AFG announces new referral arrangement with Lifebroker

Australian Finance Group (ASX:AFG) is pleased to announce the appointment of Lifebroker to AFG’s life insurance referral program. The new arrangement will make it easier for AFG’s 2850 brokers to offer life insurance referrals to clients, providing them with a wide choice of options for their needs from Lifebroker’s range of comprehensive life insurance products.

Mark Hewitt, AFG General Manager Broker & Residential, said, “I’m delighted to announce that we have chosen Lifebroker, a TAL Group company, for our new life insurance referral service. This new arrangement strengthens our 10-year relationship with TAL and I’m pleased that we have been able to evolve our life insurance offering to better meet the needs of our broker’s clients.

“Lifebroker offers specialist life insurance comparison services, featuring eight of Australia’s leading life insurance companies. With an extensive range of fully-underwritten products – equal to those accessed through a financial adviser – our clients can be confident that they are being looked after by the best in the industry,” said Mr Hewitt. “This is a great value-add to the services our brokers provide to their clients.”

The service for life insurance referrals will give clients access to the price and product comparison services provided by Lifebroker across the following types of insurance: life insurance, income protection, total & permanent disability insurance, trauma insurance, business expense insurance, and life insurance through superannuation.

Alex Homer, Lifebroker CEO, said, “We look forward to working with AFG to give their clients more choice and control over their insurance options. Lifebroker’s goal is to help Australians make better-informed decisions when it comes to life insurance and income protection cover, and this partnership will play a key role in enabling us to do this.”

The life insurance referral program commences today and brokers can opt-in by contacting their AFG relationship manager.

Download Media Release: AFG announces new referral arrangement with Lifebroker.

Media Contacts

Alison Clarke
Head of Corporate Communications AFG
+61 402 781 367 |

Brannon Valmadre
Illuminate Communications
+61 2 8583 6905 | +61 439 688 863


Small businesses making a big difference

Times may be tough, but Australia’s small businesses are giving back more than ever to support charitable causes.

When Brisbane business owner Michelle Cassimatis took time out of the pre-Christmas rush to volunteer at a homeless shelter a few years ago it had an unexpected impact. Despite being confronted by the desperate circumstances of others in her community, it actually made her happier – she felt good to be able to help and was more grateful for what she had.

Since then Ms Cassimatis, who runs Michelle’s Skin and Body Solutions, has tried to encourage her staff to do the same each Christmas and leads by example to support local fundraisers throughout the year. “I think what goes around comes around,” she said. “Yes it’s important to pay rent and bills, but it’s also about giving back. I want my staff to know this is what we do.”

Along with generally boosting gratitude, studies have shown volunteering can also reduce anxiety and increase self-esteem.  But experts say giving back is not only good for your staff, it is good for business. In today’s world being good at what you do is not always enough, consumers now want to know your company is also a good corporate citizen.

The term corporate social responsibility, or CSR, was first coined by entrepreneur John Elkington in the 1990s to describe an expectation that companies should behave ethically in the conduct of their business.  It started with a focus on big business, but in the past few years, branding expert Mikayla Maricic, founder of marketing firm Barely Branded, has seen that expectation expand to encompass small and even micro businesses.

Consumers wanted to know where products were made. Were they environmentally friendly? Were suppliers treated well? How did your business give back to the community it profited from?

“In a positive way it’s put a little bit more pressure on business owners to start thinking about not just the bottom line,” Ms Maricic said.  Supporting charities and not-for-profit groups helped signal to consumers your company valued ethics and stood for more than just profit. It marked you as not just a business, but a valuable member of the community.  “It’s beneficial for you and also for the charity itself.  “I think it’s fantastic to see so many small businesses now that are becoming involved in CSR across multiple areas. And that can have a huge impact for the community really.”

It was estimated about 90 per cent of Australian businesses were SMEs. If each one of them contributed a small amount of time or money to charity it would have a huge impact. Giving back could entail anything from sponsoring a junior sports team to allowing staff time off to volunteer at a local charity. In turn, businesses reaped rewards in everything from brand recognition to staff happiness.

“It really pays off in multiple ways. Employees who felt their company had a social conscience were more enthusiastic and engaged employees.”

CSR was also an effective path to establishing brand trust, which was key for small business success. A study cited by Australian academics in The Conversation in November found social responsibility practices generated a feeling of trust among company stakeholders and were crucial in boosting firms’ long-term competitiveness. The study also found a positive link between CSR and financial performance.

But Ms Maricic cautioned against viewing CSR as a potential business boost. The motivation first and foremost should be to do good.  “If you’re not really coming from an authentic position, then people are going to see through it,” she said. Ms Maricic advised business owners to “find your passion” when deciding what causes to support. It did not need to link to your business.

“Women’s rights and children’s rights are my passion,” Ms Maricic said. She instituted a small but simple plan in her business to both thank clients and support a favoured charity.  “Every time I get a new client I ask where they heard about us. I then contact the referrer and they have a choice. I can either post them out a free movie ticket or, for the value of the ticket, we will buy a school bag for someone who is trying to go back to school in west Africa. “I’ve never had someone want the movie ticket yet.”

All eyes on interest rates in 2017

Commodities have surged and business is confident the economy will improve in 2017, but solid growth could see record low-interest rates begin to rise for the first time in six years.

The new year had barely begun when the first interest rate rise of 2017 was announced.

Brisbane-based lender Suncorp announced in early January it would lift small business loan interest rates by 0.15 per cent to 5.14 per cent.  The company’s banking and wealth chief David Carter said expectations of overseas rates rises, among other things, had led to a tightening of money markets. “Increasing competition for quality funding sources, the cost of meeting regulatory change and events overseas that have altered the outlook for interest rates globally have led to rising funding costs,” Mr Carter said.

“The majority of bank funding is based on these factors, not the Reserve Bank of Australia cash rate,” he said, explaining why the lender had moved rates independent of any Reserve Bank decision.  In recent months, several other lenders have also bumped rates, primarily for investment and interest only home loans.

But the moves have many SME operators pondering what lies ahead for business loan interest rates. And with that comes the question of whether to fix all or part of your small business loan.

The often-quieter first quarter of the year is a good time for owners to consult their business loan broker to review arrangements, as well as ensure the business has sufficient access to capital for any volatility.

It seems even the experts are uncertain about the year ahead, with CMC Markets chief market strategist Michael McCarthy telling The Courier-Mail that unpredictable factors such as the Trump presidency made 2017 a tricky one to forecast.  “The spread of estimates of what will happen over the next 12 months is wider than I have seen for many, many years,” Mr McCarthy said.

And while US interest rates are tipped to rise further in 2017, CommSec’s Craig James predicted the Reserve Bank would not raise rates this year. However further cuts weren’t on the cards either, after six years of the Reserve Bank continuously lowering the official cash rate.  “We think the Reserve Bank will stay on the interest rate sidelines in 2017,” Mr James said.  “The Reserve Bank still has the ability to cut, if inflation rates remain stubbornly low.

But the Reserve Bank, under the new leadership of Dr (Philip) Lowe has made it clear it is not inclined to cut rates again. It still seems a little too early to contemplate rate hikes.”  However, tightening in the US and other money markets may make funding harder to source, triggering more out-of-cycle rises such as the ones seen recently.  Inflation was expected to trend back up towards the lower end of the two to three per cent target band over the next two years with more domestic spending, Mr James said.

Unemployment and underemployment remained concerns. But business confidence was high that the Australian economy would do well in 2017, according to the latest biannual MYOB survey of small business owners.

The Business Monitor survey found 59 percent of small business operators expected the economy to improve, or remain stable in 2017. About 27 percent also reported a lift in revenues; up from 21 percent at the previous Business Monitor survey in July 2016.

In early January there was more good news for the economy when the Australian Bureau of Statistics released data showing Australia had posted a surprise trade surplus of $1.2 billion in November.  Economists had predicted a deficit of around $550 million for the month. It was the first surplus since March 2014 and was driven by surging iron ore and coal prices.

Analysts predict commodities would be the key to further economic growth. HSBC’S chief economist Paul Bloxham has said the Trump administration, with its protectionist stance and focus on infrastructure projects, could drive more demand for Australian resources.  “We think the commodity price rise … is a game changer for the Australian economy,” Mr Bloxham told Sydney’s Daily Telegraph.  If the Trump administration starts to lift the protectionist barriers then the likely policy response from China will be to boost its spending on infrastructure, which in turn, we think, will support demand for hard commodities.”

HSBC has forecast the Australian economy would grow by 2.8 percent this year. It’s good news for the economy and spending, but there may be increasing pressure on business loan interest rates and small business lenders.

Don’t wait to innovate – how innovation could be driving your business further

Australian firms are striving to do things better despite a lack of time, a recent study concludes. ?The country’s biggest and smallest companies see themselves as the most innovative, according to the National Australia Bank’s Business Innovation Index.

The index, compiled by NAB Labs in partnership with the University of Melbourne, surveyed more than 500 businesses. It reported large firms (1000+ employees) and micro businesses (fewer than 19 staff) considered themselves the most innovative, with SMEs trailing behind. Overwhelmingly, businesses reported a lack of time as the biggest barrier to innovation. But for smaller firms, a lack of appropriately skilled staff, along with concerns about technology costs were also a bigger issue than for larger companies.

Overall, Australian firms scored 67.6 out of a possible 100 on the Innovation Index. This ranged from 73 for large firms and 69 for micro businesses down to 66 for SMEs. The Innovation Index study found that although SMEs reported lower levels of innovation, they felt they had a better understanding of their customer base, which was a key driver of positive change.

Small businesses were likely to under-report innovation, classifying it, instead, as improvements or adjustments to existing practice, the report stated. It classed anything businesses did to deliver their goods or services differently, faster or more cost effectively as innovation. The opportunity to provide a better product or service was a greater driver of innovation than cost savings. By industry, mining was considered one of the most innovative, followed by finance and property then utility and telecommunications.

Those working in manufacturing, hospitality and personal services did not consider their industries particularly innovative. The survey invited businesses to describe what they believed were innovative changes that had boosted their businesses. These ranged from improvements to technology to make things more user-friendly for clients, to giving staff a greater autonomy. It also sought their input on how the business could run more efficiently.

To see the full report go to NAB’s website.

In their own words

What some Australian businesses are doing to innovate, according to survey responses collected for the NAB Labs Innovation Index.


  • “Building online content for client engagement and lead generation.”
  • “Moving from print advertising to 100% online for lower cost, better management and a better response.”
  • “Client portals – clients can now readily access information about their business without having to go through their contact at our firm.”
  • “Development of a proprietary app to engage our customers and enable a more efficient delivery system which requires less time spent updating of our operator’s memory due to the aid of the GPS system.”


  • “Giving staff visibility into project costings and clearly stating objectives allowing staff to work to budgets.”
  • “Extensive training of all staff members and a paradigm shift from employee to business owner.”
  • “Less layers of management.”
  • “Established an internal “Shark Tank” to assess new business ideas for investment.”


  • “Survey of customers to differentiate between what they receive and what they really want.”
  • “Non-core tasks (e.g. IT, bookkeeping and other matters that could not possibly justify a full-time person) are all outsourced. Service levels have increased markedly, errors and problems have almost disappeared and clear goals and strategies are in place.”
  • “Weekly discussion of operating issues with team leaders so as to agree best course of action.”
  • “Analysing stocktake variances the same day, instead of weeks/months later.


Source: NAB Labs Innovation Index 2016

Open for business — small business on the government agenda

Newly appointed small business and family enterprise ombudsman Kate Carnell hopes to put a blow-out in payment times to small business on the agenda. She speaks exclusively to us about her role and how it will benefit SMEs.

The independent office of small business and family enterprise ombudsman provides advice to the government and assistance to SMEs with less than 100 employees. Inaugural ombudsman Kate Carnell was appointed in March.

Ms Carnell ran a pharmacy in Canberra for 15 years before entering politics and heading a Liberal minority government in the ACT from 1995-2000. She has served as CEO of Beyond Blue and led the Australian Chamber of Commerce and Industry for two years.

What is the difference between the role of ombudsman and that of the small business commissioner, which it replaced?

The major difference is that this role is independent. This role was set up under legislation, which created an independent entity with significantly more powers than the old commissioner’s role had. So I can instigate inquiries and we can, under certain circumstances, require people to turn up and to give us information – the same sort of powers in some ways as Royal Commissions have. And my appointment is by the Governor-General, so I don’t report to government.

Has small business always been part of your life?

Absolutely. Dad ran his own business. He was an accountant. He and his brother and brother-in-law set up a residential building company, which started the year I was born. My brother also runs a building company in Brisbane. My son bought his own restaurant about 12 months ago. And my daughter’s a barrister – so self-employed. I think being self-employed is very much part of our genetics.

What do you think are the toughest things about running a business?

The thing about small business, I suppose, is that your house is riding on it. And there’s nobody to blame. It’s pretty all-encompassing. I always tell people who think they’re going into small business so that they can have a better work/life balance that possibly they’re choosing the wrong approach. It’s certainly true it can be flexible, but it certainly won’t mean more leisure time.

If you could go back to before you started your first business, what advice would you give yourself?

I would say: ‘It’s really important to have thinking time.’ I did what most small business owners do. I just worked extraordinarily long hours and did everything I could possibly do to help the business – what turned out to be a few businesses – prosper and grow. But I probably didn’t spend enough time thinking strategically. And I suppose – like every single businessperson – I would say: ‘It is really important to keep some focus, some balance between your personal life and your business life.’ You only get one shot. And being in the situation I was, where I spent a huge amount of time away from my family, is something I regret. You can’t get that back.

You’ve been in the role a short time but how do you see it functioning?

The role of the office is probably 70 per cent advocacy and 30 per cent assistance. So the majority of the job isn’t just complaints, but to ensure that small business and family enterprises are heard inside government and also that the marketplace is as fair as possible for small businesses.

You’ve said dispute resolution is going to be a big part of that 30 percent. How will it work?

What we’ll be trying to get across is `Please come to us early’. It’s really hard solving things that are already in the court system. So come to us early and we’ll give advice on where is the best place to get your problem solved – and help you get there. We won’t be just duck-shoving. We’ll be helping people get to where is most appropriate. It might be ACCC (Australian Competition and Consumer Commission). It might be a Commonwealth ombudsman. It might be the telecommunications ombudsman. There’s a chunk of these entities around, but it’s really hard for small business to determine where to go. And for those cases that don’t fit anywhere, or where people haven’t achieved the outcome that they want, we’ll take them onboard. Depending on the issue, I’ll write to the CEO if the other party is a big business, or to the head of department if it’s a government department, outlining the issues and seeking information.

It might not occur to many small businesses to approach you for help?

I think that’s the problem. We need small business to understand that we are here to help and support them. The reason the legislation was passed – with support from all sides of politics – was the understanding that small-to-medium businesses often don’t know how to manage the system. Our job will be to help them.

It can be a dispute with a bigger company. It can be an issue with the bank. It can be an issue with the ATO (Australian Tax Office). It’s amazing how often if you elevate the problem to senior management or CEOs that things can be solved. Often problems are really about middle managers following the rules without a solid dash of common sense.

I’ll give you an example. Yesterday I spoke to a person who lost a lot of business as a result of the RSRT (Road Safety Remuneration Tribunal)’s payments determination and was struggling with their BAS payments. She said: ‘Look, I’ve rung the ATO and I’ve told them I want to enter into a payment plan because we’re really struggling, but we think we’ll get out of it in a couple of months.’ The ATO had been polite but not terribly helpful. So I rang the ATO at a more senior level, explained the situation and they said, `Of course. We’ll make sure our guys are briefed that there’s an issue and to help people with payment plans.”

The ATO doesn’t want to send people broke when they really want to pay. Even a letter from me to CEOs of companies about issues that small businesses might be experiencing – fairly obviously they have to have a real case. But it’s amazing how often problems are solved that senior management or CEOs had no idea was happening.

Is it the case that the Government needs to do more, or does it need to communicate what it already does better?

Oh, absolutely the second one. I’m amazed at the number of things that are available through Government, both State and Federal. There was one recently where there are grants for small business to address internet security. I didn’t know about that. []. There are surprising things out there, but the challenge is to get the information across to the people who need it. We’re also currently conducting a consultation of small businesses asking them what’s on their mind, what are the issues.

So, what are the issues?

Look – some of the things are the things you would expect – payroll tax, red tape issues like BAS. But also things like payment times. There seems to be a pretty systemic problem with bigger businesses blowing out payment times to smaller businesses. And these are issues that really cause problems for small business. You can’t say to your staff, ‘Sorry we’ll pay you in 90 days’. And if you’re a café owner, you can’t say to the person who delivers the bread and milk, ‘We’ll pay you in 90 days’. You don’t need a big blowout to cause a large problem for a small business that’s really got nowhere to go really.

You have consulted with SMEs to formulate an ‘advocacy agenda’. What’s top of the list?

I’d hope we’d be announcing our first (self-generated) inquiry soon and I’d think it’s probably going to be payment times. But the other thing that’s important is that one of the functions of this office is to provide small business input (to the Federal Government) on new regulations and new legislation (before it is enacted). My experience of government is that government doesn’t mean to do stuff that gets in the way of small business. Say, the hiring legislation – some things were done in this piece of legislation that has really impacted on small business. Government didn’t mean to do it. It just ended up them not understanding the difference between big business and small business and the way they operate. But trying to undo the problem is really difficult. We’ll get there. But if we’d picked it up (while the legislation was in draft stage) we could have solved the problem before it happened. That’s the plan. And that’s the role (of ombudsman).

Visit the small business and family business ombudsman’s website at

Ombudsman Kate Carnell encourages all businesses to sign up to the office’s newsletter to stay abreast of developments that impact them

Innovation nation – how the government is helping small business

The Government wants to encourage entrepreneurs to think outside the box with a range of recent changes to remove the stigma – and some penalties – around business failure.

The Government’s Innovation Statement has been roundly welcomed by small business, with changes to insolvency and tax laws aimed at encouraging businesses to push the envelope.

CPA Australia chief executive Alex Malley was quick to embrace the $1 billion package, saying a recent survey of 3000 companies across the Asia Pacific showed Australian small businesses trailed their Asian counterparts significantly on a number of innovation indicators. “On the key measure of innovation – looking at the percentage of small businesses that will introduce a product, service or process in the next year that is new to their market; for Australia it’s only five percent compared to Indonesia’s 46 percent, China at 32 percent, Malaysia 29 percent and Vietnam 26 percent,” Malley said of CPA’s Asia Pacific Small Business Survey 2015.

The survey also found that while 83 percent of Asian small businesses generated revenue from online sales, little more than a third of Australian businesses surveyed did the same. And looking to the future, only eight percent of Australian businesses reported plans to grow this part of their business compared to 40 percent of their Asian counterparts. “Backing an ‘ideas boom’ to replace the mining boom represents a sea-change in thinking and attitude necessary to propel Australia’s future prosperity in the ultra-competitive Asian century,” Malley said.

To encourage innovation, the Government has tailored its package to help companies grasp new opportunities and survive any unforeseen rough patches without incurring penalties from regulators or the taxman.

Below are some of the headline items for small business.

  1. RELAX INSOLVENCY LAWS – Key changes will:
    1. Introduce ‘safe harbour’ provisions to shield company directors from liability for insolvent trading in cases where a restructuring adviser has been engaged to draw up plans for the company to trade out of difficulty.
    2. Reduce the current default bankruptcy period from three years to one.
    3. Render ‘ipso facto’ clauses that allow contracts to be terminated solely due to an insolvency event, unenforceable if the company is undertaking a restructure.

The changes are aimed at striking a better balance between encouraging entrepreneurship and protecting investors from reckless or negligent directors. Many believed Australia’s previous laws were too heavy handed, with the Government saying concerns over inadvertent breaches of insolvent trading laws were frequently cited by investors and professional directors as a reason they were reluctant to get involved with start-ups. The Government also aimed to reduce the?stigma associated with business failure. Most seemed to welcome the changes, although SelfWealth founder Andrew Ward cautioned the reduction in the default bankruptcy period “almost helps spruikers”

  1. GREATER ACCESS TO COMPANY LOSSES – Changes to this section of the tax law are aimed at encouraging companies not turning a profit to be flexible and seek out innovative new opportunities without fear they may lose the ability to write off previous losses. Currently, the Government’s stringent same business test means if a company expands its activities into new profit-generating areas, it may not be able to offset previous losses against new profits. In the first half of this year, the same business test will be replaced by a predominantly similar business test. The new test relaxes laws, allowing companies to access historical losses if their business, while not the same, uses similar assets and generates income from similar sources. “This measure will encourage entrepreneurship by allowing loss-making companies to ‘pivot’ and seek out new opportunities to return to profitability,” the Government’s Innovation Statement read.
  2. INTANGIBLE ASSET DEPRECIATION The Government is changing the rate at which intangible assets – such as patents, trademarks and copyrights – can be depreciated. Innovative companies are more likely to hold a high proportion of intangible, or knowledge-based, assets. At present these assets can only be depreciated in line with their statutory life. For example, a 20-year patent must be depreciated over 20 years, even though it may only generate cash flow for about five years. From July 1, businesses will have the option of self-assessing the tax effective life of any acquired intangible assets. This allows faster tax deduction over a shorter period, which is likely to reduce the cost of investing in these assets?and make them more attractive to investors.
  3. ESTABLISH A ‘DIGITAL MARKETPLACE’ – With an aim to go live in January 2017, the Government is establishing what it calls a digital marketplace. The marketplace, modelled on a UK site launched last year, will be an online directory of information and communication technology (ICT) services and products offered by a range of small to medium sized businesses.The directory will be used by public servants to source and secure software and hardware products and services.“Business suppliers of ICT software and hardware will be able to join the directory easily; while government buyers will be able to easily search for services, identify suitable suppliers and procure the best value option to get the job done,” the Government’s Innovation Statement said. The initiative has the dual aim of allowing SMEs to better compete for government contracts and getting a better deal for taxpayers.
  4. TAX BREAKS FOR EARLY INVESTORS – Investors in eligible start-up companies will receive a 20 percent tax offset on cash invested (capped at $200,000). They will also get a 10-year capital gains tax exemption provided investments are held for three years. These tax breaks will only be available to investments in companies that:
    1. Undertake an eligible business (this is yet to be determined).
    2. Were incorporated in the past three years.
    3. Are not listed on any stock exchange.
    4. Have expenditure and income of less than $1 million and $200,000 respectively

For more information, please see:

Industry groups target cash flow killers

Any small business owner knows that one of the most important aspects of operating, yet also the most difficult to manage, is cash flow.

A campaign calling on big business to cut their payment terms to 30 days is gaining momentum. Kate Carnell cut to the chase on breakfast radio at the end of last year with a very simple observation. “If we want small businesses to be the engine room of the economy – and everybody does. Engines need petrol and petrol is cash flow,” she said.

The message was simple – Australia’s SMEs were being starved of cash flow by a blowout in payment times which forced many to wait months for invoices to be paid.

Ms Carnell, who was appointed Australia’s first Small Business and Family Enterprise Ombudsman last year, has wasted little time launching an inquiry into long payment times.

In recent years, settlement terms to SMEs had extended from 30 days to 60, 90 and even 120 days in some instances.? And some of the main late payment offenders were big business and government, with small businesses lacking the clout needed to demand shorter payment terms.? Add in late payments and many small businesses were going to the wall waiting for invoices to be paid.

Australian Securities and Investment Commission (ASIC) data indicated inadequate cash flow was the leading reason businesses failed.? A recent spike in business failures has underlined the importance of SMEs ensuring they have access to adequate working capital or flexible cash flow finance in uncertain times.

In the third quarter of 2016 Dun & Bradstreet reported 15,116 business failures across Australia, a jump of 42 percent on the previous quarter and the highest since Q1, 2013.? The ASBFEO inquiry into long and late payments was prompted after extensive consultation with SMEs in 2016, which highlighted payment lags as a critical issue. The office was seeking input from small business operators and would holds a series of public consultations through February before delivering a final report in March.

Along with the inquiry, the Ombudsman’s office has joined other major industry groups – Council of Small Business Australia (COSBOA), AiGroup (Australian Industry Group) and the Australian Institute of Company Directors (AICD) – in calling for big business to commit to reducing payment times.

COSBOA head Peter Strong urged CEOs of major companies make public pledges their companies would pay 30-day terms by June 2018.

“Not many people are aware of how entrenched this behaviour has become in our business world.” Mr Strong said.? While 90-day terms were becoming increasingly common in the B2B sphere, even individual contractors were facing 60-day payment terms.

“Individual contractors, unlike B2B payments, often rely on this money to live, to pay mortgages and to put food on the table. In these instances, late payments can have a huge impact,” he said.

Ms Carnell echoed this sentiment and said cutting payment times would deliver a significant boost to the economy and benefit all by ensuring cash was available for SMEs to hire and expand.

Talking on ABC radio, Ms Carnell said: “There are a couple of states in the US, I think, that have taken a really smart approach. They said: ‘Look things are tight, budgets are tight, but one thing we can do to stimulate small business is to pay in 15 days.’ So, just by governments speeding up their payment times, it can make a huge difference to the economy more broadly.”

Collectively, Australian small businesses were owed around $26 billion in unpaid debts, which averaged about $13,000 per business.? Longer payment terms dictated by larger businesses unfairly disadvantaged small business owners.? “You can’t say to your staff, ‘Sorry we’ll pay you in 90 days’,” she said.

Ms Carnell hoped to see protocols enacted to bring the current average payment time of 45 days down to 30 days.? She also praised moves to even the playing field with the introduction in November of a new law protecting small businesses from being forced into unfair contract terms with larger operators.

Visit for more information.

To find out more about the ASBFEO Payment Times and Practices Inquiry or to complete a survey on how late payments have affected your business, visit the ASBFEO website.

Remember, the start of the new year is a good time to review your working capital arrangements. There are a number of lender options available, some of which may not even require your home as security.

And the award goes to…

The Productivity Commission’s (PC) draft report into Australia’s workplace relations framework does not look set to make major changes to the country’s idiosyncratic system of award wages, much to the chagrin of business.

The old saying goes that a good compromise is one that leaves all parties equally unhappy.

And by that yardstick the PC would appear to be on track – with unions preparing to protest planned cuts to Sunday penalty rates, and growing frustration among employer groups over minimal changes to the country’s complex wage awards system.

The commission’s highly-anticipated, 1000-page draft report into the workplace relations framework was released in August and received a lukewarm response all round. But this muted reception crystalised into more strident criticism from employer groups, who had hoped to see the review tackle Australia’s system of 122 awards.

The Business Council of Australia, which initially welcomed the draft, has been outspoken in calling for greater change. In late August BCA chief executive Jennifer Westacott issued a call to action in a strongly-worded speech at Sydney University1. Westacott said the PC had put awards in the too-hard basket and urged a re-think before the final report, due in November.

“To tell companies … to work around an overly complex, conflict-driven system is simply not a modern, forward-looking proposition,” she said.

The BCA advocates narrowing and eventually doing away with awards – which set out pay rates across 122 different work areas – in favour of economy-wide rates for casual, overtime, penalty and shift work.

The commission’s draft report acknowledged Australia’s award system was idiosyncratic but said it was necessary to set benchmarks against which the relative fairness of enterprise bargains and individual contracts could be measured.

BCA’s Ms Westacott also criticised the enterprise bargaining system, which she said resulted in some agreements restricting a manager’s ability to mobilise their people.

In a nod to these concerns, the draft report states: “There are grounds for changes to the Fair Work Act to limit the capacity of (workplace) agreements to regulate the use of contractors and labour hire.” 2

But on the whole, the commission’s draft report concluded only minor, rather than major, changes were needed to a workplace relations framework which it concluded was functioning well.

The PC expressed surprise more small businesses were not using individual flexibility arrangements which allow an employee and employer to negotiate bespoke terms and conditions. It concluded many had not heard of them.3

Perhaps of most interest to SMEs is that the PC recognised constraints on small businesses negotiating individual and collective agreements and has floated the idea of a new type of employment contract – the enterprise contract – which could offer more flexibility.

The proposed enterprise contract would sit somewhere between individual flexibility arrangements (which, while versatile, were costly for small enterprise to strike with each staff member) and enterprise bargains (which could be daunting).

The enterprise contract, as proposed in the draft report, would allow employers to vary an award for entire classes of employees (level 1 retail employees, for example) without having to negotiate with each party individually, or to form an enterprise agreement.4

The enterprise contract could be drawn up without input from employees and could be offered to new employees as a condition of employment, with existing employees having the choice of retaining existing conditions or adopting the new contract.

The commission held a series of public hearings around the country in September and was seeking more input from stakeholders on this proposal before delivering its final report, slated for the end of November.

Draft report key findings

  • Australia’s workplace relations system was not dysfunctional but there was room for improvement. The system needed renovation, not a knockdown and rebuild.
  • By global standards, Australia’s labour market was good, with multiple forms of employment agreements providing flexibility and low levels of industrial activity. Nevertheless, the system could be tweaked to stop manipulations, such as aborted or brief stoppages designed to cause administrative headaches for employers. Similarly, unfair dismissal laws needed refining so procedural errors alone did not result in sacked employees being reinstated or compensated.
  • The nature of work had changed, with about a third of Australia’s workforce working a Saturday or Sunday each week. Penalty rates were needed to compensate for working unsociable hours, but they should also reflect changing norms and consumer demand.
  • The Fair Work Commission could be too legalistic in its approach to determining awards – weighing the opposing arguments of lobbyists, rather than collecting its own data. History and precedence was given too much weight. Similarly, the Fair Work Act and the FWC could sometimes put procedure above substance, to the detriment of common sense.
  • Partisan appointment processes for FWC members could lead to inconsistent decisions. A formalised process was needed.
  • So-called greenfields agreements, struck between unions and new enterprise before any employees have been hired, were becoming more common and problematic. The current system could give unions undue power to stall large capital-intensive projects with sensitive timelines. The PC proposed three options if negotiations were not finalised within three months:
    1. Keep negotiating.
    2. Request the FWC arbitrate between the last offers of both union and employers.
    3. Submit the employer’s offer for FWC approval with a 12-month expiry, at which point the business would have hired employees and they can take charge of normal enterprise bargaining.

Key draft recommendations:

    • Sunday penalty rates – that are not part of overtime or shift work – should be set at Saturday rates for the hospitality, entertainment, retail, restaurants and cafe? industries (it is recommended this be done with 12 months’ notice of introduction).
    • The Fair Work Act 2009 should be amended to replace the BOOT (Better Off Overall Test) with a simpler no-disadvantage test for enterprise and individual agreements.
    • An information kit should be prepared and distributed to small businesses to increase awareness of individual flexibility arrangements for staff.
    • An independent panel (established by state and federal authorities) should select a shortlist of candidates for appointment to the FWC. The final appointment would then be made by the federal Employment Minister. The positions of president, vice president, deputy president and commissioner should be five-year terms with the possibility of reappointment after performance reviews.
    • A minimum standards division should be established as part of the FWC to specifically handle minimum wage and modern award reviews.

1 – Kingsley Laffer Memorial Lecture, Sydney University Wednesday August 13, 2015
2 – Workplace Relations Framework, Productivity Commission Draft Report, Australian Productivity Commission, August, 2015, p 34.
3 – Workplace Relations Framework, Productivity Commission Draft Report, Productivity Commission, August, 2015. Page 36.
4 – Workplace Relations Framework, Productivity Commission Draft Report, Productivity Commission, August, 2015. Page 37.

Budget Bonanza

The budget gave small business something to smile about, but big business is waiting for more.

Are you reading this on a new laptop or tablet? You may already be reaping the benefits of a Budget which promised something special for Australian small businesses and delivered in spades.

Council of Small Business Chief Executive Peter Strong was so excited about the May Budget he had to check himself.

“I have been effusive in my praise of the budget in various media, and this worried me,”1 he wrote in a newspaper opinion piece after the budget was handed down. “But I checked with our members and they agreed with the effusiveness. One even said that I was understating the fact.”

It’s not often you get more than you’ve asked for but that is what this budget delivered for small business. One of the most talked about items was the $20,000 instant asset write-off for businesses with a turnover under $2 million – about 96 percent of all Australian businesses.

From Budget night these businesses could immediately write off against their taxable income purchases of new and secondhand business assets valued at up to $20,000 each. This is a massive bump up from the previous limit of $1000, but it will revert back to this level on July 1, 2017.

“It will provide motivation to people who wish to start a business, those who want to expand their business, and those who want to replace old machinery and stock. This, in turn, will mean an increase in employment opportunities,” Mr Strong said.

The tax rate for business with turnover under the magic $2 million mark has also been cut 1.5 per cent to 28.5 per cent from the start of this financial year, with a 5 percent discount for unincorporated businesses, capped at $1000.

There was some criticism of the cuts from industry bodies representing start-ups, which said many fledgeling tech businesses with turnovers under $2 million were not yet in profit and therefore not in a position to benefit. 2

But there were other sweeteners for start-ups, with changes to allow them to immediately write-off legal and tax advice involved in establishment, which previously had to be depreciated over five years. The government also delivered on a promise to reform employee share schemes to provide more flexibility in salary packages. Eligible start-ups will be able to offer shares and options at a small discount to employees, with tax-deferred and no tax on the discount.

In other changes to cut red tape, the Government is abolishing fringe benefits on all portable devices used by small businesses from April 1 next year. Previously, if two devices were used for a similar purpose – such as a laptop and tablet – only one could be exempted from fringe benefits tax. The Government has also proposed to allow small businesses to change legal structure without attracting a capital gains tax liability at that point. This change is proposed for the 2016/17 income year.

Australian Chamber of Commerce and Industry (ACCI) Chief Executive Kate Carnell said the Budget was a much-needed ‘turbocharge’ for the small business sector, which had been doing it tough for the past 18 months.

About two weeks after the budget speech the ACCI released its March quarter small business survey which showed the sixth consecutive quarter of declining forecasts from business owners and a gloomy outlook for the economy in general.

“The Budget initiatives, combined with record low-interest rates, should help small businesses rediscover their mojo, which the survey shows has gone missing in recent months,” Ms Carnell said. She said she looked forward to the post-budget June quarter results (due in August).

Australian Industry (Ai) Group was more muted in its praise, with Chief Executive Innes Willox joining others in voicing disappointment there was no tax cut for big business, which will continue to pay 30 percent, while small businesses have had a cut to 28.5 percent. The Government has said corporate tax rates will be considered as part of the Tax White Paper process now underway. An options paper is due in the second half of this year before a final White Paper is released prior to next year’s election.

Mr Willox praised moves to make childcare more flexible and affordable, but sounded a warning about the Government’s controversial ban on maternity leave “double dipping”.

Preventing women from accessing both employer and Government schemes would discourage businesses funding their own schemes and wipe out any advantage they may gain in attracting and retaining staff by offering generous maternity packages.

1 Strong, Peter; Hockey’s ‘small-business budget’ perfect for the sector, The Australian, May 14, 2015.
2 9 things start-ups should know about the 2015 Federal Budget, Business Review Weekly, May 13, 2015.

Budgeting beyond the boom

As the investment phase of the mining boom ends, we look at what Australian business needs from the budget to carry the economy forward.

All eyes will be on Canberra next month for one of the most pivotal budgets of recent times. It comes against a backdrop of economic and political instability as ructions within the Liberal party continue to grab headlines.

The Government and business recognise hard decisions need to be made as Australia transitions through the third phase of the mining boom. But will the Government hold its nerve in the face of dissent?

Treasurer Joe Hockey’s first budget, in 2014/15, outlined a range of much-needed saving measures but was roundly seen as a sales disaster.

Deloitte Access Economics partner Chris Richardson told the ABC’s Four Corners: “The Government had the courage – and credit to them – to attempt budget repair in Australia (last year). It turned into major political difficulties.” 1

This year, Hockey’s task is even trickier. The need to rein in spending is greater than ever, but several planned reforms have been scrapped or defeated.

“The politics of this (budget) are a disaster,” Richardson said. “Any political advisor would now be telling the politicians ‘don’t annoy the punters because you’ll lose their votes’ but at some stage this problem still has to be addressed.” 2

Prime Minister Tony Abbott’s recent talk of a boring budget 3 does not bode well for those hoping to see fiscal belt-tightening. But business and industry groups have urged the Government to hold the line on tough reforms in pre-budget submissions. In doing so, key groups – the Australian Industry Group (Ai Group), the Business Council of Australia (BCA) and the Australian Chamber of Commerce and Industry (ACCI) – have stressed the importance of communicating the need for change to the public; something they feel has not been done effectively.

The BCA writes: “The starting point for community support for this program of reform will be to properly explain the compelling need for action.” Echoing that sentiment, Ai Group underlines the need to “build understanding in the broader community.” 4

In simple terms, the first step to fixing a problem is to get the public to recognise that one exists.

To put the current situation in context, the BCA points out that when the GFC hit in 2008, Australia was well positioned to weather the storm with a $20billion surplus and no debt. Today the country is carrying a $40billion deficit and net debt that is 15 per cent of GDP, leaving us exposed to future shocks in uncertain times. Debt is growing each year, indicating a structural deficit, not a cyclical blip that will right itself. And the outlook is not promising. GDP growth is below trend, national income is flat, employment growth sluggish and unemployment on the up.

The reality is – with falls in iron ore and coal prices – Australia can no longer rely on terms of trade windfalls to deliver the economy back to surplus as it has done in the past. The way forward is to cut unsustainable spending and invest in areas that will boost productivity and skills.

The BCA calls for a major “renegotiation of what governments (taxpayers) can be expected to pay for,” with health and aged pensions first up for review. Greater privatised service delivery and user-pays options should be examined.

Industry groups agree this budget should be about repositioning the economy to allow small and medium business to flourish as mining investment contracts. As Treasurer Hockey said in March: “The biggest driver of job growth in the future unquestionably is going to be small business.” 5

Ai Group calls for a focus on incentives for business to innovate and invest and a greater role for Government in helping SMEs access international markets. 6

The Abbott Government has signed several Asian trade deals in the past 12 months and both Ai Group and ACCI want the Government to invest in proactive schemes to tell businesses how they can benefit.

Domestically, ACCI also wants the Small Business Entity Test threshold lifted from $2million annual turnover to $3million (and to further investigate raising it to $5million) to allow more businesses to access tax concessions and simplified reporting. ACCI also calls on the Government to implement the Henry review recommendation that small businesses be able to write off up to $10,000 in new assets each year. 7

On more general tax issues, ACCI also urges the Government to commit to a maximum tax-to-GDP ratio of 23.9 per cent, with indexed thresholds to eliminate bracket creep. And business groups are pushing to see a 1.5 per cent levy on larger businesses dropped now the Paid Parental Leave scheme has been scrapped.

The construction sector has seen mixed blessings in the past year, with slowed mining investment, but the strongest growth in residential building since the early 2000s. Public sector infrastructure investment has fallen and business is urging targeted spending. Certainty at State and Federal levels is vital to avoid a repeat of Victoria’s on-off East West Link. Ai Group and ACCI recommend independent bodies such as Infrastructure Australia play a central role in selecting and prioritising projects to stop them becoming mired in partisan politics.

1 M Wilkinson and K Michelmore, ‘House of Cards’ Four Corners, ABC-tv,16 March 2015.
2 Wilkinson and Michelmore.
3 Staff writer, ‘Tony Abbott says Federal Budget in May to be ‘pretty dull’’, 18 March 2015.
4 Business Council of Australia, BCA Budget Submission 2015-16: A 10-Year Plan For Growth, February 2015.
5 Joe Hockey, Intergenerational Health and Wealth, Q&A, ABC-tv, 16 March 2015.
6 Ai Group, Ai Group Submission to the Federal Government’s 2015-16 Budget, February 2015.
7 Australian Chamber of Commerce and Industry, 2015-16 ACCI Pre-Budget Submission, February 2015.