The National Electric Vehicle Strategy

Australia must accelerate its electric vehicle uptake in 2023, with government support only just starting to emerge.

Hammer Down

The rate of growth in the purchase of electric vehicles in Australia is slower than in other comparable countries due to a lack of policy to encourage their uptake, reports the CEDA’s Economic and Policy Outlook 2023. Transport is the second-largest source of carbon emissions in Australia and electric passenger vehicles (EVs) will play a critical role in decarbonising the sector, CEDA senior policy adviser Ian Hamilton says in the report.

Through its planned National Electric Vehicle Strategy, the federal government has committed to encouraging the take-up of electric vehicles, but in 2022 about 39,000 EVs were sold in Australia, or 3.1 per cent of the new car market.

“Its target for 3.8 million EVs on the road by 2030 implies adoption rates faster than we saw for household solar photovoltaic systems, an area in which Australia has been a world leader, thanks primarily to strong policy incentives,” says Hamilton.

Meeting this target will therefore require state and federal governments to introduce policies that promote take-up in the most efficient manner, a much larger variety of fit-for-purpose car models and more accessible charging infrastructure, he says.

Tesla’s Model 3 was Australia’s third-highest selling car in January this year, the first time a battery EV has reached such a level.

“Electric vehicles accounted for eight per cent of sales in April. This is well up from 1.1 per cent compared with April 2022. If you take all forms of electrification, that number has increased from 9.5 per cent to 15.4 per cent, and we know that this number would have been larger had the industry not faced global supply challenges,” says Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber.

Of the 82,137 vehicles sold in Australia during April 2023, five out of the top 10 models offer some form of electrification, FCAI data shows.

Weber says the data shows that “where Australians can afford a battery electric vehicle that suits their lifestyle, they will buy them”.

Utes and SUVs dominate the top slots in sales each month. Any consumer preference for utes and SUVs is an important factor to consider in the journey to a zero-emission light vehicle fleet, says Weber, because these vehicles are more difficult and expensive to electrify.

“If we want more zero and low-emission vehicles on our roads, then we must provide the necessary recharging infrastructure and move to implement an ambitious yet achievable fuel efficiency standard that will encourage manufacturers to allocate more of the limited supply to Australia,” he says.

While there is growing momentum behind the adoption of EVs in Australia, the challenge now is to promote rapid uptake in an efficient and effective manner, says Hamilton. “Australians have been quick adopters of new energy technologies in the past. Strong uptake will help cut our transport emissions and ease our transition to a net-zero economy.”

Peak performance

Since the 1950s, fewer people have made it to the top of Fortune 500 companies than have scaled Mount Everest (about 5000), says McKinsey & Co.

The number of CEO changes at US companies surged 49 per cent from 112 in January to 167 in February, up 11 per cent from the 151 CEOs who left their posts in the same month one year prior, according to a report by global outplacement and business and executive coaching firm Challenger, Gray & Christmas Inc. February saw the highest monthly total since 219 CEOs left their posts in January 2020.

A record 31 per cent of new CEOs were women, although 22 per cent of women have exited the CEO role so far in 2023, up from 17 per cent in the first two months of 2022, the report finds.

“More women coming into the top role than leaving is a great sign for businesses, as that number inches closer to 50 per cent. It’s still far from equitable, but companies [are] committed to diversity, equity, inclusion, and belonging, and we’re starting to see it unfold at the top,” says Challenger.

While there is no way to guarantee success, if you’re a senior executive who aspires to the top job, McKinsey says these points might increase your odds:

• Take a check of your motivations and expectations
• Elevate your perspective while boldly delivering results
• Round out your profile with humility
• Understand the CEO selection process and put your best foot forward.

Get ready for EOFY

It’s important that directors understand the current state of the business and boards need to be reviewing the financial performance from the past year, ensuring an audit is done and that the budget for the coming year is set.

The ASIC Directors and financial reporting information sheet provides an overview of general duties of a director, the company’s duty to keep proper books and records, financial reporting obligations, financial knowledge obligations and what the relationship with an external auditor should be.

Profits up, but insurers still under pressure

Rising costs and more regulatory and compliance demands leave insurers feeling the pinch. 

Insurers’ profits rose sharply in 2022 to a five-year high, KPMG’s annual review of the general insurance market reveals, with an industry insurance profit of $4.95b last year, up 42 per cent on $3.5b in 2021. Despite this upturn, driven largely by higher premium prices, KPMG is predicting a similar 10 per cent rise in premiums this year, as insurers seek to combat rising costs.

The review highlights some of the top insurance trends for 2023, noting cyber protection insurance continues to be offered by a small number of niche players, but is becoming increasingly difficult to obtain in the Australian market. It says future government action may need to be considered to provide protection in this space.

Significant investment has been made by insurers to date to comply with the new accounting standard IFRS 17. However, further investment will be required to successfully embed strategic solutions. Regulatory change continues to accelerate, leaving insurers struggling to keep up.

Enabling data-driven decision-making is one of the core pillars of the Australian Prudential Regulation Authority’s Corporate Plan. The review notes that APRA’s five-year time frame for the detailed data collection is ambitious and the timelines are more aggressive than those implemented by other global regulators.

Australian insurers are ahead of many companies in Australia when it comes to ESG, but behind the pack globally, according to KPMG. With the International Sustainability Standards Board expected to finalise IFRS S1 and IFRS S2 in 2023, ESG reporting is moving towards essential rather than optional, putting more pressure on Australian businesses. The review stresses that insurers need to continue to focus on digitisation, simplification, productivity, automation and operating model adjustments across all aspects of the value chain to drive efficiency and cost reductions.

To have or have not

The deep economic divide between Australia’s rich and poor will grow unless wide-ranging government policy reform is undertaken, warns a new paper released by the Actuaries Institute.

Not A Level Playing Field found that 80 per cent of people in OECD (Organisation for Economic Co-operation and Development) countries, and 70 per cent in Australia feel income disparities are too large in their nation. Australian income inequalities are mid-range by international standards.

Analysis by Taylor Fry actuaries Dr Hugh Miller and Dr Laura Dixie, found that inequality is significantly higher than in the 1980s, with the wealthiest 20 per cent of households currently having six times the disposable income of the lowest 20 per cent. These big gaps in income and wealth have translated into poorer social outcomes for low-income households.

 Compared to the richest 20 per cent of households, those living in the poorest 20 per cent of households were:

• 9x more likely to be an unpaid carer
• 7x more likely to have experienced homelessness and unemployment
• 5x more likely to have a child at risk of harm
• 4x more likely to have recently been unable to meet rent or mortgage costs
• 3x more likely to be a recent victim of crime
• 2x as likely to suffer psychological distress or die by suicide

Nature-related risks

Financial institutions are failing to grasp the urgency needed to address evolving natural challenges, according to a recent UN report.

Capacity building and improved resource allocation are key components for greater comprehension on the urgency of acknowledging and acting upon nature-related risks, says the Unboxing Nature-related Risks: Insights from the UNEP FI-led TNFD Piloting Programme report, published by the UN Environment Programme Finance Initiative.

The Taskforce on Nature-related Financial Disclosures (TNFD) was set up to develop a risk management and disclosure framework for organisations to report and act on evolving nature-related risks. Financial institutions are an important target audience for the framework under development.

The initial pilot data and case studies show many financial institutions, especially banks, have noted the need to improve their internal IT systems to sustain robust nature-related assessments. The report says nature-related risks are treated as a siloed subject within many financial institutions. The piloting exercise allowed for institutions to acknowledge the need of a varied set of skills across teams including risk management, data management, biodiversity expertise, sustainability strategy and financial product specialists.

One of the biggest challenges is that the climate-nature nexus and resulting financial risks deriving from biodiversity exposure for a given asset are not fully understood internally in financial institutions. The pilots aim to help financial institutions evaluate nature-related dependencies, impacts, risks and opportunities — supporting the shifting global financial flows towards nature-positive outcomes.

Held to ransom

Seven out of 10 medium-sized Australian organisations were victims of ransomware attacks last year, Sophos’s The State of Ransomware 2023 reports, higher than the global average of 66 per cent.

Attack rates fell from 80 per cent the previous year, but of the 200 Australian companies hit with a ransomware attack, data from the 13 organisations willing to reveal what they paid suggests the average (mean) payment was US$1,513,436 — up from the previous year, when 65 respondents revealed an average payment of US$226,863.

The survey of 3,000 businesses with between 100 and 5,000 employees across 14 countries discovered data was stolen in 17 per cent of attacks where it was encrypted. Of the Australian organisations that had data encrypted, 53 per cent paid the ransom.

Excluding any ransoms paid, organisations around the world reported an estimated mean cost of US$1.82m to recover from ransomware attacks.

Exploited vulnerabilities were the most common root cause of attack, followed by compromised credentials.

Stopping the scammers

The May federal budget allocated $58m to the Australian Competition and Consumer Commission (ACCC) to set up a National Anti-Scam Centre (NASC) over the next two years.

“We’ll be using this funding to build the technology needed to support high-frequency data sharing with a range of agencies, law enforcement and the private sector, with the mission to make Australia a harder target for scammers,” said ACCC deputy chair Catriona Lowe.

NASC will be phased in from July. In 2022, texts surpassed calls as the most reported scam method, with almost 80,000 reports, according to the ACCC.

This article first appeared under the headline ‘Hammer Down’ in the June 2023 issue of Company Director magazine.