Labor IR policy soon?… Family business’s top issues… NSW red tape reform… Students not work-ready… e-Tax soars… Tax agents draw in lawyers in liability fight… Woolies private label ramp-up
Monday, August 27, 2007/
- Family business’s top issues
- NSW red tape reform
- Students not work-ready
- e-Tax soars
- Tax agents draw in lawyers in liability fight
- Woolies private label ramp-up
- Behavioural finance is in the genes
- Economy Roundup
Federal Labor is leaving its IR policy to the last minute, which should be a huge worry for small business.
With an election expected within the next few months, there are reports this morning that the final touches to Labor’s industrial relations policy could be released in the next few weeks.
But while Labor is expected to clarify its position on Australian Workplace Agreements, the rights of independent contractors and union rights of entry, unfair dismissal exemption seems to be off the agenda.
As SmartCompany wrote last week (thurs brief link), there are worrying signs that the only beneficiaries from any policy shift by Labor will be the very large corporates – in particular, big mining companies operating in the northwest of Western Australia.
The final draft of the IR policy is also expected to allow people who earn more than $100,000 a year to keep their AWAs, which is a policy shift that would be virtually meaningless for most SMEs. Across much of the economy, employees earning around the $100,000 mark already work under common law agreements, so the existence or otherwise of AWAs is irrelevant.
If there is one thing that SMEs want and need, it is for Labor to leave in the exemption to unfair dismissals for companies with less than 100 employees.
Yet small businesses lack the large industry associations and groups to lobby on its behalf.
Is unfair dismissal exemption a big or small concern for small and medium business?
Should industry groups be doing more to lobby for an exemption on behalf of small and medium business?
Have your say. Email [email protected]
Increasing profits and maintaining family control are the most important business and family issues for family business.
But at the same time there is less a focus on governance and structure, and family businesses are worried about losing control as their empire grows, shows the survey Family Business Needs 2007, produced by Deakin University.
Nearly half of the 122 family businesses surveyed say they did not have management development plans or mentoring programs for family members.
Linda Glassop from Deakin University, which carried out the survey in conjunction with KPMG and Family Business Australia, says she was surprised at the decrease in formal business practices when compared to previous years. “At a time when family businesses should be professionalising their businesses, it is surprising that formal business practices such as evaluating the operational performance and customer feedback is on the decline.”
There was also a decline from 32% to 23% in the businesses that have a family council and only a quarter of respondents had a formal succession plan dropping from 29% in last year’s survey.
According to the survey the average family business in Australia is:
- Run by an Australia born, between 30-64 years old.
- Works between 40-69 hours a week.
- Is a second generation owner with a university degree.
- Business is in the wholesale, manufacturing or construction industry turning over more than $5 million.
- Business employs more than 20 staff.
The NSW Government will review insurance laws and consider creating nationally consistent rules on the liability of company directors and senior executives to cut red tape and compliance costs for NSW businesses.
The NSW Government also wants a group of senior bureaucrats to oversee a review of regulatory arrangements for water corporations in a bid to cut their costs.
The proposals are contained in the government’s second response to the Independent Pricing and Regulatory Tribunal’s report that found NSW businesses have to deal with unnecessary costs because of inconsistencies and overlap between NSW regulations and those in other states.
Paul Ritchie, public affairs manager at the NSW Business Chamber, says the Government response is welcome. “It indicates further progress by the Government in tackling the red tape issues identified by IPRT. Clearly all of these issues are areas where the demonstrated cost to NSW of the red tape outweighs any possible benefits of the regulations.”
He says one of the areas requiring urgent reform is occupational health and safety, because NSW has the most regulation and the most accidents, indicating that the system is not working.
“What is important is that there is a minister responsible for red tape reform and there is an office now charged with dealing with red tape issues – and that is significant,” Ritchie says.
Joe Tripodi, NSW Minister for Small Business, is conducting an ongoing rolling program of industry specific red tape reviews. The motor vehicle retailing and services sector, the accommodation, food and beverages sector, and the manufacturing sector are done. A review of the professional and business services sector is currently underway.
The next three industry specific red tape reviews will be in the retail, rental hiring and real estate, and road transport sectors, according to the Government’s response to the IPRT report.
The Business Council of Australia has demanded that the Australian education system keep young people at school for longer and increase their skills and knowledge so they are more effective in the workforce.
The BCA today released a five point plan that includes a national teacher accreditation, a national curriculum, better links between business and schools, more autonomy for school principals and performance parity for teachers. The paper says many aspects of school have not changed since the 1960s. And that the system is failing the many people aged 15 to 24 who are either unemployed or working part time but not studying.
Businesses need an increasing number of skilled school, university and TAFE graduates, but the need was not being met.
A survey of SmartCompany readers found big dissatisfaction with Gen-Y’s skills, and basic skills including writing and spelling.
There is less work for the suburban accountant this year as more than one million people have lodged their tax return online already.
This is a 20% increase on last year, says assistant tax commissioner Chris Mobbs. He says so far 1,056,750 people have lodged using e-Tax and that figure is expected to rise significantly.
“In 2006 over 1.6 million people lodged using e-Tax and we are well on track to exceed that figure this year,” he says.
There has also been an increase in the number accessing pre-filing services. Pre-filing lets people download information from third parties directly into your tax return such as bank interest, dividends and Centrelink payments. There have been 662,000 calls on available data using the pre-filing system so far.
Tax accountants worried about the proposal to make them liable for their clients’ non-compliance are trying to draw lawyers into the fight.
In its submission to federal Treasury on the proposal, KPMG argues that as the new rules will also affect the provision of tax advice, a proposed carve out of lawyers from liability is unwarranted.
Unsurprisingly, the lawyers are not impressed. Grant Cathro, chair of the Law Council of Australia taxation committee, told The Australian Financial Review that it was completely unnecessary for lawyers who are not preparing tax returns to be included.
The battle over the reforms, which include establishing a national tax agents’ board to replace state boards, lift qualification requirements and introduce a code of professional conduct, is hotting up. KPMG and Ernst & Young have joined professional associations in arguing against the reforms.
Some accountants are arguing that costs for clients will rise as compliance costs for accountants rise.
Woolworths will add another 200 products to its Select house brand range over the next six months, reaching its target of 1000 products eight months earlier than expected.
Select was introduced in 2005 as a higher priced alternative to Woolworths’ Home Brand range.
Woolworths general manager of private label and quality assurance, Steve Greentree, would not reveal Select’s share of the retailers’ supermarket sales or how many Woolworths customers had bought some of the 844 products sold under the Select brand, The Australian Financial Review reports.
But Greentree says about 75% of the shoppers who had bought Select had become regular buyers – a high repeat purchase rate by supermarket standards. “Select is going a million miles an hour,” says Greentree.
“It’s growth is in the very high double digits. Importantly, all of its sales are on top of what we’re doing with Home Brand. There is no cannibalisation. Our research shows consumers see Select and Home Brand as very different brands, meeting very different needs.”
Home Brand and Select products are priced 40% and 10% below national brands respectively. Woolworths has research conducted on the brands weekly to track sales, and consumer attitudes to the ranges and identify new categories the brands should enter.
Select recently entered the chewing gum category, and Greentree says Woolworths was “looking in particular at categories that have traditionally been regarded as no-go zones for private label”.
“We’re looking at fresh, value-added products such as packaged salads, fresh pizzas and meal components. In a month we’ll go into breakfast cereal for the first time with six muesli products.
However he says Select would not enter commodity categories such as milk and bread, where Woolworths already sold private label products under its own name.
The more investors trade, the lower their returns, research finds, but some are hard-wired to just keep buying and selling.
Behavioural finance is a relatively new discipline that examines the point at which investment and psychology meet. As a financial planner and a psychologist, this is a natural focus of my attention. One of my favourite researchers in this field is an American named Terrance Odean. Odean is a professor at the Berkeley campus of the University of California.
Somehow, in the 1990s, Odean and his fellow researchers persuaded a discount brokerage firm to give them access to their client data. The researchers received unfettered access to all trading records over a continuous six-year period. The clients were “de-identified” (their identity was kept secret), but all other aspects of their profile was recorded.
The researchers knew how old each trader was, what they did for a living, where they lived and who they lived with. In short, they knew pretty much everything other than the trader’s name. Most importantly, the researchers knew every stock that each trader bought and sold during the six years.
One of the first things the researchers discovered – a result that must have broken the heart of the broking house that gave them access to the data – was that returns were inversely related to frequency of trading: active traders often experienced lower returns than those inclined to buy and hold. The researchers discovered this by comparing the post-sale performance of shares that were sold with the performance of the share that was bought using the initial sale proceeds. Most investors would have done better had they held their original shares.
I don’t know about you, but the last time I looked at the ASX website I could not find any reference to this research at all. I am sure that this is merely an oversight and the link will appear soon.
Of course, merely knowing that excessive trading destroys wealth is one thing. Explaining why people trade too much is the real point of interest. So, the researchers went back to their data (which, presumably, the broking house had been unable to retrieve), looking for clues that would allow them to predict excessive trading.
One predictor stood out: the possession of testicles. Males in the sample were more experienced investors than the females, and traded 45% more often. Both gender groups tended to reduce value through excessive investing, but because they traded more often, men reduced their net return by 2.65 percentage points, as against just 1.72% for women.
The reduction was all due to excessive trading: there was no difference in the performance of the first share selected by the men and the women. It was only once the investors started to sell and buy that they started to reduce their wealth. And men, who buy and sell more often, reduced their investment performance accordingly.
The researchers felt that men were more inclined to be (unfoundedly) optimistic about their own ability to pick shares than women.
Bear in mind that about 70% of shares perform positively over time. Don’t believe me? The average share performance on the average Australian sharemarket from Federation to 2001 was 7.5% a year plus inflation. So, when a person picks any share there is a better than even chance it will rise in value. The problem with men is that they think that a share price rises because they bought it, whereas women are inclined to be a lot more humble. And accurate.
But, chaps, there is hope. Odean and his all-male confreres examined what happened to a man’s investment performance when he got married. Remember, they had six years worth of data. What did they find? You guessed it: when men got married they started to trade much more like women. They did it less and they did it better.
Adrian McMaster, a registered psychologist and financial planner, Eureka Report.
The S&P/ASX 200 is up 1.72% this morning, reaching 6193.2 points at 12.51pm. The US dollar is buying $A0.82 cents.