Finance

Bureaucrats decide what’s fair… Taxman to send in the debt collectors… States push on TPA… Strong growth for private firms… Do Not Call… Economy roundup…

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Fairness test hands power to the bureaucrat

Workplace Authority bureaucrats have been given wide powers to determine what constitutes a fair workplace agreement under new legislation introduced into Parliament last night.

The legislation, enabling the Government’s new “fairness” test, requires new AWAs and collective agreements to provide “fair compensation” for any protected award conditions that are traded away, having regard to monetary and non-monetary compensation received, the work obligations and any relevant personal or family circumstances of the employee.

However, no guidance is given as to what is meant by the general term “fair compensation”, leaving Workplace Authority director Peter McIlwain to exercise a wide discretion in making a value judgment about the terms and conditions offered in AWAs or collective agreements.

The Workplace Authority director is also empowered to judge when “exceptional circumstances” apply – when the fair compensation test should take into account special industry, geographic or economic circumstances of employers and the employment circumstances of employees.

The National Retail Association’s executive director, Patrick McKendry, says the broad nature of the test means it is critical the Government appoints the right people to the Workplace Authority.

“It is really important the appointments are people with business experience that enables them to empathise with employers and employees rather than taking a big brother or third-party interventionist approach,” McKendry says.

He says the NRA will now begin the process of going through the “thousands” of AWAs that have banked up from members since the test took effect on May 7.

The Government has effectively acknowledged the extra red-tape involved in applying the test by allocating $370 million to hire 600 new public servants to administer the test.

A spokesman for the NSW Business Chamber, Paul Ritchie, says that although his organisation wouldn’t usually welcome millions of dollars being spent on more public servants, they should ensure a quick response for business who lodge workplace agreements for vetting against the test.

“The concern we had under the previous no-detriment test, which is similar to the new fairness test, was that it often took four to six months to get agreements ticked off, so clearly the funding for 600 new public servants is important because it will allow speedy approvals to be given to the test,” Ritchie says.

– Mike Preston

Taxman to send in the debt collectors

The Australian Taxation Office will spend $42 million on external debt collectors as part of a major campaign to collect tax debts owed by businesses and individuals.

In a statement announcing the move, tax commissioner Michael D’Ascenzo says a key motivation for the campaign is to prevent business tax debtors using tax and superannuation guarantee charge debts as a line of credit to obtain an “unfair competitive advantage”.

D’Ascenzo says the tax office will be fair and reasonable with people who are making their best endeavours to repay tax debts, “firm action” will be taken against intransigent tax debtors.

The tax office was allocated $127.5 million over four years in the federal budget to fund programs to reduce the $10.1 billion in unpaid debts currently owed to it.

At $42 million over four years, the program to hire private debt collection agencies to collect tax debts represents a major commitment to cracking down on tax debtors.

D’Ascenzo says all debt collection agencies will be required to adhere to strict guidelines in relation to privacy and professionalism. Uncollected debts will remain the responsibility of the tax office and will not be ‘on sold’ to the agencies.

More staff will also be hired to help chase employers who fail to make their superannuation payments on behalf of employees, he says.

– Mike Preston

States push on TPA protection

The Federal Government must make sure planned changes to the Trade Practices Act provide real protection for SMEs against aggressive tactics by big business, state small business ministers have warned.

NSW Small Business Minister Joe Tripodi and his Victorian counterpart, Theo Theophanous, yesterday warned the Federal Government that changes to the Trade Practices Act, which sets the rules for fair market behaviour, will struggle to gain state government support if they do not crack down on unreasonable behaviour by big business.

As SmartCompany reported last week, the Federal Government has announced plans to amend section 46 of the Trade Practices Act to provide better protection for SMEs against unfair conduct such as predatory pricing by big businesses.

Tripodi says he hopes he will be able to support the changes, but needs to see the detail on key issues including the strength of protections against predatory pricing by big business and whether it will be easier for SMEs to take action against unconscionable conduct by big business.

Political point scoring aside, Tripodi has a point: the devil will be in the detail. SMEs just want to be able to compete against big businesses on a level playing field. We hope the Federal Government’s legislation makes this possible.

– Mike Preston

Strong growth for private companies

Private equity might like private businesses, but the feeling is not mutual. Ninety percent of mid-sized businesses surveyed by PricewaterhouseCoopers for its inaugural Business Barometer, say funding is a key challenge, but only 5.7% ranked private equity and venture capital as an option for raising capital in the next year.

The sample of 793 private businesses with turnover of between $10 million and $100 million a year reported strong growth over the past year with an 11.2% average increase in profits and a 14.9% average growth in sales, according to Business Barometer.

The future is even brighter: growth is expected to surge further over the coming year with targeted average sales growth of 17.7% fuelling a targeted average increase in profits of 16.6%. The three-year outlook is solid, with a 14.4% increase in sales expected to drive an 11.8% rise in profit.

Business in WA and Queensland did best: More than 80% of Western Australian and Queensland businesses exceeded revenue targets in the last financial year. By contrast, just 18.1% of NSW businesses and 11.3% of Victorian businesses exceeded their targets in the last fiscal period.

But the survey showed that mid-sized businesses are poor planners: 40% did not have a business plan. The study’s authors say this is bad news because businesses that did use a formal business plan set more realistic short and medium-term targets and achieved better sales and profits than those that did not.

– Jacqui Walker

Do Not Call

Scammers are talking advantage of the Do Not Call register and requesting that people pay them to register. The Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, issued the warning yesterday saying it is very disappointing to hear of scam merchants profiting from the register.

She says there have been reports of scammers charging up to $79 to sign people up to the register, which is a free service.

And businesses should get ready: from midnight this Thursday it will be illegal for telemarketers to cold call numbers that are listed as Do Not Call.

If consumers receive telemarketing calls more than one month after registering, they can lodge a complaint. Since its launch on May 3, 927,000 numbers have been registered.

– Amanda Gome

Economy roundup

Housing affordability in Australia is at its lowest level in more than 20 years, according to a new Housing Industry Association Survey.

House prices lifted 1.5% in the March quarter 2007, the report shows, pushing the HIA’s affordability index down 10% on the same quarter in 2006.

Mortgage repayments now account for 30.7% of the average first home buyer’s income, up 0.2% on December 2006 quarter.

At midday the S&P/ASX 200 is up 0.5% to 6282.7 and the Australian dollar is trading at US81.78¢, down on yesterday’s US81.93¢ close.

– Mike Preston

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