DroneShield debacle worsens; ASX surges on Nvidia; IMF's GST warning

DroneShield debacle worsens; ASX surges on Nvidia; IMF's GST warning

News in brief

The International Monetary Fund has told the government to pursue comprehensive tax reform and cut wasteful spending, if it wants Australian living standards to improve.

 

Australia has formally dumped its bid to host next year’s United Nations COP31 climate summit in Adelaide, effectively green lighting Turkey’s bid. In return, Climate Change and Energy Minister Chris Bowen will share the presidency of the event with Turkey and also be lead negotiator for next year’s summit.

 

American media and technology giants are urging President Donald Trump to reprimand Australia over new laws that dictate foreign players’ television production plans and ban kids from accessing social media.

 

The Trump administration and Russian officials have drawn up a proposal to end the war in Ukraine that envisages major concessions by Kyiv, and have urged President Volodymyr Zelensky to accept it.

 

Only one Australian vineyard, Henschke in the Barossa wine region in South Australia, has been named in the World’s 50 Best Vineyards. It came in at number 47, and it is the first year since the awards began in 2019 that Australia has only had one vineyard in the top 50.

Fear-o-meter

The DroneShield debacle is one for the ages. CEO Oleg Vornik sold all his shares in the company for almost $50 million between November 6 and November 12. On November 10, the company mistakenly announced it had secured $7.6 million in new contracts with the US government. It later corrected that announcement.

 

Two other directors, including the chair, sold shares in the window of time between the original announcement, and the correction. It is a fair assumption that they benefited financially from the release of the incorrect statement.

 

The company said the three directors were in “substantial compliance” with its trading policy and had sought approval to sell the maximum number of shares, which was granted on November 5. I wonder what “substantial” means, in this instance.

 

At its low this year, DroneShield share price was 62c. At its high, it was $6.60. In the six weeks since its peak, it has dropped to $1.89. What a debacle.

Fear & Greed Q+A today

On the report from the International Monetary Fund calling on the government to pursue major tax reform, including increasing the GST and dropping tax breaks:

 

"Look, the IMF itself is a great institution and it looks at economies across the globe and, you know, makes its prognostications on how they could improve. The thing that really got me yesterday, is the IMF said Australia should embark on a series of reforms to taxation, the budget, technology, competition, labour markets and the green transition because that'll boost productivity. Of course those things will boost productivity, but seriously, unless you can tell us how to do it... the GST, we have argued this ever since the GST was introduced 20, 25 years ago, a higher GST rate or a broader GST would be a good economic decision. It isn't necessarily a good equity decision and it's not a good political decision. Now maybe some government at some point will make a call on that and they'll be able to do it. Fair enough.

 

Mining tax... Maybe there's a good argument for it. Similarly, the green transition. We've had this week all the big banks coming out saying, hey, we've got to rely on gas. We've got to keep going towards renewables. We've got the coalition saying we're dropping net zero. What the IMF's saying, of course it makes sense, but it's hard. Just coming out and saying, this is what you should do. Well, you run the country."

Corporate governance at ASX-listed companies is once again grabbing the headlines. Yesterday, DroneShield said its chief executive, chair and another director sold $2.4 million worth of shares after incorrect information had been released to the market. The ASX queried DroneShield about recent price movements. In a 16-page response, DroneShield outlined the selling of $70 million worth of shares by CEO Oleg Vornik, chair Peter James and director Jethro Marks. The selling occurred over several sessions and triggered a big sell-down in the stock. Meanwhile, Mineral Resources’ board has axed the deadline for founder Chris Ellison to exit as managing director. He promised to quit a year ago following a series of scandals including allegations of tax fraud via an offshore scheme that penalised shareholders.

Greed-o-meter

	State	FY25 growth %
1	Australian Capital Territory	3.5
2	Queensland	2.2
3	Western Australia	1.3
4	Victoria	1.1
5	South Australia	1.0
6	Tasmania	1.0
7	Northern Territory	1.0
8	New South Wales	0.9

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The ACT economy recorded the greatest growth of any state or territory in the last financial year - driven largely by the public service. The weakest was NSW, according to the Australian Bureau of Statistics.

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Source: ABS