Economy

WorkChoices softens, AWAs get in a twist… Do Not Call alarm… Budget expected to boost infrastructure… Super confusion

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Howard softens WorkChoices and creates new AWA red tape

The Howard Government’s plan to introduce a new fairness test for AWAs represents a significant softening of the WorkChoices IR regime and will create more red tape for employers. The changes, which come as a big surprise to business groups, will take effect from this Sunday.

The lack of detail available on the changes, and the short timeframe for business to comply with the new test, looks like policy-making on the run and suggests John Howard is putting his political interests ahead of the needs of the business community.

The change means employers must send all new AWAs with employees who earn less than $75,000 a year to the Office of the Employment Advocate – to be renamed the Workplace Authority – to be checked for compliance with a new fairness test, similar to the “no disadvantage” test that applied before WorkChoices.

AWAs will only be approved if they provide “fair compensation” for the removal of benefits such as penalty allowances, overtime or holiday pay. Existing AWAs will not be required to comply with the test.

Employers and employees will be able to have AWAs vetted by the Workplace Authority prior to lodgement. Once lodged, AWAs that fail the fairness test will expire if not brought up to scratch within 14 days.

Business group leaders such as ACCI chief executive Peter Hendy and Restaurant & Catering Association chief executive John Hart have described the move as “very disappointing”. Apart from increased compliance costs as business rushes to understand the change before next week, many will face higher wage costs and more red tape.

SMEs, without large human resources departments and already struggling to cope with wage pressures in the current skills shortage environment, will be hit particularly hard.

VECCI workplace relations policy director David Gregory says he is surprised by the announcement. “This is more than just fine tuning; it is a significant change to WorkChoices,” he says. “We’re keenly awaiting detail on how the new system will work so we can start advising our members on how to deal with the changes.”

Gregory says there will be no rush to register AWAs before the new system comes into effect next week. “Really, there just isn’t enough time for most businesses to start negotiating new agreements and get them in before the deadline,” he says.

Despite this softening of WorkChoices, business groups still prefer the Liberal IR package to the Labor alternative. New South Wales Business Chamber chief executive Kevin McDonald says even with the new fairness test, the Government’s IR policy is better for business that Labor’s.

“It is a choice between simplified agreement making, with a robust safety net, versus a policy that scraps one million AWAs and forces collective agreements, and the return of ‘no ticket, no start’ to every Australian workplace,” McDonald says.

– Mike Preston

 

Do Not Call register alarm

The huge response by people to list on the Do Not Call register should cause alarm for every business that sells to consumers.

Yesterday was the first day that people could register their home or mobile phone number, and 50,000 swamped the registration within hours of its launch, almost causing the website to collapse. The Government hopes the service can handle up to 700,000 registrations a day.

It was an astonishing response, and shows the level of anger in the community for nuisance calls.

But the fall out on small and medium businesses that sell directly to consumers will be huge: many will be hit with expensive fees, more paperwork and compliance.

About a third of small and medium businesses sell directly to consumers, so that means nearly half a million businesses could be hit by these new rules. Worse, many will be in the personal outsourcing sector, home-based businesses, retail and in the franchising sector – sectors that are traditionally hard for the Government to reach to inform.

Telemarketing is an important part of customer acquisition. While businesses will get 500 calls for free, after that they will pay a tier structure, with changes starting at $71 per year to have 20,000 calls washed and ranging up to $80,000 to have 100 million calls washed.

Customer retention will also be affected. If businesses have an existing business relationship with a customer, the rules say this gives implied consent to make calls.

But this is a very grey area – something business hates, especially when fines for breaching the new rules range from a minimum fine of $1100 to a maximum of $1.1 million.

So businesses will be forced to get written consent agreeing to be contacted for certain purposes – more paperwork and cost.

Businesses will also have to police telemarketers as they will be liable for fines if their call centres breach the rules.

The worst part of the new rules is the lack of education and communication to business. And the most annoying part is that the majority of annoying calls will still arrive at dinner time. Market researchers, education groups, charities and political parties are still free to call.

And while businesses are unsure whether they are allowed to contact their customers, Senator Helen Coonan says political parties can call, even on Sundays – because people want more, not less contact with politicians.

– Amanda Gome

 

Infrastructure, skilled migrants announcements expected from budget

The likelihood of a modest, “inflation-busting” budget appears to be fading fast with leading Government figures suggesting there is room for big infrastructure spending and tax cuts in Tuesday’s budget.

“We’ve proved in the past that when we have a strong budget surplus and strong economy, we can do both,” deputy Prime Minister Mark Vaile told The Australian Financial Review.

Up to $500 million in new spending for roads and rail is just one of the new infrastructure spending initiatives expected in Tuesday’s budget.

Australian Industry Group chief executive Heather Ridout says there is room for tax cuts and infrastructure spending in the budget. The manufacturing industry group called on the Government to cut PAYG tax rates across the board and increase spending to loosen infrastructure bottlenecks.

The Government is also expected to announce on Tuesday that 5000 additional skilled migrants will be introduced to reduce skills shortage pressures.

– Mike Preston

 

Super confusion

It was meant to be a bonanza for superannuation funds. When the Government announced the people could make large after-tax contributions to their super funds of up to $1 million before 30 June, fund managers rubbed their hands. But the baby boomers, as usual, have not behaved as expected.

The flow of funds has not reached the levels anticipated by commentators. A new study released by Mercer Wealth Solutions is blaming lack of education for the lack of awareness of the superannuation changes.

Their survey of 300 working Australians found that half were uncertain if the rules would affect how they plan for retirement. And only a fifth were aware the maximum undeducted contribution until 30 June was $1 million.

Only a third were happy by Simpler Super, while 28% were perplexed but hopeful, and 39% disinterested and disheartened, the survey found.

This suggests the Federal Government has a challenge in its ongoing promotion of superannuation as a competitive savings vehicle, says David Anderson, business leader of Mercer Wealth.

And a bit of knowledge might reverse the situation. Mercer found that a fifth claimed that after seeing the figures they would contribute extra between now and June 30.

Interestingly, about 31% of the over 50s believed that employers are responsible for communicating Simpler Super.

Jeff Bresnahan, managing director of SuperRatings, agrees that many people are simply not aware of the changes coming into force. “There is still a lot of apathy and people are slow to take the changes on board.”

One reason is that super benefits continue after the 30 June deadline. “But don’t be too complacent,” he warns. In 10 years time, such generous superannuation benefits might not be around as the government changes the rules again, concerned at the benefits to the well heeled.

– Amanda Gome

 

Economic round-up

The Reserve Bank of Australia has lowered its 2007 inflation forecast from 2.5% from 2.75% in its quarterly statement on monetary policy released today, but says it stills expects inflation to be back at the top of its 2-3% target band by mid-2008.

The announcement suggests the RBA does not expect to have to raise interest rates this year but will maintain a tightening bias in anticipation of increased pressures in 2008.

New car sales in April were up 10.1% on the same time in 2006, according to new Federal Chamber of Automotive industry figures.

Australia’s trade deficit grew $894 million in March with the value of Australian imports outweighed exports by an estimated $1622 million in March, Australian Bureau of Statistics figures released today revealed.

The S&P/ASX 200 is up 0.7% on yesterday’s close to 6292.1 at 12.40pm. The Australian dollar has dropped to US81.76 cents at the same time, down on last night’s US82.38 cent close.

– Mike Preston

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