Australian dollar hits US88c
Surging growth figures on the Chinese economy has seen the Australian dollar pushed past the US88c barrier in local trading this morning.
At 12.20pm the Australian dollar is worth US88.05c, after European currency trading saw it move above US88c overnight.
ANZ senior currency strategist Tony Morriss says the Australian dollar is hitting its straps just as US dollar index has hit a 12-year low.
“The Aussie is now outperforming the other major currencies, there is a very solid backdrop for dollar yields and commodities, indeed all metals moved higher over night, oil is above $75 and people realise the Chinese data we saw yesterday means its economy is going to keep surging,” he says.
The Chinese economy grew at an annualised rate of 11.9% in the June 2007 quarter, Government figures released yesterday revealed. The result was significantly higher than market expectations of around 10% GDP growth.
ANZ’s Morriss believes the Australian dollar could well reach US90c in the next three weeks. “The market wants to get to at least US89c. US90c will be an important psychological level, but there is nothing to stop us reaching that unless if we start to some profit taking or the strong Chinese growth generates calls for more powerful efforts to rein in growth there,” he says.
– Mike Preston
Workplace mediation flop
The Federal Government’s $10.4 million scheme to encourage alternative dispute resolution between employers and employees has been a flop, according to a report in The Australian Financial Review.
Not one worker or employer has applied to the fund in the past financial year. Legal experts say it’s because the scheme is not available for some of the most common disputes: interpersonal, unfair dismissal, unlawful termination, trade union right of entry and certain industrial action matters.
The scheme is intended to provide eligible applicants with up to $2000 per dispute to put towards private dispute resolution services and travel expenses. The Government has defended it; Workplace Relations Minister Joe Hockey says the lack of interest is a sign of fewer disputes under WorkChoices.
Hockey admitted to The Australian Financial Review that the $4.06 million allocated for the fund over the next two years is not likely to be spent. “I wouldn’t be betting my house on it given the current rate of uptake,” he says.
– Jacqui Walker
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Goodwill tax treatment change for partnerships
Law firms and other partnerships that incorporate will have to pay capital gains tax on goodwill in the business, even if they had never accounted for it under a new guidance note issued by the tax office.
Compliance with the guidance note will mean goodwill will usually have to be accounted for in calculations of the market value of a partnership for CGT purposes, reports The Australian Financial Review. Partnerships must conduct market valuations when switching to an incorporated model.
The guidance note will create “a significant impediment to firms incorporating”, Reynah Tang, chairman of the Law Institute of Victoria’s commercial law section, told the paper.
– Mike Preston
Patent proof for innovators made easier
Inventors will find it easier to defend their intellectual property thanks to a High Court of Australia ruling that commercial success should be taken into account in determining the validity of patents.
In the past, courts have placed little or no weight on the market success of a product in considering whether its inventor had made an “inventive step,” the threshold test for whether a patent for a product should be upheld.
In this case, hardware manufacturer Doric Products challenged the patent of a competitor, Lockwood Security, held over a deadlock design that uses a simple mechanism to prevent people accidentally locking themselves in.
In considering whether an “inventive step” had been taken by Lockwood in its deadlock design, the Court said the product had clearly achieved some commercial success and had met a need in the market.
“Secondary evidence, such as commercial success, satisfying a long-felt want or need, the failure of others to find a solution to the problem at hand, and copying by others such as competitors, has a role to play in a case concerning an inventive step,” a unanimous decision of five High Court judges said in upholding Lockwood’s patent.
The decision is likely make it easier for inventors with products in the market to defend their patents in the future.
– Mike Preston
Geelong manufacturing days are over
This week’s announcement that Ford will stop making car engines at its Geelong plant is confirmation that the city must abandon the manufacturing industry on which it was built, local Chamber of Commerce executive director Lawrie Miller says.
Miller says by the time the plant closes in 2010, even less than the current 17,000 manufacturing jobs in Geelong will exist.
“Thirty years ago, 60% of jobs in Geelong were in manufacturing, so although the loss of 17% is still significant it’s not the deathblow it would have been not that long ago,” he says.
“Manufacturers in Geelong are all downsizing. Alcoa and Shell have been, and Ford has dropped 500 employees over the past few months. This is just what is happening in manufacturing and its going to continue that way in many areas, not just in Geelong but across Australia.”
The Australian car manufacturing sector will continue to decline unless it can secure stable export markets, according to IBISWorld research published in SmartCompany.com.au yesterday.
The research shows the sector has declined 5.2% over a five year period to 2006/07 and is set to grow at just 1.7% per year over the next five years, culminating in the likely departure of weaker players such as Mitsubishi by 2012.
But, Miller says, he is hopeful that growth in microbusiness and SMEs will create more jobs than those that are lost in manufacturing in coming years.
“We have put on 5000 jobs in microbusinesses and SMEs in the last three years,” he says. “They are the engine room of Geelong’s economy, and as large businesses reduce numbers we hope that will continue.”
– Mike Preston
Financial planners shun industry super funds
The financial planning industry has come under attack for failing to recommend industry super funds to clients, despite the strong performance and low fees of many of those funds.
New research commissioned by the Industry Super Network shows that none of the top 30 financial planning groups, which employ around two thirds of Australia’s 16,000 financial planners, has an industry super fund on its list of recommended schemes.
Many financial planners are owned by large financial services companies with their own superannuation products or receive commissions from those companies for directing a client to their products. By contrast, industry funds often pay lower or no commissions to financial planners.
“The law of the land needs to require that people that hold themselves out as financial advisers need to be required by law to act in the best interests of their clients,” Industry Super Networks spokesman Garry Weaven told the ABC. “That’s currently not the legal requirement – they’re required only to give appropriate advice, and I think that’s a big gap in the financial regulatory system.”
But Financial Planning Association chief executive Jo-Anne Bloch says financial planners are required to disclose any commissions to allow consumers to make an informed choice.
“The financial planner’s relationship with the client is such that they need to understand their client’s specific circumstances and then provide advice, and if product is appropriate in that circumstance, that product must meet the interests of the client and all the issues such as commission or fees or whatever must be disclosed and understood by the client,” she told the ABC.