Telstra cuts jobs amid market woes28/05/2019 - Author: admin - Comments are closed
The changes will be the “most substantive” for 10 years: Telstra Chief Operating Officer Brendon Riley. Photo: Rob Gunstone Customer confidence is unpredictible: Chief Executive of Myer Bernie Brookes. Photo: Matthew Piper
Telstra is poised to make deep cuts to its 30,000 strong Australian workforce, amid a slump in consumer confidence and falling mining investment.
The telecommunications giant unveiled a sweeping overhaul of the divisions that contain half its staff on Wednesday, in a move that could lead to substantial job losses.
The announcement came as federal Treasury and the new Parliamentary Budget Office blamed both sides of politics for Australia’s slide into a structural budget deficit – a deficit Treasury warns is now likely to remain for another six years.
The news was a blow to government hopes that jobs growth would pick up outside the mining sector. Record low interest rates have so far failed to reignite the economy and the latest data will add to pressure for further rate cuts.
The government’s official commodity forecaster confirmed the resources investment boom had already peaked this year.
Cost blowouts had caused $150 billion worth of projects to be scrapped or delayed in the past year, the Bureau of Resources and Energy Economics said, as it predicted mining investment would decline from its current level of $268 billion from now on.
The Westpac Melbourne Institute index of consumer sentiment dropped by 7 per cent this month, from 104.9 to 97.6, a level where pessimists outnumber optimists.
The fall, which came despite this month’s cut in interest rates, was blamed on a budget that removed key benefits from households and forecast deficits until 2015-16.
It comes as the chief executive of Myer, Bernie Brookes, said that consumer confidence was patchy and there were no signs of a significant turnaround in overall sentiment.
”This is not a heyday for discretionary retail,” Mr Brookes said. ”We’ll continue to invest, getting ready for the consumer to come back but the budget as evidenced by the consumer sentiment is not particularly good.”
Although the overall reading of confidence fell sharply, a sub-index on whether now is a good time to buy a house jumped by more than 10 per cent in the month and is up by a fifth in the past year.
In its debut research paper, the budget office estimates that Australia will still be in significant budget deficit in 2016-17, even though the budget papers forecast a $6.6 billion surplus by then.
If so, the paper says, it would be only because mineral export prices remain unusually high, swelling tax revenues. It predicts the structural balance – which assumes long-run average prices and levels of activity – will then be in deficit by between $5 billion and $28 billion.
In a separate paper, Treasury gives similar estimates, saying the budget will remain in structural deficit until 2018-19, three years after it is officially forecast to be in surplus.
Telstra would not say how many jobs would be affected by the changes, but its chief operating officer Brendon Riley described the move as the ”most substantive changes for 10 years”. It will brief union officials next week.
with Glenda Kwek and Peter Cai
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