Australian Chamber of Commerce
Leading economists expect the Reserve Bank is likely to hold official rates at 2.5% when it meets later today, with some predicting rate increases later in the year. “Interest rates have already been cut to record lows and evidence continues to build that rate cuts are getting traction,’’ AMP Capital chief economist Shane Oliver told Fairfax. ‘‘Our assessment remains that the RBA would prefer to wait for the full impact of past rate cuts to flow through and is now more focused on achieving and maintaining a lower level for the Australian dollar.’’ JB Hi-Fi increases profit despite falling software sales JB Hi-Fi has reported its net profits in the December half are up 10% year-on-year to $90.3 million, with the company’s full-year net profit now expected to rise at least 8.3% to $126 million. The results were despite an 11% fall in music, movies and computer games sales for the half, which was offset by increases in sales for consumer electronics devices and appliances. “There's a lot of life left in the software market… every new store is still opening with a full range of music, movies and games,” JB Hi-Fi chief Terry Smart says. “There's no doubt that the market is declining, but what we can do is benefit from consolidation that may happen in the industry and really leverage that strong customer base we still have today.” Business lobby group praises Abbott over SPC Ardmona The Australian Chamber of Commerce and Industry praised the federal government for refusing assistance to SPC Ardmona, as it issued its quarterly business expectations survey for December. “The government has shown impressive resolve in terms of refusing to hand out subsidies to businesses that are struggling,” ACCI acting chief economist Burchell Wilson said. “This is the sort of discipline that has to be displayed in order to, not only return the budget to surplus, but in order to strengthen the economy.” Overnight The Dow Jones Industrial Average is down to 5201.9. The Aussie dollar is down to US87.52 cents.
Agribusiness, resources, tourism, international education and wealth management have been identified as the next “super-growth” sectors, capable of contributing $250 billion to the economy in the next 20 years. New research from Deloitte has found these sectors offer high growth rates and will be helped by the retreat of the Australian dollar from its record highs – and small businesses are set to benefit. Deloitte predict these five “super-waves” will collectively match the mining industry in terms of their contribution to the Australian economy, giving it a boost of about 1%. Report co-author Chris Richardson from Deloitte Access Economics said in a statement the success of a nation cannot be built on natural resources alone and new growth drivers are needed. “We need another wave – or several – to create more diversified growth,” he says. “And the first place to look is markets that can be expected to grow significantly faster than the global economy as a whole over the next 10 or 20 years, or by more than about 3.4% a year.” Australia’s long-term average growth rate is 3%, but over the next four years the Bureau of Resources and Energy Economics forecast a rate of only 2.5%, and some economists anticipate it will be even lower. Five “big-picture advantages” for Australia were also determined by Deloitte: world-class resources in land, minerals and energy; proximity to the world’s fastest growing markets in Asia; our use of English, the world’s business language; a temperate climate; and well understood tax and regulatory regimes. Agribusiness is set to benefit from the global population growth of 60 million per year, which will increase food demand, while growth in air pollution in emerging economies will push gas demand upward. The tourism sector is tipped to double in size in the next 20 years, fuelled by Asia’s growing middle class, and Australia will attract more foreign students from India and China. Deloitte also estimate by 2050 the south-east Asia region will account for more than half the world’s financial assets, driving an increased demand for wealth management services. Managing director of Deloitte’s Western Sydney office Danny Rezek told SmartCompany small business has a vital role to play in the prosperity of the super sectors. “Innovation is the foundation for the whole concept of prosperity and while not specifically mentioned, it’s underlying the whole report, and inherently small and medium sized enterprises are better at being agile and innovative,” he says. “The Australian Chamber of Commerce and Industry’s small business, Too Big to Ignore campaign is absolutely accurate in terms of the positioning of small business in relation to prosperity.” Rezek says in the next 20 years, every business will have a role to play in boosting the economy. “We’re sometimes seen as a one-trick pony in regards to the economy, but there are so many sectors which will be hot sectors in the next 10 to 20 years,” he says. “Whether you’re a small, medium or large business you will have to identify the sectors which will prosper and how you’ll support that sector if you’re not in it.” Other sectors identified by Deloitte crucial to Australia’s prosperity include banking, health, construction, business and property services, transport and logistics, public administration and manufacturing. This story first appeared on SmartCompany.
The office of Prime Minister Tony Abbott advised Communications Minister Malcolm Turnbull to slow the mass resignations from the NBN Co board earlier this week, according to media reports. The revelation follows the mass resignation of NBN Co directors earlier this week, with the Prime Minister’s office urging resignations in an orderly fashion. “I asked for their resignations. We had a discussion with the chairman [Siobhan McKenna] and she was very amenable and understanding that the incoming government would expect to have maximum flexibility in terms of dealing with the board,” Turnbull said. Nine eyes December IPO Nine Entertainment is planning a $3 billion listing before the end of year, as the company completes the purchase of its Perth affiliate from WIN Television. The purchase follows a similar deal to buy the network’s Adelaide affiliate from WIN earlier this year, along with the sale of the company’s magazine arm to German media group Bauer. “Following detailed discussions with WIN proprietor Bruce Gordon and the completion of due diligence requirements, we are now in a position to finalise the contracts on this pivotal deal for the Nine Network,” Nine Entertainment chief executive David Gyngell says. The IPO is set to be conducted by UBS, Morgan Stanley and Macquarie. Peter Anderson to stand aside as ACCI chief Australian Chamber of Commerce and Industry chief executive Peter Anderson has announced he is stepping down from the role in January, after serving with the group for 12 years, including six as its main spokesperson. "I have not sought an alternate role in the public or private sector, nor had one offered," Anderson said. "I have no current plans other than to complete my service on a high note and then ride my bicycle from north to south Thailand for charity in the month after my departure." Overnight The Dow Jones Industrial Average is down 0.43% to 15334.59. The Aussie dollar is down to US93.89 cents.
The Australian Chamber of Commerce and Industry today rolled out the next phase of its "Small business too big to ignore" campaign. "The BIG 4 You Can't Ignore" was launched by ACCI chief executive Peter Anderson at the National Press Club in Canberra. The BIG4 campaign calls on the government and Coalition to cut red tape, simplify the tax system, make it easier to employ people and build better infrastructure. Anderson said government regulation is extremely damaging to small businesses and they were at a tipping point. "Our tax and finance systems are impossible for the average small business person to understand and comply with," he said in a statement. Richard Clancy, executive director of the Victorian Employers Chamber of Commerce and Industry, told SmartCompany the campaign articulates what small businesses are saying and allows others join the conversation. "What it does is highlight what small businesses are saying. One of the things that has become obvious is that a lot of small businesses are overworked and they often feel that their issues and concerns aren't being heard," he says. The online campaign advertisements feature real business owners discussing the hardship and concerns the current system presents small businesses. Many of the people complain about penalty rates and how these high rates stop them from being able to open their businesses at peak periods, such as nights and public holidays. Anderson said telling the stories of real people, rather than using actors and models, was integral to the campaign and its mission. "It's a message not built on actors, not set by scripts, but carved out by the authenticity and rawness of real small business people and their stories," he said. The campaign's latest move is an attempt to garner support and attention for the plight of small businesses from the Coalition and the government in the lead up to September's election. Anderson previously told SmartCompany the campaign is giving small businesses the opportunity to have their voices heard in unison. "Small business plays a big part in what's happening...and we want to make sure small business has a voice across the country. That's what the campaign is about – making sure small business is heard in this election campaign." Anderson says getting noticed before the election is not the sole aim of the campaign. "I say to the politicians of all political persuasions, something real is happening in the political landscape, starting in our suburb and towns, and it will go beyond 14th September," he said. The campaign has already attracted public support with 22,121 people signing a petition. Small business owners, employers and those who are concerned about the plight of small businesses in Australia can "add their voice" to the campaign online. This story first appeared on SmartCompany.
Small business will be slammed by three cost increases in the new financial year: An increase in the minimum wage, another 0.25% rise in superannuation contributions and an increase in penalty rates for many retailers, according to the Australian Chamber of Commerce and Industry. The Australian Council of Trade Unions is before the Fair Work Commission today lobbying for a $30 per week award wage rise across the small business economy, and ACCI is characterising the push as a raid on the payrolls of hard-working small employers. ACCI is proposing a rise of no more than $5.80 per week, a position which it says is consistent with last weeks “alarming” budget forecast. David Turnbull, director of communication at ACCI, told SmartCompany an award wage rise would weaken business viability, reduce profitability and cost jobs. “If the union claim gets up and there is an increase of that magnitude, it will come at the same time as an increase to the superannuation guarantee and increasing costs under modern awards that continue to be phased in,” Turnbull says. “We’re referring to it as a triple-whammy, at a time when businesses are under significant strain you can see why we would be concerned.” ACCI is calling for a specific superannuation wage offset and says without this the increase to the superannuation guarantee will hit hard. Small business will also be impacted by the next round of rate increases with casual loading going up 24% and penalty rates increasing from July 1. Peter Strong, executive director of the Council of Small Business Australia, told SmartCompany “without a doubt” the increases would all hit small business. “What is difficult for small business is passing costs on, which is proving more difficult the way landlords work and the way the big supermarkets like Coles and Woolworths work,” Strong says. “The government often says if there is an increase in costs pass it on to the customer and that is easy to say, but in the past decade that is more and more difficult as the big supermarkets won’t let small businesses put up prices.” Strong says businesses will also be hit by the administrative costs of implementing the increased costs on July 1. “The other problem that confronts us is red tape, every small business has to dive into their software and change the super contribution, it’s not like a pay rise, super is more difficult,” he says. The FWC’s annual review of the minimum wage concludes today.
The small business community could be hit by the Coalition's proposal to tax the largest 3200 companies in order to fund its maternity leave scheme, with tax experts warning smaller companies are in danger of being affected. The warning comes as Prime Minister Julia Gillard's budget troubles have continued, as she is set to announce today the government will record a shortfall of $12 billion in next month's budget – a figure worse than expected. Economists and business groups have said they are concerned about the announcement, and what long-term effects it could have on the nation's finances. The Coalition has made the maternity leave scheme a pillar of its election campaign. The 3200 largest companies will be taxed an extra 1.5% in order to fund the plan, which will pay primary carers a full six months' salary. Coalition leader Tony Abbott has said the program will come alongside a reduction in the corporate tax rate for other businesses, although reports indicate this proposal is in jeopardy. The Tax Institute tax counsel Deepti Paton told SmartCompany this morning the category of largest 3200 companies squarely hits a number of SMEs. Paton points to the ATO's own statistics. The ATO categorises the number of "very large" companies existing in Australia at 927. These companies have income more than $250 million. However, there are only 1099 companies in the next biggest category, "large" businesses, which have income between $100 million and $250 million. This means, in order to fulfil the 3200 companies target slated by the Coalition, it needs to tax businesses in the "medium" category, of which there are 12,916 businesses. These have income between $10 million and $100 million. Paton told SmartCompany while the organisation has "always been very supportive of a tax rate cut when it can be afforded", the impact of taxing smaller organisations cannot be denied. "The notion of affordability has to be counter-balanced," she says. "We'd like to see a cohesive plan that maximises productivity for Australian businesses and SMEs." Paton also points out the ATO also can define an SME as a business earning anything up to $250 million. Meanwhile the government is set to announce the current budget shortfall is even worse than feared. Prime Minister Julia Gillard is set to announce today the May budget will produce a shortfall of $12 billion – but no new spending programs such as education and disability reforms will be targeted for spending cuts. The deficit of the 2012-13 year is now expected to be at least $11 billion. The Department of Prime Minister and Cabinet was contacted this morning regarding the announcement, but no reply was received prior to publication. The Australian Financial Review has reported Gillard will announce the deficit today. It comes as two new reports from the Grattan Institute and Macroeconomics have found the government is facing long-term deficits as a result of both weak revenue trends and new spending initiatives. Gillard will reportedly say today the budget must "respond to the huge reductions in revenue growth over the next four years", but it also needs to "make necessary investments in the nation's future to ensure that none of our people are left behind". The major problem is not spending, Gillard is expected to say, but falling revenue rates. Australian Chamber of Commerce and Industry head of economics, Greg Evans, told SmartCompany this morning the announcement "puts the onus on the government to properly deal with spending in the next federal budget". "Without a sustainable budget there is no scope for the major economic reforms required such as delivering a tax system that promotes incentive and enbales productivity improvements." AMP economist Shane Oliver says while the shortfall isn't a significant problem in the sense we already knew the budget wouldn't deliver a surplus, it does underline a "broader issue". "Where it's probably a longer-term problem is the fact it's underlined Australia has a revenue problem." "We're not in dire straits...but instead of years of surpluses we may expect several years of deficits." This story first appeared on SmartCompany.
The business community has welcomed a new direct currency trading deal between Australia and China, but an entrepreneur says there are still key challenges facing Australian start-ups keen to strike partnerships within the economic powerhouse. Prime Minister Julia Gillard has announced the Australian currency will be directly traded and converted with the Chinese currency. Under the agreement, the Australian dollar will be directly convertible into Chinese yuan, easing costs for companies. China only has deals of a similar nature with the United States and Japan. ANZ and Westpac are the first two Australian banks licensed to handle the conversion in China. The Australian Chamber of Commerce and Industry welcomed the move, with chief executive Peter Anderson saying: "Making it easier to do business often involves a myriad of small steps, of which today's announcement is just one, but an important and welcome one." Speaking at the China Executive Leadership Academy in Shanghai, Gillard said the deal “reflects the rapid growth of our bilateral trade and the value of two-way investment”. Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, said in a statement the agreement is a boost to exporting businesses. “Whilst developing commercial and trading relationships in China requires the long-term relationships and business plans, the opportunity for direct currency conversion removes an obstacle,” Anderson said. “There is potential benefit not just to major resource industry investors, but also small and medium enterprises, such as Australian professional services companies.” According to Jim Vrondas, OzForex chief currency and payment strategist for the Asia-Pacific, the agreement could save small businesses thousands of dollars in exchange fees every year. “It would cut costs, due to no longer having two separate conversion fees,” Vrondas said in a statement. “Savings could be somewhere in excess of 1%, so for an Australian importer sending AUD1 million into CNY [yuan] at the moment, it could be a $10k saving.” But Dean Ramler, co-founder of online furniture retailer Milan Direct, which uses Chinese manufacturers to replicate European designs, says there are still challenges facing Australian start-ups in China. Here are Ramler’s top three potential hurdles faced by Aussie start-ups. Changing working conditions “Payment conditions have changed in the last five or six years,” Ramler says. “It used to be a low cost manufacturing base in China but no so anymore. Material costs have gone up, wages have gone up. “At the same time, the Australian market is seeing new competitors in the market every week. “Milan Direct was the first online seller of furniture six years ago. Today there might be 100 competitors… The price point is going down but the cost is going up.” Fewer niche operators “I think China’s caught onto the fact that anything they make, somebody’s going to buy it,” Ramler says. “I’ve seen factories that one week are selling timber furniture and the next week they’re making kitchen products… [They] don’t specialise in anything. “Everyone who quits their day job wants to be an online entrepreneur. They’re starting up online without having any passion for the product and just ordering containers off the internet. “The big shock comes when the consumers are really smart, and demand amazing products at amazing prices. “If start-up entrepreneurs don’t have a background in quality, the customer will be really disappointed, so you have to be careful there.” The slow burn “Chinese businesspeople value relationships first before doing business,” Ramler says. “If you want to be a long-term successful company in Australia, it’s definitely important that you continue speaking to all different factories in Asia every month. “With one factory, we were speaking to them for four years before we placed our first order… You really have to spend the time on the ground in China and Asia, and work together.”
Irate business groups across Australia have slammed Prime Minister Julia Gillard's announcement yesterday confirming penalty rates are here to stay.
Two weeks after his appointment, Chris Bowen has finally spoken up as the country's newest small business minister, but his criticism of the Coalition's small business policies hasn't been wholly accepted by the community he has been chosen to represent.
The federal government has solidified its plans to expand flexible working standards, with Prime Minister Julia Gillard confirming legislation will change to allow victims of domestic abuse to request different working hours.
Small business has expressed its hesitation over the federal government's planned expansion of flexible workplace laws, saying they could threaten the viability of businesses in certain industries and place undue pressure on struggling SMEs.
Yesterday’s announcement of the 2013 federal election date garnered a largely positive response from business groups, but there are now concerns about “policy paralysis” within government.
Prime Minister Julia Gillard’s surprise announcement about this year’s federal election has been welcomed by the business community for giving “certainty” to small firms.
Economy-wide spending fell almost 2% in December, according to the latest Commonwealth Bank Business Sales Indicator, despite small businesses’ hopes for a buoyant Christmas shopping season.
The Reserve Bank has cut the cash rate by 25 basis points to 3%, admitting that while consumer spending is expected to grow, a return to “very strong growth” seen in previous years is unlikely.
Economy-wide spending rose by 3.9% in September, according to the Commonwealth Bank Business Sales Indicator, but a spike in inflation has reduced the likelihood of another rate cut.
Workplace Relations Minister Bill Shorten today offered limited relief on unfair dismissal laws to business but the Australian Chamber of Commerce and Industry says the reforms are unlikely to go far enough.
Nearly three quarters of Australian small businesses spend longer complying with regulations than they did two years ago, with one in 10 taking more than 20 hours a week to tackle red tape, according to a new study.
The Commonwealth Bank Business Sales Indicator fell 5.4% in seasonally adjusted terms in July, while another survey shows the small business sector has become increasingly pessimistic about the economy.
The Australian economy could gain as much as $90 billion in the next five years – but only if the Federal Government implements enough ways to boost productivity in the years after the mining boom ends, a report from research group McKinsey & Co argues.