Economy

Market falling, interest rate rise worry… Bookkeepers back tax agents bill… Small retailers ‘expendable’… NAB nabs Crazy John’s… News/Fairfax targeted… Where the bloody hell are tourism staff?

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Market falling, interest rate rise worry

Australian sharemarkets have stumbled again today, following US markets that fell on Friday after the release of a bundle of unexpectedly weak economic data.

By midday The S&P/ASX 200 had fallen 1.5% on Friday’s close to 5930.6. Selling in Macquarie Bank shares, which last week revealed that much of its high-yield funds are exposed to the US sub-prime market, saw these prices fall by 6.37% to $70.26 by 12am.

The Dow Jones index fell 2.1% or 281.42 points on Friday after rating agency Standard & Poor’s dropped its rating on Bear Sterns, a US hedge fund with significant exposure to the US–sub-prime market, from stable to negative.

More bad news came in the form of an unexpected increase in US unemployment from 4.5% to 4.6% and a slow down in the growth of US service industries.

In Australia, however, it is considered unlikely recent market instability will prevent the Reserve Bank of Australia from lifting interest rates when it meets tomorrow. As of Friday last week the market has priced in a 76% likelihood that rates will rise by 0.25%.

Mike Preston

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Bookkeepers back tax agents bill

Most bookkeepers support a controversial bill that will impose additional educational and legal requirements on unskilled members of the profession, the chief executive of a leading industry group says.

Australian Association of Professional Bookkeepers chief executive Sharyn Grant says, once enacted, the legislation will increase consumer confidence in a sector that has previously suffered from a lack of consistency in training and standards.

“At the moment anyone can hang out a shingle and say they’re a bookkeeper, but there is a huge variation in what is out there,” Grant says. “If you talk to most bookkeepers they are always complaining about the people out there without the knowledge or skills – our members are always having to clean up the mess they leave with unhappy consumers, but it does tarnish the reputation of the industry.”

The proposed Tax Agents Services Bill, currently being circulated in draft from for comment throughout the bookkeeping and accounting industry, would impose new mandatory education obligations and higher professional standards on bookkeepers.

Grant rejects concern that the higher standards imposed by the bill will lead to higher insurance premiums for bookkeepers. “This will benefit the sector – there won’t be significant additional costs and improved consumer confidence will mean more work for bookkeepers,” she says.

Association of Accounting Technicians Australia chief executive Robert Comelli says he also supports the main thrust of the bill.

“The draft legislation is designed to address the problem of unqualified and inexperienced people claiming to be bookkeepers and contracting their services to clients resulting in a high incidence of error and omission, he says. “The end result is usually individuals and small businesses falling foul of the Australian Tax Office and incurring penalties and tax arrear payments.”

Mike Preston

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Small retailers “expendable” in lease negotiations

Many small retailers are “expendable” to their landlords when it comes to lease negotiations in a retail leasing market that is inefficient and inequitable, one Australia’s leading retailers associations says.

Shopping centre owners put the squeeze on specialty retailers when leases come up for renewal because they know the risk of loss of income, close-down and moving costs mean moving is not an option for many retailers, the National Retail Association has told the Productivity Commission inquiry into the retail lease market.

The NRA says the superior information available to shopping centre landlords often gives them the upper hand in lease negotiations with speciality retailers.

“Landlords [should] be required to state the basis for the rental assessments on market review and lease renewal offers,” the NRA says. “The more usual practice is a ‘take it or leave it’ ultimatum – or someone else (unspecified as to use or identity) will take the premises.”

But the views are rejected by the Shopping Centre Council of Australia. The SCCA says in its submission to the inquiry that the retail tenancy market is working efficiently and there is “no evidence of significant market failure that requires correction”, The Australian Financial Review reports today.

The SCCA effectively throws the blame for any problems in the market back on to small retailers. “[G]overnment and landlords cannot be held responsible for every bad decision taken by a retailer,” the report says.

Mike Preston

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NAB nabs Crazy John’s

The National Australia Bank is the latest investor in mobile phone retailer Crazy John’s, investing $25 million for an 8.5% stake in the business valued at about $300 million.

This means that during the last month founder John Ilhan has sold down almost 25% of the company, including 17% to the Smorgan family and the Selpan Group two weeks ago.

But Ilhan still owns 75% of the business and says he will not be exiting. See our previous story in Briefing.

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New sites to take on News and Fairfax

Two new websites are aiming to take on giants News and Fairfax in online dating and the online property market. Partner4Real, a new dating website, has been launched by Chris McKay and Anthony Johnston.

They have spent $2 million developing the site, which aims to sign up 100,000 members in its first year. The site is more like social networking sites such as MySpace than RSVP. Members can update their profiles at no cost via the internet or mobile phone.

Meanwhile the Real Estate Institute of NSW has launched a website in NSW called realestateworld along with a print version in regional parts of the state, reports The Australian Financial Review. It goes head-to-head with the floundering Myhome launched in late February by PBL and Microsoft and Fairfax’s Domain and realestate.com.au.

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Where the bloody hell are tourism staff?

Small and medium companies in the tourism industry are losing staff to the huge salaries being paid by mining and finance companies.

Training and career development was a looming problem, which was leading to a lower level of productivity when compared to other industries, and also made the industry less attractive to investors. An inquiry into the hospitality sector also showed the industry was suffering shortages in while collar staff, bar staff and cleaners.

Making the problem worse? Australian tourism and hospitality workers are in demand thoughout the world, particularly in Asia and the Middle East.

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