Economy

Canberra reveals broadband network plan… Tax compliance burden to hit SMEs… House prices soar… Pressure on petrol

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Coonan announces billion dollar regional broadband network

Businesses and consumers in rural and regional areas will be able to access broadband with speeds up to 12 megabits per second by mid 2009 under a new billion dollar plan announced by Federal Communications Minister Helen Coonan today.

Government funding of $958 million has been awarded to an Optus and Elders joint venture. known as OPEL, which will invest $900 million of its own money in the project. They will build a broadband network that will cover 99% of the non-metropolitan population via a mix of fibre optic, ADSL2+ and WiMax technology.

Work on the broadband network under the program is scheduled to be completed by 2009, three years earlier than Labor has said its network would be fully implemented. But the network under the Coonan plan will deliver 12mbps speeds – four times slower than what Labor has promised.

Communications analyst at ICT research specialist Ovum, David Kennedy, says while the roll out of 12mbps broadband in rural areas will deliver significant economic advantages, top-end online innovators would require the faster speeds that a fibre-to-the-node network can provide.

“Most people can do everything they need to on 1.5mbps, and for business that’s where a lot of the economic benefits are in terms of improved communication and access to new services,” Kennedy says. “But the thing you really can’t do (is) on-demand video downloading. At the moment that is a niche issue but that is also where a lot of the cutting-edge innovation is happening.”

IT Wire telecommunications editor Stuart Corner says the timing of the announcement smacks of political opportunism.

“It really looks like they’ve just shovelled this money in as a quick fix to respond to the political pressure they’re under to be seen to be doing something. It’s another step towards trying to kill off the main ALP proposal and remove some of the pressure they are under from Telstra,” Corner says.

The Government also announced the make up of the panel that will review the regulatory arrangements that will apply to the Telstra and G9 proposals for metropolitan broadband services. The panel will be chaired by Patricia Scott, the head of the Department of Communications, Information Technology and the Arts, and will include representatives from government, the Australian Competition and Consumer Commission, big business representatives and telecommunications experts.

– Mike Preston

 

Business to pay more for tax services

Business may have to pay the price for changes to laws governing the accounting profession that industry groups say dramatically increases the level of knowledge they will be required to have about their clients’ affairs.

As SmartCompany reported several weeks ago, proposed Government legislation requires accountants to take “reasonable care” to ascertain the accuracy of information provided to them by clients. If they fail to do so and provide false information about their client to the tax office, they could be subject penalties of up to $27,500 per infringement under the changes.

Business will have to pay for accountants to work the extra hours required to meet this “reasonable care” test, and hourly fees could also increase if the accounting profession passes on increased professional indemnity costs to clients.

The impact of the Government’s proposed changes is being hotly debated in the accounting and bookkeeping industry – and in feedback to SmartCompany. Last week John Birse, national divisional franchisor of Jim’s Bookkeeping, wrote that he feared the proposed draft legislation for tax agents and BAS service providers will further add to the cost of running a small business by pushing up the charge-out rate for bookkeepers, who will have to pass on the cost of being compliant.”

But Tony Gavin, from Ledgers Bookkeeping, says the trade-off for increased costs is a better service and more certainty for small businesses. “The draft legislation sees some shift in legal responsibility from the taxpayer to the accountant or bookkeeper that the taxpayer relied upon to advise… Given the complexity of the Tax Act, this can only be viewed as a positive step for the small businesses that rely upon these advisers – many of whom are inexperienced and unqualified.”

One thing is for sure – these proposed changes are controversial. Let us know what you think at [email protected]

– Mike Preston

 

House prices soar

It is up, up, up for house prices in most Australian cities, driven by investors chasing strong rental growth and increased yields, according to forecaster BIS Shrapnel’s latest report Residential Property Prospects 2007 to 2010.

However Perth is expected to fall due to a downturn in the resources boom, and Darwin may also slide as houses become too expensive.

Brisbane, Sunshine Coast and Gold Coast are expecting the strongest house-price growth in the next few years. Meanwhile Sydney housing prices are expected to stagnate, but a lack of affordability in Sydney and Brisbane will drive up prices in regional centres as people leave the cities to find more affordable housing.

Newcastle and Wollongong house prices are expected to increase by 13% and 11% respectively over the next three years, while prices in Cairns and Townsville are also expected to rise.

– Amanda Gome

 

Government bows to petrol pressure

Competition regulator the Australian Competition and Consumer Commission will have the power to force witnesses to appear and answer questions under oath as part of an inquiry into petrol prices announced by Treasurer Peter Costello late last week.

Costello, says ACCC chairman Graeme Samuel, requested the Government authorise an inquiry because of the gap that opened up between retail petrol prices in Australia and the benchmark Singapore wholesale fuel price in the lead up to the Queen’s Birthday long weekend.

The inquiry is due to report by October 15. If the inquiry finds evidence of anti-competitive behaviour, petrol companies could be liable for fines of up to $10 million or triple the benefit wrongfully obtained, Costello says.

– Mike Preston

 

Economy round-up

The S&P/ASX 200 is performing strongly this morning, at 12.40pm up 0.8% to 6341.4. At 12.40pm the Australian dollar is trading at US84.19c, just down on the most recent US84.23c close.

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