WorkChoices red tape… Retrospective tax ban sought… Contractors need assurance… Super funds take a wallop… Now for property?… Online share trading limits… Survey: Pay peanuts, get monkeys… Wesfarmers gets go-ahead
Thursday, August 23, 2007/
WorkChoices increases red tape and complexity
A new survey of employers has found that WorkChoices has not been all that it was cracked up to be for employers. The new laws have provided labour flexibility, but significantly increased red tape and complexity.
A third of the 1000 human resources managers surveyed by Deakin University for the Australian Human Resources Institute said WorkChoices has made their job more difficult. Only 3% said it had made it easier.
And 40% thought the new laws added complexity of employment arrangements – 55% reported it increased their need for legal advice, and 54.5% increased record keeping.
Peter Wilson, the chief executive of Australian Human Resources Institute, says while there are some very positive results in terms of flexibility for employers, there is a rub for employers. “The rub is the cost and complexity. It’s a very comprehensive piece of legislation. People are needing help to understand it and comply. Over half are getting advice from lawyers and advisers… that is proving to be a bit of expensive.” And 15.8% said their labour costs had increased.
Tony Steven, CEO of COSBOA, denies he has heard complaints from employers on complexity. He says if there is complexity, it is worth it. “In the same way, the GST introduced an extra level of professionalism to financial management in small business, and probably saw an increase in the number of bookkeepers employed and contracted.
“Over time the new workplace relations system will concentrate small business on best practice in human resources.”
Scott Driscoll, workplace relations manager for Queensland Retail Traders Association, says he is not hearing complaints from employers on WorkChoices. “Essentially the retailers we represent are embracing the flexibility.
“There is more involved, but at end of day you’re getting an agreement that relates to the needs and wants of your business and staff, rather than an antiquated awards system.”
The survey also found that employers had allowed their employers more personal, carer and sick leave days since WorkChoices was introduced, with 38.7% increasing personal carer days allowed. On the other hand, 11.1% reported that staff were working longer hours.
Despite many employers allowing more carer and personal leave, and 20% of employers increasing overall remuneration for employees, 17.2% reported declining workforce morale. Some business groups are blaming this on the union advertising campaign and the confusion and fear around worker rights.
What do you think? Has your red tape burden increased because of WorkChoices? Is it giving you more flexibility? Are your staff taking more paid leave? Email [email protected]
Limit to retrospective taxation sought
It can be a nightmare when the taxman rolls up and tries to increase your tax bill when you assumed the matter was done and dusted. But the Federal Government, in an attempt to give business more certainty, wants to limit the tax office’s ability to impose bigger tax bills on tax returns from past years.
SmartCompany tax expert, Thomson Legal & Regulatory’s Terry Hayes, says it would certainly give taxpayers more certainty, although anyone that attempts fraud or evasion will still have past returns trawled through. “It is part of the self assessment system, where the tax office accepts at-face-value tax returns, and it is good news if it happens, although we have no idea if it will and when.”
The discussion paper released yesterday suggested repealing or amending 107 income tax laws. For more on what the taxman is targeting this year and why, see Terry Hayes’ story.
Contractors want assurance
The Independent Contractors of Australia has warned Labor that it must address certain concerns or it will lose its support.
The ICA, which is the lobby group for about 1.9 million independent contractors, says that under Labor’s policy contractors will be treated as employees, which would reverse protections put in place by the Coalition.
ICA executive director Ken Phillips told SmartCompany that Labor has come a long way. “But we told them eight weeks ago that there were unresolved issues and they said they would come back to us. They haven’t and we are concerned about this.”
Phillips says there are a whole series of tensions in the Labor Party. “How they play out is anyone’s guess, but it is important we understand their position soon.” The ICA wants clarification over whether unions will be able to bring back the practices of using industrial agreements to ban or limit the use of contractors in the workplace.
WorkChoices prohibited a number of practices thathas assisted independent contractors, he says.
Super funds take a wallop
The recent market volatility has, as expected, hit superannuation funds during July and August. But the fall has not been nearly as dramatic as expected. SuperRatings says there was a median drop between 1 July and 22 August for an average Australian in a balanced investment option of just 2.5%. This takes Australians back to where they were in April of this year.
The month of July saw a drop of 0.95%, which was at odds with expectations, says SuperRatings managing director Jeff Bresnahan, given signficant losses in property options (-3.6%), international share options (-2.36%) and Australian share options (-1.8%).
Property’s turn now?
Is the property market really relaunching off the back of the recent market correction? Take a look at the past if you want to predict what may lie ahead.
Within six months of the sharemarket crash of October 1987, the property market went into a massive upswing that ran unimpeded until mid-1989. The economy was expanding rapidly then too, but without a steady hand on the inflationary tiller, official interest rates went to 17%. The ensuing recession lasted until 1993.
When the sharemarket dipped again in 1992, there was a spark of recovery, albeit short-lived, in the property market. However, in 1996 a new price surge heralded a sustained, long-range pattern of growth.
The next biggest hit on the sharemarket was when the so-called tech bubble burst in March 2000. Property forged ahead as investors redirected their funds. But, as the introduction of the GST loomed, most industry sectors went into a wait-and-see holding pattern. The greatest property uncertainty was felt by the first home buyer and new construction markets, which prompted the Federal Government to introduce first home buyer grants as a safety net and a hedge against the short-term inflationary impact of the introduction of the GST.
This time around, the catalysts may be different. There is the sub-prime mortgage fallout from the United States and some inflation pressure in Australia, but the effects are very similar. However, with a more stable economic backdrop and long-term first home buyer assistance in play, there has been a long and sustained period of growth in our nation’s property values and I believe that the volatile sharemarket will prompt even greater demand in the property sector for the balance of the 2007/08 financial year.
The recent 0.25% interest rate rise has not yet shown any dampening effect on investor interest in investment property, and the reality is that rates are still relatively low. In 2007, the steady-as-she-goes, small rate increases have ensured that growth rates on the most sought-after property continues to outpace inflation. These small, steady interest rate rises tend to be fairly rapidly absorbed, but have the greatest dampening effect on those sectors that are highly geared.
Prices in the most sought-after inner-urban precincts have continued to rise and have not slowed over the past 18 months, but we are seeing very high auction clearance rates that appear to be gathering momentum. This is characteristic of winter patterns that precede the higher volumes of spring stock – a time when auction clearances fall somewhat on the back of higher stock levels.
Barely a week after the sharemarket correction, Melbourne recorded auction clearance rates of about 84% last weekend, an indication of increasing demand. The annual clearance rate record is 85%. Sydney’s clearance stood at 69%, compared to its record for the year of 70%. Brisbane also recorded a high clearance, although it does not run on the same percentage system because the number of properties sold at auction are much lower than in the other two major capitals.
The continuing steady upward price trajectory of the highest capital growth areas, coupled with falling rental vacancy rates, may be tipping some spooked sharemarket investors over the property line sooner rather than later in a bid to secure the scarcest, highest growth and least speculative assets. Therefore, the potential is for the inner-urban and prime end of the market to edge up again off an already high demand and high price base.
While the property investment market continues to gather momentum, previous experience clearly shows that the sharper the downward correction is in the sharemarket, the more the property market roars into life.
Monique Wakelin, Eureka Report
Sharing the love online
Day traders spending hours on online stock forums, like hotcopper.com.au and topstocks.com.au, may soon be subject to new rules because of concerns some visitors are using multiple identities to ramp stocks.
The Australian Securities & Investments Commission told The Australian Financial Review that it will begin a review this financial year. Two of the online operators have asked ASIC for help because technology changes have outgrown the current rules.
More than 70,000 investors have signed up to the main online forums in the past three years, many of them day traders. The founder of topstocks.com.au, John Christian, wants ASIC or the ASX to take part in moderating his site. Another site, ShareScene.com, based in Adelaide, uses technology to monitor users and tosses those not following its rules out.
SMEs fail to use remuneration to attract talent
Attracting talent is the least important purpose of a remuneration strategy, with only 2% of business owners placing any value on it, shows a survey of small and medium business owners.
This is despite the fact that 18% of the surveyed companies ranked having the best people as the most significant factor that had made their business better than competitors, ahead of world class service (14%), the ability to adapt and respond to market needs (12%) and their product (9%).
The Grant Thornton survey of 250 business owners with between 20 and 400 staff says remuneration strategies are not being used strategically.
Only 2% of business owners recognised that having a competitive remuneration package is a key driver in attracting high calibre staff, says Tony Markwell, national head of private business services at Grant Thornton.
Companies should include a range of components in their remuneration strategies, he says. This includes bonuses based on performance, profit share and employee share plans. “There are lots of reasons why people stay in a job, but business owners don’t see salary as a key reason. Yet if you have a good remuneration strategy, it gets rid of a reason people might leave and it also makes employees feel part of the business – which is a key reason they stay.”
ACCC gives Wesfarmers green light for Coles Group takeover
The Australian Competition and Consumer Commission has decided not to oppose Wesfarmers’ proposed $18 billion acquisition of the Coles Group.
“The ACCC conducted a comprehensive review of the proposed acquisition, including extensive market inquiries with interested parties,” says ACCC chairman, Graeme Samuel in a statement.
“While these market inquiries revealed some concern from certain market participants about overlap in LPG, hardware, and related sectors, following further analysis the ACCC concluded that there was not likely to be a substantial lessening of competition in any market.”
In relation to hardware, garden products, tools, lighting and electrical products, market inquiries revealed that the relevant Coles businesses, particularly K Mart, were not considered to impose a strong constraint on Wesfarmers’ Bunnings business due to their limited range and targeting of particular price points.
In relation to automotive LPG, Coles is a retailer through Coles Express/Shell, while Wesfarmers is most strongly represented at the production and wholesale levels, as owner of the Kleenheat brand and a participant in the Unigas joint venture with Elgas.
The ACCC found that the vertical integration of Coles Express/Shell’s LPG retail and Kleenheat’s wholesale and production activities is unlikely to disrupt supply to other retailers, due to constraints from other suppliers and competition from other players at the retail level.
The basis upon which the ACCC has reached its decision on Wesfarmers’ proposed acquisition of Coles will be set out in a Public Competition Assessment which will be published on the ACCC’s website in due course.