19 of them have mentioned Australia during their earnings calls in the past six months, and all of them have talked about it in a favourable fashion.

Perhaps the indicator that I like the most, which kind of puts it in perspective, we look at i-Shares, MSCI, Australia exchange traded funds. This is the world's most liquid exchange traded fund investing in Australian equities. And it's attracted a record amount of money since May 2013, and the money keeps flowing into this fund. The white line in this slide is commodity price, and the orange line is showing you commodity prices are stagnating, and the white line is the money flowing in at the same time.

So that's just a quick snapshot of Australia right now. And it's a nice way to segue to the most important part of this evening, and I'm honoured to introduce Bloomberg Television's Haidi Lun, who will be moderating this evening's discussion. Thank you very much.

Haidi Lun

Thank you so much Matt for those comments. It's been very refreshing given the news cycle being what it is that we talk about Trump essentially every day all day to get an objective or an outsider's perspective on how all of this interrelates to Australia's economy being as vulnerable, exposed or benefiting from global trade as we do.

Without further ado I'd like to introduce and bring on stage a really wonderful panel of speakers that we have for you. Elizabeth Gaines is the Chief Financial Officer at Fortescue Metals Group, FMG. It's wonderful to have you with us. We also have Alexis George who's a Group Executive, Wealth Australia for ANZ joining us as well. Dr Alexandra Health of the RBA, the Head of Economic Analysis at the Central Bank there. And last but not least, and I'm going to pick on you first because this is of course all about Trump, from Twitter Australia, the Managing Director, Suzy Nicoletti. So if you guys would like to come on stage and join us.

Suzy, I've given you a little bit of warning, and maybe you knew that we would start on you, given that this is about Trump and how Australia deals with this new normal, if you will. I mean, we talk a lot about markets, and it's certainly unprecedented in that not just as news makers, not just as journalists, but market participants, investors, are checking Twitter to see what the US President has said. We're in a pretty good time zone to be able to react and actually make investable decisions based on that, and you see that from auto makers to manufacturers really reacting and making business decisions based on just a few, 140 characters or less. What I want to know, has that changed the nature of your business, have you seen a surge in interest? I know your CFO said as much, but also said that in terms of user growth it actually hasn't impacted very much.

Suzy Nicoletti

Yeah, so that's right. So a couple of things on that in terms of is Trump making Twitter. We've done quite a bit of work, he really has done a bit on the platform, and after we did quite a big analysis we actually did see that it was really our product roadmap that was put into place that drove the majority of the growth, so that's why we've actually been seeing an increase in users over the past several quarters.

But in terms of Trump in and of himself on the platform, he has done a lot, he has generated conversation, he's not the key driver of the growth on Twitter, but I think you get a couple of things with Trump. You get pure authenticity. Obviously he likes to get his unfiltered messages out there, and that's of interest. And when you think about the audience you find on Twitter, firstly you have a lot of global leaders, so 90% of global leaders are on Twitter. So you get Trump's message, you also get a lot of people having discussions around it, and then the nature of the platform in and of itself is one where people come together to discuss and debate and have conflict. So it's absolutely a driven conversation, there's no doubt about it, and a lot of people follow him just to see what will happen next. But he wasn't the core driver of our overall growth as a company.

Haidi Lun

Does it change the nature of the game for policy makers, for political leaders, but also for businesses? I mean, I'll throw out to Alexis. Does it make you as a business leader feel the need to engage more on social media? I mean, there are obvious pitfalls to doing that as well.

Alexis George

Look, I think there are pitfalls, and we're all very aware of those, but we're living in a world where I think it's impossible not to engage in social media. Our staff are engaging in social media. Our customers are engaging in social media. And for me as a business leader, that's where I can get the temperature check of what's going on, and clearly there's a lot of debate around trust et cetera. Social media is that check for me. And quite honestly I wouldn't get out of bed in the morning without looking at what had happened, and Twitter's a great way to see it in 140 characters.

Haidi Lun

Dr Heath, we've seen members of the Fed in the US doing Q and A sessions on Twitter, and that's been wildly popular. It hasn't all necessarily or in fact any part of it really been on monetary policy, but it has been a way to engage the audience. Are we likely to see RBA members on Twitter any time soon?

Alexandra Heath

Well I think we're in a slightly, well, I would say that a lot of our credibility comes from the consistency of our message, so I don't think you're going to see a free for all on Twitter. But clearly just as Alexis said, it's really important for us to engage with our audience, which is the Australian people, and the Australian people includes people who follow things on Twitter. So I think it's clearly an important medium that we have to understand and be able to use effectively to be able to communicate the people that we need to communicate with.

Haidi Lun

Suzy, clearly this is a key platform for the US President. There are a lot of issues that I think with previous administrations perhaps we haven't had to think about. So President Obama for example had to give up his personal accounts, there's clearly security issues, but Trump insists on still tweeting very openly from his personal Android. Is there, to the extent that you can disclose to us, additional security measures that are being taken, or is his account just like any other? Because you'd think that if there was some sort of hacking incident that there would be enormous implications.

Suzy Nicoletti

[Unclear 00:18:36] with some of his messages. But I think yes, I think that we take security very, very seriously on Twitter, and we do give advice. I know one thing that we have talked to the White House about is the two step authentication program. But outside of that, I can't speak too much of the security, there's passwords, there's updates, just like every other account, and I think he's willing to work with the platform just to have that unedited message and unfiltered message out there.

Haidi Lun

I'd love to know if he ever just forgets his password, or logs himself out and has to provide his mother's maiden name or something. The other aspects that we talk at length on Bloomberg Television, at Bloomberg News, is this so-called ‘Trump trade’, whether it's a misnomer or not, the reflation trade that's happening both in Asia and of course in the US. These expectations that he's going to come through with infrastructure spending, with pro-growth policy, I'll start with you Elizabeth, are you building that into your forecast in terms of a potential demand for Australian commodities?

Elizabeth Gaines

I think our focus is very much in China. 97% of the commodities that we sell are sold to China, and China produces 50% of world steel production. So the comments from Trump around infrastructure spending I think are broadly positive. However our focus is very much on those growth fundamentals of China and the broader region that we're in. But overall, broadly positive.

Haidi Lun

Yeah, in terms of a broad boost in sentiment, you mentioned China, and actually one of our audience members, Steven, who's the Chief Economist for Deloittes China said something very interesting, that Australia has been benefiting off bad policy in China. So to that respect do you expect greater reforms in Beijing to have an impact on your business, or do you think this stabilisation narrative will continue?

Elizabeth Gaines

Look, I think, I mean, there's been supply side reforms, so inefficient steel mills closing down. But the production has actually been relatively stable, so we're not necessarily seeing a deterioration in production. There's been capacity restraint, there's the one belt, one road. So we're seeing demand for infrastructure and demand for steel as broadly flat to some growth. And we're also seeing that the supplier demand and the cost curve is largely in balance. So there's a lot of suppliers coming from the global low cost producers, and there's quite a good balance in that curve, and the shape of the curve is very healthy, so we're actually seeing that the fundamentals and the settings are positive for commodities and for our business.

Haidi Lun

Alex, how much has this unexpected second wave of the mining boom actually surprised policy makers at the RBA?

Alexandra Heath

Well, I think a part of the answer to that question is around China. So I think a part of being able to predict what's been happening over the last couple of years comes down to our ability to be able to predict would could have been expected in China. And I think one of the things that's quite interesting about China is how policy driven a lot of the demand is. So you didn't mention residential construction, which is actually the largest source of demand for steel in China, and there's quite a clear relationship between policy decisions and activity in the housing market and the construction sector, so these things are always going to be a little bit difficult to predict.

I think the other aspect of the steel iron ore market that was a little bit difficult to predict was the high cost producers, because the cost curve has been mentioned, Chinese production of iron ore is right down the high cost end, and I think it's probably fair to say that our initial expectation would be that as prices started to fall, that some of that production would come out of the system, and it really didn't to the extent that we might have predicted. And again that's tied up with policy decisions in China about what's important, is it more important to remove the excess capacity, for example, or is it more important to employ people because social cohesion is a really important feature of the Chinese policy maker's objectives. We know that iron ore and steel mills tend to be vertically integrated, they tend to be very closely related to the state owned sector, and they're quite geographically concentrated so to do something very quickly on that margin risked quite a bit of social dislocation, and I don't think we had fully appreciated that.

Haidi Lun

You bring up real estate, and clearly that is everyone's favourite water cooler discussion in Sydney, in Melbourne, and probably for different …

Female

In China.

Haidi Lun

Yeah, in China, in Hong Kong as well. But it feels like part of what drove us to a Trump election victory was really this idea that he appealed to a part of the electorate in the US that felt, despite a lot of economic indicators to the contrary, what the Fed was saying, what the Fed is now doing, that they missed out on the economic recovery in the US. Housing affordability is clearly one of these hot topic political buttons. Do you think that the issue when it comes to this two, three speed housing market that we have, is potentially going to drive Australian voters to some sort of populous conclusion?

[Talking over each other]

Haidi Lun

I think you're the political commentator here. That's a really difficult question.

Alexandra Heath[?]

Yeah, I mean, if you look at housing markets in Australia, there are clearly different dynamics playing out in different parts of the country. This was mentioned by the Governor last night, at the end of the day it's about supply and demand, and different parts of the country are facing different demand conditions, and the supply constraints are different across different parts of the country as well.

So I'm not quite sure how to relate this back to the Trump part of the question, but I think some of the differences in demand conditions in Australia are clearly related to the structural change that we're experiencing as a function of the end of the mining investment boom. So if you look at the demand fundamentals of the Western Australian economy, the population growth increased very dramatically through the period of time where people needed people on the ground in Western Australia to do the mining investment. And as that's come off, the population growth in Western Australia has come back really quite significantly. So that's an important part of the story for Western Australia.

So I guess in that sense structural change, which I think is what you were referring to as being as part of what was influencing the politics in the US perhaps, has been a feature of Australian, the macro-economy if you like, but I think one of the things that we have experienced is that the labour force has been quite responsive, and so you have seen people move from Western Australia to get jobs on the east coast. People that perhaps moved to Australia from places like New Zealand have gone back to New Zealand. So there's been a lot of adjustment, and it's been relatively painless. I won't say it was absolutely painless, but I think relative to our past history we've done a relatively good job.

Haidi Lun

One of the other things that President Trump has clearly been focusing on, although it was on his list of things that he said he was going to do on day one of his presidency, and he's still trying to get around to it, we're still trying to work out what kind of de-regulation he's planning to do when it comes to the financial sector. We expect that some chunks of Dodd Frank will be dismantled, it's not really clear which areas and to what extent. But Alexis, in terms of your perceptive, do you think that is going to have a trickle down effect to Australia, the banking sector here, or conversely do you think that some things need to be deregulated? Is that a conversation that we should be having?

Alexis George

Look, I think we should be proud of what's happened in Australia, that actually we're an extremely well regulated country in terms of the financial system. And you look at the statistics there about how important we are to the Australian system, I don't think we're in a situation where we want to see destabilisation of that. I don't know what's going to come out of these reforms, because we know there's a lot of rhetoric. What actually happens I think we have to wait and see. But from an Australian perspective I think it's important that we maintain a good regulatory system, keep the financial system very strong, and ensure that the economy remains strong as a result.

Haidi Lun

We are on the eve of this much anticipated meeting between President Xi Jinping and President Trump. I guess just throwing it out there, what are you watching for, and I guess what are the key risks and how that could spill over to the Australian economy?

Elizabeth Gaines

Look, I think it's very difficult to predict what might come out of that in terms of we could wake up and there's a tweet about something. Personally I think it's probably broadly positive that there is a meeting taking place, I think first and foremost, and I think there's been a lot of talk in the early days and in the lead up to the election from Trump around protectionism policies. When you look at globalisation more broadly, there are companies that are truly global now, just government policy isn't necessarily going to change that. So I think the fact that there is a meeting, that there's a recognition that some of these trade volumes are so significant now that you can't just necessarily cut it off. So the fact that it's a meeting is broadly positive. What might come out of it, I think we're yet to see.

Haidi Lun

I'm always curious about, especially over the past couple of months you see I think on the Bloomberg there's a great, you know, it's a bit tongue in cheek, but there's those two indices that you can track, companies that have done well out of Trump's tweets and policy, and companies that haven't. I think one's called ‘Drain the Swamp’, and the other one's called the ‘Oligarch's Index’. But it really is a whole new playing field when it comes to how corporations make decisions, because you've seen for example companies like [Underama], the stock price plunge, making some sort of, what's perceived to be an alliance with the administration. Is there I guess the pressure to take a stand, to become more political in this day and age?

Female

Well, I think as large organisations there's an expectation of us to be socially responsible. I'm not sure if that's taking a political stance, but definitely taking a stance on issues broader than perhaps what we all individually focus on. So I think there is a community expectation around that now, and we've seen some of that debate playing out recently. So I do think that community expectations of us as organisations is changing dramatically, partly because of social media.

Haidi Lun

Because I suppose it sort of complicates that when you do have a President who has made his views on things like immigration, on women, quite clear, is there is kind of a lot more pressure for a company to take a strong political position?

Female

Well, I mean I think these are social issues that he's commenting on, and I think there's an expectation of us as large corporations to take some positions on social stance now. Diversity, inclusion is obviously a very topical one at the moment, and as a company we've taken some stands on that. So I do think there's some community views. Whether that's political or not, there's a difference. But on social issues I think it's important for us to take some stance.

Haidi Lun

Yeah, Suzy, you know – Elizabeth?

Elizabeth Gaines

The only comment I was going to make around this strong engagement between business and community, and I think that's been part of the challenge around some of the US politics, the way that's played out, and I think there is a really good opportunity for businesses in Australia, and certainly large businesses, to demonstrate genuine engagement with community, it's not that us and them. I mean, at Fortescue we're very focused around that, because we operate in remote regions. So I think actually mining companies are actually quite good at it, because they have to operate in remote locations and deal with native title holders, and very much about providing something back to the community. And it's genuine, it's not monetary necessarily, it's employment, it's training, it is jobs. So that's really been a key focus. And I think that it's a really important attribute for Australia and for businesses to take as a leadership position, is that engagement with community.

Haidi Lun

Suzy, I'm going to put you on the spot again, because Twitter is really, while there are certain segments of it that have been incredible for really robust discussion, and as you say, conflict and debate, it has also been in some parts kind of a cesspool when it comes to abuse and harassment, and a lot of that tends to be directed at women. How does Twitter deal with something like this? Because it is pretty hard to police, just ugly sentiment that gets put out there.

Suzy Nicoletti

Sure. So being on a live public platform, yes, we absolutely acknowledge that there are some conversations that we are working as our top priority to actually get under control. And so this year in particular we have made a number of strides as we are moving faster than ever, we're making it harder for accounts that are shut down to come back, we're removing notifications from timelines, it is absolutely a top priority for the company.

But things that we are doing is we're trying to also harness the positive power of the platform. So thinking of the good things coming from it. So International Women's Day, the hash tag ‘she inspires me’ trended. And it gave women globally and in Australia an opportunity to come together and share and celebrate one another, and people that inspire them. And for me personally I followed that hash tag all day, and found a whole bunch of new followers, and people to connect with that I thought were incredible women.

Another one we're working hard with is a hash tag from Dr Kristin Ferguson called ‘celebrating women’, and it's one we're promoting at Twitter and it's a way where women can share in some of the accomplishments of other women, and it can be great, something big, and it can be something day to day. And we're working hard to make sure that we acknowledge that there are some issues with safety, we're doing everything we can, but in parallel we're pushing projects where we can bring communities together to share in good work.

Haidi Lun

What about accuracy? I mean, fake news, right? We've seen Facebook really be forced to step up and try and deal with the dissemination of inaccurate or just straight up false information. Is there a responsibility on the platform, given that we are dealing with the leader of the free world whose chosen way of communication is through Twitter, and as we've seen in the past it's not always accurate.

Suzy Nicoletti

So in terms of vetting what Trump tweets about, as long as he follows our policies, and adheres to our guidelines, we technically can't do anything to his particular handle or the messages he chooses to push out. In terms of the accuracy of the platform, it's one where people come to follow brands, so the majority of regular users come to do that, and they're looking for information and they're following fantastic brands like Bloomberg to get their news, and they go to trusted sources. It's not so much one where you go to find your friends. So that's how we keep the authentic aspect and accuracy of the platform intact.

Haidi Lun

Alex, I want to talk about the RBA has been very prominent in its push to hire more women in senior roles. At what level does that conversation happen? I'm just curious about if there is a regular analysis or conversation or debate about trying to push that?

Alexandra Heath

Yeah, absolutely. I would also say that we haven't had a sort of epiphany where we've decided it's a particularly good idea to hire senior females. I think for a long time the fact that economics, macro-economics and finance is a male dominated area as a general rule, we have been aware of that, and there have been discussions around that for a very long time. And so I've been a member of what was the Diversity and Inclusion Committee at work, where we have had these discussions over I can, well, personally say at least a decade. So we have had the discussions around ‘Well, what do you do if your pipeline isn't as representative as you would like it to be?’, had conversations about ‘Are we measuring merit appropriately?’ and things like that. It's become a little bit more public recently I guess with the promotion of Lucy.

And interestingly Alexis made the comment that there seems to be much more momentum behind the diversity inclusion discussion generally, and at the Reserve Bank we've actually moved away from the Diversity Inclusion Committee of old, and now we have a whole range of employee reference groups, resource groups. So there's a gender equality one, there's an LBGTI plus indigenous race and ethnicity, disability and flexibility. I remembered them all. So I'm actually executive sponsor of the gender equity, ERG. And so I can honestly say that the conversation's, it's a much more deep thing than just superficial, so we have representatives, both male and female I will say, from all kind of areas of the Bank. So we have people in IT and facilities management as well as economists, so we don't want to be seen as just economists. And we have pretty meaningful discussions around what are the issues that we think we need to be addressing, and I think the conversation's gone well past questions about explicit discrimination to much more subtle questions around unconscious bias and how that might play out in the workplace.

And just as a pick up on the Trump thing, we actually had an event with Betsy Stevenson, who's an academic in the United States, and she actually made the comment that she found the reaction of people to the somewhat polarising way that President Trump presents things as being quite positive, so the Women's March, for example. So the fact that he's quite polarising has actually motivated a whole lot of people to become engaged in a whole range of topics that perhaps they had become disengaged from. And things like Twitter and social media more generally are one of the avenues that people have been able to kind of coalesce around that sort of response reaction. So there's definitely positives.

Haidi Lun

Elizabeth, I'm keen to get your view, because quite clearly a woman in such a senior role at a very traditionally male dominated sector, that's quite an interesting perspective to be coming from.

Elizabeth Gaines

Well, I think whilst it is a traditionally male dominated sector, Fortescue's always embraced diversity. So we actually have a very broad representation of female participation, and for a mining company, and if you ever have the opportunity to go on site, you will see truck drivers and the women doing what people would regard as traditionally male roles. So I think the approach to diversity is part of a unique culture that was established with the company, and it's quite particular to Fortescue. So as a business it's not unusual to see a large number of women. We also embrace diversity with 15% of our workforce Aboriginal, so we're very focused around diversity.

In the broader sector, I think there's still a way to go. But I do think there's a general recognition across corporate Australia that if you limit your pool of talent to only one portion of the population, then you're just not getting the best, because you really need to be broad in your approach, and be selecting from a large pool of people.

Haidi Lun

Alex, you brought up this idea of unconscious bias, and I wanted to ask Suzy how that plays out in the tax sector, because there has been a lot of pretty negative headlines and high profile analysis of how there is this kind of ‘bro’ culture when it comes to Silicon Valley. You've seen some of these stories about the Uber executives and just kind of generally behaviour that perhaps you wouldn't expect at fully fledged corporations. Is that something that Twitter is aware of and trying to address?

Suzy Nicoletti

Yeah, it's a definite focus for Twitter as in anywhere else. So different ways that it's being addressed, we have our very, very public goals for diversity around women and under-represented minorities, more specifically getting about 31% of our female leaders into leadership roles, and we make those very public and have a huge focus behind them.

In terms of how we're shifting things internally, we're rethinking how we hire. So we have a really extensive unconscious bias training that's a top/down mandate, and there's a lot of focus and intention that went into it, and it was really interesting, even for me, and biases that I hadn't even noticed. So we're re-educating how people are approaching candidates, how they're looking at candidates. And it was really encouraging I guess for us, every global open country head role for Twitter last year was filled by a woman. So that was a really interesting result. I don't know if it coincided with the training, but it was great. And another thing that we do is we look at a pay analysis of women in under-represented minorities, and that's also published. So we make sure that there's an accountability I think behind what we're saying we want to achieve. And once you're within Twitter there's a lot of groups to help different organisations. So Twitter Open, Twitter Women, Twitter Parents, just to make sure that people feel comfortable and supported with whatever they're bringing into the organisation.

Haidi Lun

Alexis, was there anything that you wanted to …?

Alexis George

Yeah, look, I think it's really interesting that we're still having this debate, which means we still need to have this debate.

Suzy Nicoletti

Isn't it, yeah.

Alexis George

And it's great to see so many talented women sitting on the stage together, I must say. I think we still need to focus on these things and I feel really proud of what we've done at ANZ. I mean, we pushed the hash tag ‘equal future’ last year quite a lot, and I think the unconscious bias training is important, but it's only one facet, and the new research says without a whole system around unconscious bias, actu7ally it's just a confirmation that you have it, and it's kind of okay. So we need to build the systems round it.

At our organisation we ensure that there is a female in every interview panel, every interview panel, a woman has to be shortlisted for every job, and we ensure there's flexibility in workplace. But I think one of the really big changes that we've initiated is in terms of performance management, values are now a very large proportion of our performance management process, and I think that starts to change behaviours a lot as well. It's not just about financials, it's about values, it's about customer. And some of the work that CEW did recently was showing that really to ensure full inclusion it's the performance feedback has to be robust, honest, and to date the performance feedback to women is much more benevolent and not so honest, which is not helping them in developing their career. So we've got to change those systems as well, I think it's really important.

Haidi Lun

I'm conscious of time, so I think maybe now would be a good time to throw it out to the audience, if anyone has any – I suspected so.

Question

So I find it intriguing that Dr Heath said paradoxically maybe Trump is a catalyst for the sort of accelerated understanding of how important diversity is in the workplace, and overall generally in life. And I just wonder if that's a shared perspective? Maybe that's the silver lining, I don't know, but I'm just wondering if that is actually a trend that we're seeing that comes out of the Trump era?

Alexis George

Well, it certainly creates debate, and I suppose where there's debate on topic is positive.

Elizabeth Gaines

I think there was a growing awareness in Australia already amongst corporate Australia at least of a genuine need to be more diverse. If you looked at Australia boardrooms, I don't know, five, six, seven years ago, it would have been fairly much a homogenous group of people. And there has been a real push for diversity. And studies have shown that companies have a more diverse, from the Board, all the way through the company actually perform better. So there's evidence to support that. But I think combined with growing awareness, use of social media, it just accelerates the discussion and the debate, and I think promotes positive action.

Suzy Nicoletti

The hash tag for ‘Women's March’ had 25 million tweets, and so it was really a great hash tag to follow, and just see globally women coming together in multiple different countries and markets. So I did definitely see that.

Question

Hi. My question's probably more relevant for Elizabeth than Alexis. I'm just interested, I work in climate financial risk and climate policy, and one thing that happened quite quickly after the US election was that a lot of big companies came out and declared that they really wanted the US to remain committed to the Paris Agreement, and we've seen some really big announcements from large asset owners also supporting that in terms of how they invest.

And then I'm still starting to see this theme I suppose where maybe businesses are having to take up the bit of the slack where policy is falling short. I thought that same thing came up a little bit recently with the announcements by APRA and ASIC on the slight tightening of mortgage lending standards for the banks, and there was almost this response of relief from the big four, or at least one of them I think publicly indicated that. I'm just curious if you've got any reflections on whether that's something that you see happening, is where when the political debate gets really bogged down to the point that policy isn't actually functioning very well, that you actually have companies almost being forced to kind of step in and seek a more measured policy response?

Elizabeth Gaines

I think at times there's certainly a need to provide some, a voice to the debate, not necessarily drive the outcome. And in Western Australia just recently we had a state election, and prior to that we had a leader of one of the parties promoting the fact that there should be a tax introduced on two mining companies. So clearly when there are some of those issues that are quite particular to our sector and to industry, then I think that's when we do actually try to have a voice. But our view is very much to be fairly moderated in that approach, as opposed to driving home. I mean, we're one voice, we're a large company certainly in Western Australia and ASX50, and we employ a lot of people so we do have views and we like to contribute to debates. But I don't think we've yet seen a circumstance where we've had to step in and drive the debate.

Alexis George

Look, I think we're living in a world where customer expectations of us as large organisations I think is really changing, and as part of a large organisation, a large employer also, both our staff and our customers have expectations on us around diversity, around sustainability et cetera, and we're very publicly set our targets on all of those issues, and have them audited independently every year, and publish them for the wider audience. So I think it's important that we do continue to do that and to promote the debate about where these issues are going and what's expected of large corporations like ours. So I don't think we'd get to the point where we would drive debate, but I certainly think we need to be involved in that debate.

Haidi Lun

Is there a danger that that sentiment, that trend, can be unwound by the sheer force of politics?

Alexis George

Well, that's a hard question. Look, I think with social media it's just so much easier now to have debates about these issues. And the expectations of community are far more known to politicians now. On a daily basis we've been talking about that this afternoon, so I'm not sure that that's possible anymore.

Question

Hi. This is a question probably more for Alexandra, but if any of the other panellists have any comments I'd be interested. One of the things I've observed in the media in recent weeks is that Trump has been acknowledging the challenges of trying to get political change and regulatory change through the system over in the US, and obviously those hurdles appear to have been greater than he initially thought. Obviously I certainly wouldn't expect you to comment on what the Federal Reserve will do, but given that consensus expectations are for two to three rate hikes in the calendar year '17 from the Fed, if we see the policies that the market were expecting and the economy were anticipating from Trump taking longer to come through, if that leads to less rate increases from the Federal Reserve in the US, how do you think that would impact the outlook for Australia, the things that you're anticipating over the course of this calendar year? I mean, obviously it would have broad reaching implications particularly for currency, through to things like commodity, our competitiveness as a producer, so any thoughts you had on that and how that would change your view of our outlook over the next 12 months, I'd be interested. Thank you.

Alexandra Heath

I think in many ways you actually gave the answer to the question. So I think from our perspective we have to take a lot of what happens in the rest of the world as an exogenous thing. And as you pointed out it's a little bit difficult to be specific about what impact Trump policies may have, because we don't have details about what they are. And I guess the Fed is in a similar situation, they're getting the same information that we are presumably to a large extent in terms of what the details of the policies are, and they'll be analysing what effect they think that will have that will affect their forecasts, and that will affect their assessment of what they expect to do, which they publish in the form of the [dots].

And clearly if that changes, and if market expectations of what the Fed is likely to do also change, that's a key interest rate in the world economy, and I think from the perspective of Australia, any effect that may have on the exchange rate is probably going to be the first order effect. And as far as our approach to forecasting goes, we have an assumption of no change in the exchange rate we clearly think through scenarios on the what-ifs. But I think the bottom line would be that it would depend on what impact that had on the exchange rate, and we have a long history of understanding what exchange rate movements might do for the Australian economy, and clearly that depends on the source of why the exchange rate has moved. And I think we're pretty sophisticated at playing that out. So the short answer is it depends if it affects the exchange rate, then that would affect our forecasts.

Question

Elizabeth, in your view, when will the steel production in China would peak? Question two, Dr Heath. A lot of overseas observers do not believe in China's GDP statistics. So in Central Bank, what's the most important Chinese economic data you track?

Elizabeth Gaines

Do you want me to talk about steel production?

Alexandra Heath

You can start, before I move on to statistics.

Elizabeth Gaines

We've looked at some forward forecasts for steel production, and you can see the peak of steel production in the US took about 50 years. This is consumption per capita, largely. Or stock per capita. And that took about 50 years from the 1920s to the 1970s when the US reached their peak. And in relative terms to that, China's actually still at quite an early stage in that cycle. So the forecasts that we use, and they're actual external forecasts, so we source them from other sources, is showing that it will actually continue to grow, and that we're some way off from the peak, like a number of years, 10, 20 years. So there's still quite a long way to go before we reach that peak production.

Alexandra Heath

Yeah. In terms of answering the question about what statistics do we look at, in many ways it is a bit more difficult to read the Chinese economy, it's an emerging economy, the structure of it's changing fundamentally. We have a lot of experience understanding Australian statistics, and we know what the challenges there are, and the challenges for China are just that much greater. Generally speaking the answer to what do you look at, is it just one statistic, the answer is no, you have to look at a whole range of statistics. So yes, we look at GDP, we look at industrial production, we look at that on a value added basis and a gross basis, we look at electricity production, we look at trade.

So the bottom line is – I mean, I can go on forever at what we look at, but the answer is you look at a range of things, and if everything is pointing in the same direction and you feel more confident that the story that the data are giving you is right. If they're moving in different directions, you ask more questions and you look for more data that will give you a stronger sense, or more confidence in one story versus another. So I think it's a little bit more challenging, the actual how do you aggregate the bits is pretty much the same process for China as any other country.

Haidi Lun

I'd like to point out that our Bloomberg Intelligence China Economic Activity Tracker has actually in recent months been correlating with the official numbers, so if that's of any reassurance to you there.

Question

While it's very heartening to see the topic of diversity inclusion gaining so much momentum in your respective industries, I'd just like to find out what the panel's opinion is about diversity in Australian media as it stands today, particularly related to certain issues, hot button issues like say housing affordability, where having been a journalist myself, I know popular sentiment seemed to be that what was driving housing affordability was foreign investment, namely from China, and it wasn't in the most positive light. So what is your view on how the diversity in Australian media is working, and I think Bloomberg is exempt from this, being international, and how it shapes dialogue and debate in Australia?

Alexandra Heath[?]

I think one way of answering that question is to say that when we talk about diversity it does tend to get discussed in terms of gender or racial background or observable characteristics often. But what you're really trying to achieve, and if you go to the guts of what leads to better decisions and all the positives that we keep talking about is that you get a range of different opinions, and you get a range of different experiences coming into the process. So I wouldn't have thought that the media was any different to any other industry or institution in the sense that for you to have a diverse range of journalists bringing a diverse range of perspectives will bring together a much more complex and nuanced story than if you have a media that's all one group that will probably have one perspective, because that's their historical experience, and then you would presumably get a less comprehensive view of what the issue is. So I don't see it as being particularly different in that sense.

Haidi Lun

I would agree with that, but I also think, and we talk about diversity as more than women, but I think we have to be also prepared to talk in the media more, and I know when we started looking at how many women were in media, as well as reporting, it wasn't very many. So we tried to, I know internally tried to create a Notable Women program where we encouraged women to be more vocal in media and gave them a bit more training and support to do that, so I think it's a two way thing. Maybe we'll have one more.

Question

Hi. Just to revisit climate change, this is a question for Dr Heath. Recently we've had APRA come out and be more vocal about climate change issues, and it was at the end of 2015 that Mark Carney, the Governor of the Bank of England discussed climate change and financial instability. Is that something that we're going to see the Reserve Bank be more vocal on?

Alexandra Heath

Well, clearly climate change affects, or has the potential to affect financial stability considerations, and the reference you made to APRA was more in the context of insurance markets, and how do you think about the sorts of risks that you should be worrying about as a supervisor for that industry. I come from the monetary policy side more than the financial stability side, and so I guess climate change and the effects of climate change are either operating on a much longer timescale than we tend to be thinking in terms of, or in some sense it manifests itself as extreme weather events, or you could argue that climate change is a contributing factor to what's happening on the reef, and you can tell a story that says well, that's going to affect tourism, and that's an important industry for Queensland, and so what are the macro-economic, or potential macro-economic effects of that? So I think it's definitely something in the environment that we're making our forecasts within, but it tends not in a monetary policy sense to be the most important risk that's likely to play out in an 18 months to two year horizon, which is what we typically think in terms of.

Haidi Lun

I think we are running a little bit over time but I know there was one more question there?

Question

Thank you. To you Matthew, but only because it relates to the last question. But I wanted to know how successful you have found the quota for quotes that Bloomberg introduced that I believe was at your urging in 2014?

Matthew Winkler

With sourcing?

Question

Yes, in terms of including a female.

Matthew Winkler

Yeah, mutually, for everybody's benefit. I don't know if everybody can hear me. I'll just get a mic. For everybody's benefit, we like a lot of news organisations belatedly recognised that our content historically had a pattern of overwhelmingly quoting men as authorities, and recognised that that was out of date, to say the least, and totally unsatisfactory. So what we did, or what I did, was insist that at a minimum any story that could be considered enterprise beyond ‘this just in’ as a bulletin could not be published without greater diversity in the sourcing. And in fact the result was actually we got much more varied authorities in our reporting, and it actually made our reporting a lot better, which just sort of proves the point, because the data is inescapable on this subject, is that where there's greater diversity the greater, better outcomes, more success, and of course the data supported what we did. So it actually wasn't much of a surprise. The only thing that was a little bit dismaying is that it took as long as it did, and we finally got around to it.

Haidi Lun

I think we'll have to wrap up this part of the evening for now, but feel free to come up to any of our panellists, and Matt, if he's going to stick around for a little bit, if you have any more questions. But it's really great to see the turnout today, and a big thank you to all of our panellists today.