Business groups have welcomed Kevin Rudd’s announcement of an election on September 7, saying the certainty that comes with an election outcome will boost consumer and business confidence. “Business will be looking to the major parties to offer policies and strategies focused on creating a vibrant and sustainable economy for the decades to come,” Australian Industry Group chief executive Innes Willox told Fairfax. “Business confidence is highly elastic and will not be salved until there is a clear plan for the future and an unequivocal mandate for its execution," Minerals Council of Australia chief executive Mitch Hooke told The Australian. ATO concerns over Lisa Ho comeback The Australian Taxation Office has raised concerns Lisa Ho could be attempting to establish a ‘phoenix’ company after a holding company controlled by the fashion designer purchased key intellectual property from Lisa Ho Designs, which recently collapsed with $17 million in debts. However, administrator Todd Gammel of HLB Mann Judd is denying there is anything untoward in the transaction, according to the minutes of a creditors' meeting filed with the Australian Securities and Investments Commission said. “The administrators had gone through the sale process and that the best offer they had received was from the director [Ho] … The business was offered for sale to the general public, the transaction that took place was at arm's length and the business was not continuing to trade,” the minutes said. Chinese turf war spooks investors A turf war has broken out between the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) over the future of China’s foreign investment and trade rules, with analysts warning the news risks spooking international investment. "The PBOC is taking a more open approach (to reform), whereas SAFE sees itself as a gatekeeper," a lead representative of a foreign business association in China told Reuters. “There's a perception, particularly outside of China, that policy is unfolding according to some great plan," said Mark Williams, chief China economist at Capital Economics in London. "Clearly that's never actually been the case, but evidence of conflict within the government will certainly dent confidence.” Overnight The Dow Jones Industrial Average closed up 0.19% to 15658.36. The Aussie dollar is up to US89.12 cents.
If the Rudd government is re-elected to another term this year, it will legislate a move from the carbon tax to an emissions trading scheme effective from July next year, the government announced on the weekend. The move could see a carbon price of $6-$10 a tonne, Treasurer Chris Bowen said. However the price could be higher or lower based on market demand. Most analysts expect the price to be significantly lower than the $24.15 per tonne of carbon Australian businesses currently pay for their carbon emissions. What does this mean for your business? This has the potential to both help and hurt small businesses. Peter Strong, the CEO of the Council of Small Business Australia, says there are two main ways the weekend's announcement could impact the sector. The first is through its impact on electricity prices, and the second is through some of the positive business incentives that were funded by the carbon tax, which are now in jeopardy. "Not a lot of small businesses are directly affected by the tax, but its effect is in the power costs," he told SmartCompany this morning. "Part of the problem with the carbon tax was that few small businesses were able to pass on their costs to customers," he said. "That's because, if you're a supplier to Coles or Woolworths, they make it very difficult for you to do so." In June, research by the Australian Industry Group found 70% of businesses surveyed had been unable to pass on any increased energy costs to their customers, and only 6% said they'd been able to pass on the energy costs caused by the carbon tax. This has meant small businesses have largely absorbed the carbon price, particularly in manufacturing, which uses a lot of electricity. But they weren't the only ones affected. "Any retail shops or cafes that have a lot of fridges, or big freezer rooms, were impacted," Strong says. "If power bills go up $6000 a year because of the carbon tax, I think it's a lot of money." Professor John Quiggin, an economist at the the University of Queensland, told SmartCompany the carbon tax had raised electricity prices between 5%-10%. "So, if the price falls when we switch to emissions trading, which is what we're expecting, other things being equal we'd see a drop of somewhere less than 10%. But that's likely to be swamped by other factors." The biggest factor in electricity price rises in recent years has been a dramatic increase in the poles and wires charges billed to electricity users, Quiggin says. "And those are likely to rise further." The government has yet to announce many details about which programs are likely to be cut as a result of the move to an ETS, but has flagged it won't change the compensation offered to households. The carbon tax has funded some tax breaks for small businesses, including an increase in the instant tax write-off and the loss carry-back measures. This article continues on page 2. What do the industry bodies think? Most business groups have welcomed the move to an emissions trading scheme. "The government's decision to move early to scrap the carbon tax and commence emissions trading is a positive move that will cut business costs while still meeting the emissions targets shared by the major parties," Australian Industry Group CEO Innes Willox said yesterday. "We will be looking for more detail. But, in principle, a switch to much lower internationally linked carbon prices next year would be very positive for businesses struggling with high energy prices and lost competitiveness. "The earlier move to emissions trading would cut the carbon price by as much as three quarters, while not reducing our capacity to meet the objectives of reducing emissions in line with Australia's targets." However, the Queensland Resources Council has said the changes raise more questions than answers on Australia's carbon pricing. QRC chief executive Michael Roche said the government had a number of crucial questions to answer, including whether the scheme would allow European Union politicians and bureaucrats to effectively set Australia's carbon price, and whether the scheme would lock in Australian firms to buying local permits, excluding them from the European market. "If the federal government's answers to each of these questions is 'no', then clearly the intent is no more than a political fix in the shadow of an election, not the fundamental rethink that is so badly needed to ensure Australia's trade-exposed industries can be internationally competitive," Roche said. The earlier move to an ETS has been criticised as a "cowardly act" by the Australian Greens and "a name-changing exercise" by the opposition. What about the election? What would the Liberals do? The date given for a move to the ETS was July 2014, which is after the last possible date for the next federal election. This means the policy hinges on Labor being re-elected to government, a prospect which, until recently, looked unlikely. This morning's Nielsen poll is the latest to show the government and opposition neck-and-neck in the polls. But if the Liberal opposition does what is largely expected and wins government, its current policy remains to scrap the carbon tax. This would mean no emissions trading scheme, and instead, a range of "direct action" policy measures intended to pay businesses to reduce their carbon emissions. Some of these measures include paying businesses up to $40 per tonne (though usually less) to reduce their carbon emissions. This means the Coalition's plan values emissions at far above the $6 per tonne currently being proposed by the government. However, it would be a cost borne by the public out of general taxation, and not billed directly to polluters. This story first appeared on SmartCompany.
The Fair Work Commission has granted a $15.80-per-week increase in the minimum wage to $622.20 per week, or $16.37 an hour, just over half the union movement’s original $30-per-week claim. The increase, which also sees workers on higher award levels will receive increases ranging from $18.40 to $30.20 a week, was praised by both sides of politics, but criticised by the business community. “It is time for the unions to adopt a more progressive approach to this issue and to moderate their wage demands when changes to taxation arrangements, transfer payments and superannuation are on the agenda,” Australian Industry Group chief executive Innes Willox said. Howzat! Nine picks up affiliate in Adelaide and splits cricket rights with Ten Channel Nine has agreed to split the television rights to cricket with Network Ten in a $550 million rights deal, after signing a deal that will see it purchase key affiliate stations from Bruce Gordon’s WIN Television. Under the deal, Nine has agreed to purchase the WIN-owned Nine affiliate station in Adelaide for $140 million, along with the option of purchasing its affiliate in Perth should the 75% broadcasting reach rule be lifted in the future. Following the deal, Nine secured the free-to-air broadcast rights to Australian Test matches and one-day internationals, with Ten picking up the rights to the Big Bash League, while Sheffield Shield and the state one-day competition going untelevised. "It's been a long and sometimes difficult and complex process and I pay tribute to Bruce Gordon and his team at WIN for really stepping up to the plate, not only on the sale of its major stations but through our new rural affiliation deal which has enabled Nine to achieve a very substantial offset of costs," Nine chief executive David Gyngell said. Job ads fell during May Jobs ads have fallen to their lowest level since 2009-10 with a 2.4% seasonably adjusted fall in May, according to ANZ’s latest job ads series. “Job advertising is declining across all states and territories, but least strongly in NSW, in keeping with a number of other indicators that suggest the NSW economy is beginning to show some improvement," said ANZ Australian chief economist Ivan Colhoun. "Advertising is very weak in Victoria and Tasmania, consistent with other indicators suggesting these economies are relatively underperforming at the present time." Overnight The Dow Jones Industrial Average is up 0.92% to 15,254.03. The Aussie dollar is up to US97.56 cents.
Above: Opposition leader Tony Abbott. The Liberal Party will abandon its promise to cut company tax by 1.5%, should it be elected, new reports have suggested, disappointing business groups which have long called for a cut in this tax rate. Opposition Leader Tony Abbott (pictured above) has consistently said he would fund a $3.3 billion parental leave scheme by raising company tax a further 1.5% on the biggest 3,200 companies while introducing a cut of the same size for other businesses. In net terms, this would have resulted in companies outside the top 3,200 having a company tax rate of 28.5%, down from the current 29%. But now, sources have told The Australian Financial Review a 1.5% tax decrease was still possible, but unlikely. This would mean the top 3,200 companies are slugged with an extra tax but other businesses would receive no relief. A spokesperson for Shadow Small Business Minister Bruce Billson told SmartCompany commitments can only be made based on the latest information. “As of the last budget we believe that we can introduce a modest cut to company tax,” he says. “Unlike the Government we will not make reckless spending promises without taking into account changing budget forecasts and a deteriorating budget position.” The move, if it is accurate, is sure to disappoint businesses. The business community reacted negatively last year to the Government’s announcement it would abandon a company tax cut for SMEs. Abbott yesterday reaffirmed his commitment to the paid parental leave scheme and said it would be funded by increasing the company tax rate for Australia’s largest 3,200 companies. “It's been a signature policy of ours since early 2010 and I want this important reform to be one of the things for which an incoming Coalition government is remembered,” he said. “I want to stress that this isn't just a women's issue, it's not just a families issue, it's an economic issue and if we can get more women productively into the workforce, that's good for the economy as well good for families as well as good for society.” Earlier this year SmartCompany investigated the policy changes small business leaders wanted to see this year and a cut in the company tax rate was a regular feature. SmartCompany contacted the executive director of the Council of Small Businesses of Australia, Peter Strong, but he was unavailable to comment prior to publication. Executive director of the Australian Retailers Association, Russell Zimmerman, previously told SmartCompany changes to the current tax system are needed. “If there are good reasons to make changes, changes that make more economic sense, then surely we should make those changes,” he said. Chief executive of the Australian Industry Group, Innes Willox, was quoted in The Australian Financial Review as saying there were “deep concerns” about Abbott’s parental leave scheme. He said the proposal would, “put a huge additional cost on bigger companies”. “At times like these businesses need reductions on cost burdens, not new ones”. The move comes alongside an admission from the Opposition the budget may not return to surplus for some time, with Opposition Treasurer Joe Hockey signalling a longer than expected wait. “We are not going to go down the path of austerity simply to bring the budget back to surplus because it would end up being a temporary surplus, depending on how big the deficit is that we inherit,” he said yesterday. Earlier this year Hockey pledged on ABC Radio’s AM program the budget would be returned to surplus in the first year of governing, “and every year after that”. This story first appeared on SmartCompany.
The Fair Work Ombudsman has been given extra powers to monitor possible rorts under the 457 visa program. In the latest measure announced by the federal government as part of its crackdown on the skilled visas, more than 300 FWO inspectors will assist Immigration Department officials in monitoring and enforcing compliance with 457 visa conditions. At the moment there are only 34 inspectors from the department to police the regime. Immigration Minister Brendan O’Connor said the FWO inspectors would ensure workers are employed in the right jobs and are receiving market salary rates. “My concern has been all along that we don't want to see 457 applicants exploited,” O’Connor said. “We do not want to see local workers unfairly missing out because there were no genuine shortages, and we do not want to see other employers who do the right thing … be adversely affected by those rogue employers who do the wrong thing.” Tess Hardy, lecturer in the Graduate School of Business and Law at RMIT, says the extra powers are a positive development in that they encourage greater collaboration and cooperation between the FWO and the immigration department. But Hardy warns proper resourcing is a significant question that has not been resolved. “The problem is likely to be one of resourcing. As yet, there is limited information on how these additional functions will be funded. Ensuring that the job being performed matches the job title and description in the visa may require a deeper investigation, which can be time-consuming and resource-intensive,” she says. While business groups claim the crackdown on 457 visas is an overreaction, Hardy says previous litigation shows there are problems with some businesses rorting the 457 visa system. “The bulk of employers are doing the right thing but there are pockets of employers who are abusing the system,” she says. “There have been a number of prosecutions where 457 visa holders have been brought over to Australia and then engaged in work which is different to that described to them and receive pay which is much lower than the minimum award rates, let alone the market rates. “ The Australian Industry Group has backed appropriate sanctions for the “very small number of employers” that abuses the 457 visa system. Ai Group chief executive Innes Willox said in a statement that no data has been put forward to suggest any significant or systemic rorting of the 457 visas and Ai Group would expect any cases uncovered by the ombudsman to be very much at the margins. "The government has said there will be no additional compliance burden or red tape and we will be watching the implementation of the increased monitoring closely to ensure this is the case,” he said. “We remain concerned that the series of announcements around 457 visas, combined with offensive and repeated references by unions to the system being akin to slavery, is unfairly demonising employers and vilifying 457 visa holders.” This story first appeared on SmartCompany.
Irate business groups across Australia have slammed Prime Minister Julia Gillard's announcement yesterday confirming penalty rates are here to stay.
Key players in the Australian tech start-up scene have lashed out at Prime Minister Julia Gillard’s suggestion the 457 visa program is being abused by the IT industry.
Business leaders have criticised the federal government's proposal to have workplace bullying complaints heard by the Fair Work Commission, saying the move will increase confusion and encourage "forum shopping".
The small business sector has been handed its fourth minister in two years, with former immigration minister Chris Bowen assuming the role as part of an unexpected cabinet reshuffle.
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.
Some say it’s too late. Some, even those who have been continuously calling for the nation to go to the polls for the past three years, say it’s too early, given the budget announcement isn’t until May.
Wesfarmers-owned retail giant Coles has recorded its 15th consecutive quarter of same-store sales growth, along with a 5% growth in second quarter sales to $7.71 billion.
Energy costs for businesses have risen on average by 14.5% following the introduction of the carbon tax, according to new research by the Australian Industry Group.
Business groups have downplayed the Federal Government’s concession the budget is unlikely to return to surplus in 2012-13, with one group describing the move as “neither here nor there”.
The decision to exempt food from GST has cost the Federal Government billions of dollars since 2000, according to former prime minister John Howard.
Business groups have praised the Federal Government for the goals outlined in the Australia in the Asian Century white paper, including a vision to transform Australia’s innovation system.
No changes will be made to the R&D Tax Incentive after the Business Tax Working Group failed to find a “revenue neutral” way to fund a company tax cut, which has been pushed for by lobby groups.
The Federal Government has resumed its Clean Technology Investment Programs following a two-month freeze, but there are fears that the pause will have had a negative impact on prospective grant recipients.
Small businesses are bracing themselves for a hit following the release of Treasurer Wayne Swan’s Mid-Year Economic and Fiscal Outlook, which has downgraded the 2012-13 projected surplus to $1.1 billion.
Businesses are critical of the limited change to unfair dismissal provisions announced by the Federal Government yesterday, claiming unions have been effectively given a "veto right" on reform.