Economy

Howard’s generous industry package… Wages spiral up… SMEs vulnerable to information theft… Victoria to cut WorkCover premiums… Economy roundup…

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Howard’s generous industry package

Prime Minister John Howard today hit back at Labor with a massive assistance package for business including many initiatives for small and medium companies. There is a new start-up grants program, assistance to connect business with public research, a huge export support program and productivity centres.

The $1.4 billion Industry Statement called “Global Integration” contains some surprising new initiatives, the usual ideas to get money to start-ups plus extensions to existing programs. Although the statement is sensible and hardworking, it cannot be described as visionary. And while some of the initiatives will be welcome, there is a lot of money going into the hands of consultants.

Here are the highlights:

Grants for start-ups. A new streamlined grants program will be launched to assist micro businesses and public research sector spin-offs. More than $90 million over 10 years will be available for Commercial Ready Plus, a new program to ensure that very early ventures get assistance. The program will provide dollar-for-dollar support of up to $250,000 to fund R&D, proof of concept and early stage commercialisation. It is a move that will be welcomed by highly innovative start-ups strapped for cash.

Export support. A new $254.1 million Global Opportunities program aims to help Australian firms win work in global supply chains and major projects. The program will identify opportunities in other countries, facilitate trade missions, and place Australian industry experts in national procurement offices.

New Productivity Centres. The surprise of the statement: $351.8 million would be allocated to establish productivity centres across Australia to enhance productivity in manufacturing and services businesses. The centres will provide a suite of business improvements services, help firms better understand and enhance their performance and solve practical problems through technology and processes improvement.

Small business links with pubic researchers. Attempts to narrow the looming gap between universities and businesses is being addressed with a $20.1 million Intermediary Access Program. The aim, says Industry Minister Ian Macfarlane, is to connect small businesses with public researchers and other businesses to help them acquire the knowledge and technology to be more internationally competitive.

Intermediaries are trusted third parties who help small businesses find and use new knowledge and technology to strengthen businesses. The program will provide support for 150 businesses each year. The success of this program though will depend on the choice of intermediaries and whether they have the skills to really add value.

Register Online. There will be a streamlined registration process for new business so that ABNs and business names will be registered together. Registrations previously completed manually will be able to be done online 24/7.

Registering a business and ABN online will save time and money, says Small Business Minister Fran Bailey. The $89.2 million initiative over 10 years will involve the Department of Tourism and Resources, the Australian Taxation Office, IP Australia, ASIC, and state and territory governments.

Skills development. A $14.3 million boost to small business owners who want to develop their business skills and access advisory services, including exporting and IT skills development. This is an extension of the existing Building Entrepreneurship in Small Business program, which will now receive an extra $2.6 million in 2007-08 and a further $11.7 million in 2008-09.

Nanotechnology boost. The nanotechnology sector will get a $21.5 million boost to draw together a fragmented industry. The National Nanotechnology strategy will draw together industry, researchers, the community and government to establish a nano-particle measuring capability, address regulations and standards and provide balanced advice.

Tax changes to boost R&D. The beneficial ownership test for the 175% R&D tax concession will be changed to allow claims to R&D projects undertaken in Australia regardless of where the intellectual property is held. This will let the arms of big business expand their operations in Australia. The change will only apply to the 175% concession and it is predicted that 300 companies will use the concession.

What do you think of the package? Has Howard won the battle for the heart of business

Wages blowout nightmare

Wages are spiralling upwards. Wages growth has climbed to the highest level recorded in the 12-year history of the St George Bank/Australian Chamber of Commerce and Industry business expectations survey.

The latest survey, released today, shows wages growth jumped from 72.9 index points in the December quarter to 74.4 in the March quarter, continuing a sharp rise that began in June 2006.

Worse, employers’ expectations that wages would continue to grow also increased over the March quarter. However, the head of economic research at St George, Steven Milch, believes that softening in the economy in about six months time will see wage pressures come off.

Meanwhile, employers should be considering a range of strategies in the face of the wages blowout and remember that it’s often not just about pay. Instead, offer flexibility, the latest technology, an attractive work environment, work-from-home options and fun social activities.

And if a pay rise is warranted, structure the remuneration package to line pay up with outcomes. A performance component will be keep high-performing staff who are motivated by targets.

– Amanda Gome

SMEs face information theft threat

SMEs are increasingly falling victim to employees who are using the latest technology to steal valuable commercial information, forensic experts say.

McGrathNicol forensic investigations director Jimmy Higgins says the prevalence of tiny devices with the ability to store large amounts of information, such as USB memory sticks and iPods or iMates, has increased the risk of information theft for employers.

“It is usually detailed commercial information for an industry or technical knowledge of a piece of machinery or technology that is at stake. We had one case recently where a guy brought a digital camera in to work to show workmates some photos. Later we discovered he had then used it to take information away from his employer,” Higgins says.

And, he says, SMEs are particularly vulnerable because they often don’t have the resources to put in place the safeguards that can reduce the risk of theft.

Higgins says he has seen an increase in cases involving either information theft or communication of potentially fraudulent information within organisations over the past two years.

But businesses are not helpless in the face of this new wave of information larceny. He identifies three key steps businesses can take to protect valuable information:

An information policy. The policy should be put in place and communicated. Access to valuable information should be limited to those who need to know, Higgins says, and a clear system put in place to regulate when and how it can be accessed. This not only helps to create a culture of compliance but can be a source of evidence if that is required.

Restrict use of information storage devices. Higgins recommends that the use of small information storage devices such as memory sticks be either prohibited or strictly restricted where a business has highly valuable confidential information.

Let them know they will be caught. Higgins says that although it can be difficult to catch people in the act of stealing information, it is very rare that the theft cannot be traced after the fact. “A lot of people don’t realise electronic information usually leaves a fingerprint; if they knew how likely it was they will get caught, many people wouldn’t try it in the first place.”

– Mike Preston

Victorian WorkCover premiums to be cut

Speculation is mounting that Victorian Treasurer John Brumby will announce a 10% cut in WorkCover premiums when he delivers the state budget tonight.

A 10% cut would reduce business WorkCover premiums to 1.46% of remuneration bill, down from the current 1.62% rate, a WorkCover spokesman says. That would equate to an annual saving of $2920 for an SME with annual remuneration bill of $200,000.

Infrastructure upgrades are set to receive the biggest share of new money from tonight’s budget with schools, water, transport and energy likely to be the biggest winners.

– Mike Preston

Economy roundup

Economists are unanimous in the view that the Reserve Bank won’t decide to raise interest rates when it meets today, but the question remains: just how strong is the Australian economy?

Consumers and business seem to think it is very strong, judging by RBA figures released yesterday showing private sector credit grew a strong 1.2% in March, pushing annual private credit growth to 14.8%.

All parts of the private sector have significantly expanded their exposure to credit in March, with business credit growing 1.2%, housing credit 1.1% and personal credit 0.9%.

A small fall in the the Australian Industry Group–PricewaterhouseCoopers Australian Performance of Manufacturing Index to 51.7 points suggests manufacturers aren’t enjoying the same confidence, although the measure remains above the key 50 point mark that separates expansion from contraction.

Growth in new orders and supplier deliveries also slowed for the second consecutive month, burdened by renewed concerns over the exchange rate, interest rates and consumer spending.

The S&P/ASX 200 is down 0.4% on yesterday’s close to 6141.9 at 12.40pm. The Australian dollar is trading at US82.97¢, up on last night’s Sydney closing price of US82.64¢.

– Mike Preston

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