New figures heighten skills fears… Retailers buoyant… Crazy John to go it alone? New threat to broadband progress… Stop taxing my benefits… Home offices in the spotlight… Economy roundup…

New figures add to skills fears

The skills shortage is the single biggest problem facing Australian businesses, a new survey shows. Job vacancy figures released by the ABS this morning add weight to their concerns.

Job vacancies increased by 1.7% in the three months to May 31 to reach 166,000. The rise follows increases of 1.5% and 3.1% in the preceding February 2007 and November 2006 quarters.

The labour drought is so tight that even the recruitment industry is getting worried about not being meet clients’ hiring needs.

New data from the Grant Thornton international business survey 2007, shows that 59% of Australian business owners rate the shortage of skilled staff as the single biggest constraint on their business, more than any other factor.

Of the 32 countries involved in the survey, only businesses in New Zealand reported a greater concern about skills shortage than Australians: the issue rated as the biggest business problem by 60% of Kiwis.

“With almost 100% employment, finding skilled labour is the single biggest issue facing Australian business,” says Grant Thornton Australia’s head of private business services, Tony Markwell. “We have not benefited in the way that the EU, for example, has in terms of substantial inflows of skilled migrants from Eastern Europe.”

The skills shortage is also a prime concern in the recruitment industry, with 93% of respondents to the latest Recruiting and Consulting Services Association quarterly member survey reporting it as their top concern.

But the recruiting industry is divided over whether the shortage is an opportunity or a curse: half of those surveyed believe full employment presents a positive opportunity, because desperate employers look to the professionals to help solve their talent crisis, but 49% believe it threatens the industry by making it more difficult to satisfy client needs.

– Mike Preston

Retailers buoyant

Retailers are feeling more optimistic than six months ago, according to the latest Jones Lang La Salle’s Survey of Retail Sentiment. The survey, done in April, found that most retailers were considering a “moderate level of expansion” over the next 12 months.

Retailers have received plenty of good news recently: yesterday’s Census figures showed that median household weekly incomes have increased from $782 in 2001 to $1027 in 2006.

The latest retail trade figures from ABS estimated turnover for the Australian Retail and Hospitality/Services increased by 0.6% in April 2007 to $17.9 billion. This follows increases of 0.7% in both March and February 2007.

– Jacqui Walker

Crazy John to go it alone?

Telstra and reseller John Ilhan’s Crazy John’s will go their separate ways on Sunday. And Ilhan is believed to be planning to launch a virtual mobile network by renting airtime from Vodafone.

Managing director Brendan Fleiter, who has refused to comment on the rumours, told the Australian Financial Review that an announcement about the company’s future would be made on Sunday.

Crazy John’s was Telstra’s biggest re-seller at one time and it has been a difficult relationship to unravel. The companies have been fighting for several years over commissions.

The latest bout centres on Telstra’s concerns that Crazy John’s will take information about Telstra’s customers, collected over the past 12 years, and use it to its own advantage. Yesterday the companies agreed on an interim compromise, until the matter is resolved by the court in August.

– Jacqui Walker

New three to broadband progress

A review into regulations that ensure basic telecommunications services are provided across the country, announced by the Government yesterday, could hold up the deliberations of the panel set up to consider tenders for a national broadband network.

The review into the Universal Service Obligation, announced by Communications Minister Helen Coonan yesterday, also represents a win for Telstra, which is solely responsible for providing the services required by the USO. Telstra says the industry-funded subsidy of about $150 million it receives for providing the services leaves it out of pocket by close to $400 million.

The cost associated with regulatory burdens such as the USO is one of the reasons Telstra is calling for regulatory concessions to allow it to charge more for wholesale access under its proposed fibre to the node broadband plan.

Ovum research director David Kennedy says that although there are no policy reasons why the USO review should delay the broadband panel’s deliberations, if political considerations come into play the process could become entangled.

“The issues around fibre to the node broadband really relates to the competition regime and the USO is really a side issue in that context, but that’s not to say that it couldn’t come into play as a part of the broader deal between the Government and industry players on broadband,” Kennedy says.

The recent awarding of close to $1 billion to an Optus/Elders joint venture (known as OPEL) to build rural broadband infrastructure means the USO review is timely, Kennedy says.

“The USO is primarily about phone services in the rural areas, but the OPEL announcement means Telstra will now face competition in a lot of areas where Telstra once had a monopoly. That means it will lose economies of scale and that will push up its USO losses, so it may make sense for OPEL to carry some of those USO responsibilities.”

– Mike Preston

Stop taxing my benefits

Confusion is growing around when fringe benefits will have to be paid on minor work benefits.

According to a recent ruling from the tax office, minor work benefits will be exempt from fringe benefits tax if they are “infrequent” and “irregular” and were under $300.

But a lot of confusion revolves around the detail. For example, the tax office used the case of an employer who paid for 20 e-tag road tolls for an employee in the ruling. The tax office said 20 e-tags was infrequent and irregular. So what does it regard as substantial? What is the difference between 20 and substantial?

It all sounds like more work for your accountant.

– Amanda Gome

Executives’ home offices under tax scrutiny this year

Tax-avoiding executives are in the spotlight, with the ATO announcing that it had uncovered discrepancies in the tax returns of 180 executives and directors of large corporations. Annual reports were checked and then compared to tax returns which alerted the tax office to potential problems.

Audits of wealthy individuals will continue this year.

Also on the tax man’s list, according to today’s Australian Financial Review, are landlords, as the percentage of investors reporting losses on rental investors continues to rise. Holiday home owners should also watch out as the tax office examines the returns of people who claim for properties that are genuinely not available for rent and deducting for renovations.

People with home offices also need to be wary as it is easy to for the taxman to tell how much tax they should be paying. Industries under the spotlight this year include travel, fitness, miners and construction workers.

– Amanda Gome

Economy roundup

The S&P/ASX 200 has recovered 0.9% of its value at midday today after dropping 1.97% yesterday — its biggest drop since March 14.

A resurgence in concerns about the US sub-prime mortgage market, falling commodity prices and end-of-year profit-taking were key factors behind yesterday’s fall.

This morning’s rebound was triggered by climbing New York crude oil prices causing buying in commodity stocks, according to Bloomberg reports today.

Wobbles in the US housing market and the sub-prime mortgage concerns have also caused the Australian dollar to lose some value, as risk averse investors took some heat out of the carry trade market. At midday the Australian dollar was trading at US83.99c, down from yesterday’s US84.21c close.

– Mike Preston


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