commerce & industry winter 2013

2013 ELECTION EDITION

V O L U M E 8 - W I N T E R 2 0 1 3 - $ 9 . 5 0 P E R E D I T I O N - $ 3 6 A N N U A L S U B S C R I P T I O N

A U S T R A L I A N C H A M B E R O F C O M M E R C E A N D I N D U S T R Y

ICC: World BusIness at the G20

What BusIness Is looKInG For In the neXt GoVernMent

the CoalItIon’s

Plan BY tonY aBBott

aCCI Federal eleCtIon CaMPaIGn: the BIG 4 You Can’t IGnore

a neW

aGenda BY KeVIn rudd

2 MILLION SMALL BUSINESSES.

Did you know Australia’s small business owners employ over 7 million people?

That’s over 60% of our workforce! Yet they’re overlooked, overtaxed and

overregulated. So the Australian Chamber of Commerce and Industry launched

a national grassroots campaign to give small business the big voice it deserves.

Your support for small business can help make sure we’re heard in Canberra. Add your voice at toobigtoignore.org.au

An initiative of

Authorised by M. Love, Campaign for Small Business, Canberra.

THAT’S TOO BIG TO IGNORE!

Chief exeCutive’s message 1

eLeCtiON 2013 THE BIG 4 YOU CAN’T IGNORE FOR SMALL BUSINESS 2

WHAT BUSINESS IS LOOKING FOR IN THE NEXT GOVERNMENT 4

A NEW AGENDA — THE HON KEVIN RUDD MP 8

THE COALITION’S PLAN — THE HON TONY ABBOTT MHR 10

ACCI PUSH FOR RATE CUT 12

SMALL BUSINESS. TOO BIG TO IGNORE 13

WORKPLaCe POLiCYWHS HARMONISATION — KEEPING TO THE PATH 14

“THE BEST WAY TO GET A BAD LAW REPEALED IS TO ENFORCE IT STRICTLY” — LINCOLN 15

iNteRNatiONaL affaiRs MINIMISING RED-TAPE AT THE BORDER IN INTERNATIONAL TRADE 16

ICC: WORLD BUSINESS AT THE G20 18

emPLOYmeNt, eDuCatiON aND tRaiNiNgTHE IMPORTANCE OF WORK INTEGRATED LEARNING 20

PATHWAYS TO PRODUCTIVITY 22

LegaLLEVERAGE AND THE COLLECTIVE BARGAINING EQUATION 24

LITIGATION FUNDERS, SHAREHOLDER CLASS ACTION AND THE IMPACT ON CORPORATE AUSTRALIA 25

PICKETING: THE CASE FOR LEGISLATIVE REFORM 26

DID I BUY A DUD? 28

aCCi memBeR NetWORKREINFORCING THE SAFETY MESSAGE 29

NECA PLAYING AN IMPORTANT ROLE IN APPRENTICESHIP PILOT 30

THE AUSTRALIAN MADE SUMMER OF TENNIS 3 1

SAFETY IN DESIGN TOOLKIT 32

REFORM NEEDED TO UNLOCK THE BENEFITS OF THE MEDICINES SECTOR 33

WHY GST REFORM IS AN ESSENTIAL WIN FOR BUSINESS 34

WISE BEYOND ITS YEARS 36

ACCI MEMBERS SUPPORTING UNIVERSITY RESEARCH 37

ELEVEN ANNUAL PUBLIC HOLIDAYS IS ENOUGH 38

IN MEMORIAM 39

Contents

CommerCe & IndustryPublished by the Australian Chamber of Commerce & Industry (ACCI)

ISBN 9780646534091

edItorDr Imogen Reid Manager Membership Services and Marketing P: 03 9668 9950 E: [email protected] www.acci.asn.au

desIgn3 Degrees Marketing 3dm.com.au

No part of this publication may be reproduced in any manner or form without written permission from ACCI.

The views expressed in Commerce & Industry are not necessarily those of the editors or the Australian Chamber of Commerce & Industry.

WHAT BUSINESS IS LOOKING FOR IN THE NEXT GOVERNMENT

P.4

Jim Collins – Renowned strategy expert, author of ‘Good to Great’ and ‘Great by Choice’ on The Discipline of Endurance

John Lipsky – Deputy MD of the IMF 2006-2011 & Acting MD 2011 on Opportunities of a New World Order

Rahaf Harfoush – Digital Strategist ‘Yes we can’ Obama Campaign on Staying one step ahead in a Hyper-Connected World

Paul Bennet – CCO, IDEO on Design thinking fueling a new global era for Australian brands

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COMMERCE & INDUSTRY WINTER 2013 1

The 2013 federal elecTion is noT far away. naTurally i am being asked by plenTy of business people whaT’s in sTore for The privaTe secTor on The oTher side of polling day.

Crystal-ball gazing is fraught at the best of times. When it comes to politics and elections, even more-so.

But there are a few certainties.

Firstly, whether one lot of politicians or another are elected to govern, the people that run companies and small businesses are private individuals. While political decisions make a difference to the business environment for better or worse, the private sector should not be sitting back waiting for government to do its bit. Our businesses are ours. There is a lot that good thinking, planning and teamwork can do to lift confidence, productivity and competitiveness, and business people must drive that.

Secondly, the government, whether formed by one political party or the other, doesn’t control the economy. Government policies sure have an impact, but the Australian economy is globalised — meaning that regional and global forces shape our well-being. The global financial crisis in 2008 didn’t start here — but it is still having an impact on credit markets and confidence. And the industrialisation of developing nations, especially in Asia,

wasn’t an Australian idea — but it sure has increased a regional middle class with whom we trade goods and services. So expectations that a national government can lift confidence or economic activity by flicking a switch or holding a few cabinet meetings are wrong. Only with a coherent plan of reform and strong leadership over a number of years will the economy strengthen beyond the resources boom.

Thirdly, not too many members of the federal parliament will have any experience in running a business, no matter which party governs. When I addressed the National Press Club in June, I drew attention to the fact that a dismal 9.3% of federal politicians had been business operators. Only 30% had a private sector background, meaning that 70% of people making laws that affect business hadn’t been in the cut and thrust of a private sector workplace for any length of time. These percentages might change a little on the other side of polling day, but not by much. It will still be up to private sector organisations like chambers of commerce and industry associations to school-up the pollies about running companies, risk-taking and employing.

Fourthly, ACCI and our member organisations will be leading the way with fresh private sector advocacy across the small, medium and large business sectors. Our ideas and plans on how the next Australian government can lift economic activity and enterprise are developed by industry. We’ve been confronting political parties and candidates with a pro-private sector agenda, starting with our small business plan, ‘The BIG 4 You Can’t Ignore’: cut down on the red-tape; simplify the tax system; make it easier to employ people; and build better infrastructure.

Amidst the complications of political leadership changes and a minority parliament at a federal level, our ‘Small Business. Too Big To Ignore’ campaign has been a positive and unifying message in this election year.

It’s been a great success so far. Nearly 50,000 supporting small business voices in the first 90 days, and increasing week by week. More than 15,000 Facebook supporters. Politicians, Ministers and

candidates from all sides taking note. More than 700 small business people queuing at 7 o’clock in the morning in Sydney on launch day in April. More than 230 attended the stage 2 ‘BIG 4’ launch in Canberra eight weeks later, in June, and other events around the country. Advertisements and videos being shared on paid and social media, featuring real small business people — not actors.

And that brings me to my fifth certainty of this election year. ACCI, the chamber of commerce movement and supporting industry associations will be continuing our ‘Small Business. Too Big To Ignore’ campaign and ‘The BIG 4 You Can’t Ignore’ message beyond polling day.

Why? The reason is simple. Whilst government can’t do all the heavy lifting, promises or even repaired relationships won’t suffice. Frustration amongst small and medium business people and their staff is deep, and the systems of government that need to be fixed go well beyond one collective ballot, let alone party or personality politics. This campaign demands political action, not just political endorsement. Action by the next Australian government to implement the ‘BIG 4 You Can’t Ignore’ and other elements of ACCI’s private sector agenda is the metric we’re using to keep politicians accountable.

It’s said that the more things change, the more they stay the same.

That may be true of many aspects of the way we are governed. And some of our institutions best serve us when they are strong and stable. But as business people, we have to make sure that this maxim is challenged on the other side of polling day with common-sense decisions by the next government and its bureaucracy that better respect and value the private sector, as the drivers of our nation’s wealth, living standards and diversity.

It’s not just up to them; it’s also up to us.

a Word FroM our ChIeF eXeCutIVeBy Peter Anderson, chief executive, Acci

eLection 2013eLection 2013

By John osBorn, chief oPerAtinG officer, Acci

2 COMMERCE & INDUSTRY AUTUMN 2013

WHAT SMALL BUSINESS NEEDS FROM THE NEXT AUSTRALIAN GOVERNMENT


we have been lisTening To small business. since The launch of our “small business. Too big To ignore” grassrooTs federal elecTion campaign we have been collecTing sTories idenTified by Tens of Thousands of small business people and waTching The Trending Topics develop in social media.

We have taken what small business has to say and distilled it down into “The BIG 4 You Can’t Ignore”; which together with our members we have identified as critical to small business survival and success.

The BIG 4 are supported by tangible examples of what small business needs from the next Australian government. They are by no means exhaustive, but help to start answering the question ‘what specifically is small business looking for?’

We will add more as the campaign goes on and seek firm commitments from all political parties and major candidates to ensure real action for small business.

These reforms will create genuine prosperity that will be shared by the community and small business alike. This is because small business is a central part of all local communities and at the heart of our Australian way of life.

The BIG 4 You Can’t Ignore:

1. Cut down on the RED TAPE

At every level of government, regulation is suffocating small business. The costs and time involved in complying with those regulations is bad enough, and the unnecessary duplication makes it even worse. Let’s cut the red tape and give small business a break. We need to:

• Make government administer superannuation and paid parental leave payments

• Put in place sunset provisions for all business legislation and regulation, as well as a 1-in-1-out rule that actually works

• Make the Small Business Commissioner a warrior to fight red tape; and

• Get more small business in government and less government in small business

2. Simplify the TAX SYSTEM

Our tax and finance systems are impossible for the average small business person to understand and comply with. Many small businesses need to employ specialists and the whole process adds unnecessary cost and time while draining entrepreneurship. Let’s ease the tax burden and make it simpler for all of us. We need to:

• Reduce and phase-out payroll tax

• Restore quarterly company and income tax collection

• Support a trial of a small business credit guarantee; and

• Force governments to pay bills on time or pay interest

3. Make it easier to EMPLOY PEOPLE

Australia has become a very costly place for small business to hire, keep and dismiss staff. And when times are tough, that means jobs and hours get cut. It’s also too hard to get workers with the right skills. Let’s make it easier to employ people and create more jobs. We need to:

• Make sure penalty rates are realistic and don’t make businesses unviable

• Let employers and employees make agreements with the protection of a safety net

• Guarantee a person’s right to work as a self-employed independent contractor

• Ensure that increases to superannuation costs for small business are offset with income tax cuts

4. Build better INFRASTRUCTURE

Our roads are congested, our ports bottlenecked and our rail networks groaning with overuse. Energy costs are skyrocketing and making us less competitive. This affects us all, but is particularly hard on small business. It’s

time to actually do something about it, let’s build new and better infrastructure. We need to get cracking with infrastructure investments for our future prosperity.

For a full list of potential infrastructure projects along with more detail on The BIG 4 You Can’t Ignore for small business visit www.toobigtoignore.org.au and add your voice.To get involved, go to www.toobigtoignore.org.au and #2BIG2IGNORE.

these reForMs WIll Create GenuIne ProsPerItY that WIll Be shared BY the CoMMunItY and sMall BusIness alIKe. thIs Is BeCause sMall BusIness Is a Central Part oF all loCal CoMMunItIes and at the heart oF our australIan WaY oF lIFe.


eLection 2013

By GreG evAns, chief economist And director of economics And industry PoLicy, Acci

WhaT busINEss Is LOOkINg fOr

IN ThE NExT gOvErNmENT

iT is criTical for The nexT governmenT To provide The righT economic environmenT To underpin The success of ausTralian businesses.

ACCI considers there are four essential economic policy initiatives that can provide the platform for stronger confidence levels and the setting in which business is able to create jobs and wealth. Success in achieving this platform is particularly important to encourage the growth and prosperity of the engine room of the Australian economy, the small business sector.

What shape Is small busIness In?

More than a million enterprises defined as small business occupy all corners of the economy and it can be difficult to provide a general economic assessment across their geographic spread and industry breadth.

However, we do know for the most part smaller businesses have not been a leading participant or necessarily a direct beneficiary over the past several years in the stronger parts of the economy – mining, energy and engineering construction.

Smaller enterprises tend to be more prevalent in sectors including housing construction, services, retail, hospitality, tourism and manufacturing, which are areas of the economy that have been under increasing pressure.

Therefore it is no surprise we are continuing to see low levels of business confidence amongst smaller and middle ranking business.

A good analogy is that small businesses are hibernating until a clearer and more optimistic economic outlook appears likely to take hold. Business lending remains flat as proprietors play a safe game and show a reluctance to extend facilities in a period of uncertain demand. This impacts expenditure on plant and equipment and building and structures. This is despite favourable timing opportunities with a strong currency affording potential cost savings. Evidence also suggests continuing weakness in the labour market with job shedding taking place in sectors including construction and retail.

Our own business surveys, which are amongst the largest and longest running in Australia reiterate this subdued performance. The ACCI Business Expectations Survey for the December quarter indicated that general economic conditions, sales revenue, profitability investment and employment are all falling deeper into contractionary territory with specific indicators at or near historic lows.

FaCtors ContrIbutIng to Weaker CondItIons

A range of factors are contributing to weaker conditions and the immediate near term outlook including:

• Persistent international volatility and the uncertain impact this has on the domestic economy

• An elevated currency is placing pressure on trade exposed businesses and reduces competitiveness

• Changing consumer spending patterns and the preference to reduce debt

• Unease about the performance of minority government and resulting policy responses which endorse a low growth green policy agenda

• The impact of higher utility prices brought about by the carbon tax and other emission reduction measures

• An established view of policy makers that business can help deal with the unexpected revenue shortfalls of government through higher tax rates or new taxes.

These factors are also no doubt contributing to shakiness in broader consumer sentiment measures.

eLection 2013

COMMERCE & INDUSTRY AUTUMN 2013 5

eConomy In transItIon – makIng sure maInstream busIness Is able to beneFIt

A well-recognised feature of the domestic economy in recent years is the uneven nature of economic growth.

The peak of the capital investment stage of the mining and energy expansion is expected to occur in 2013, which will encourage more broad based economic growth. There is no formula for how this transition might take place, nor necessarily any economic precedent to follow — it is not an automatic response.

The Reserve Bank is trying to facilitate this transition by assisting interest rate sensitive parts of the economy. Following a series of official rate cuts it is betting on the housing construction sector to be the first cab off the rank, although this is proving slower than expected.

The record high terms of trade and accompanying income boost derived from higher commodity prices was a welcome and perhaps longer than expected dividend for the national economy and for public revenues.

To some extent it provided a security blanket which delayed the need to act more quickly on productivity enhancing reforms, which would have helped business. It also bolstered revenue to government, delaying the urgency for proper public expenditure discipline and encouraged more indulgent spending across all of government.

The point is, if better judgement and policy calls were made over the past two years when the economy was growing strongly and had shrugged off GFC related difficulties, the domestic economy would be in better shape as we emerge from the other side of the resource investment boom. In any case, this now hastens the need for bolder and more meaningful reform.

the eConomIC reForms a neW government should Implement — What busIness needs

There are a range of initiatives government can implement designed to improve the circumstances of business, expand the economy and improve productivity.

The strongly held view of business favours a return to the basics. To make an enduring contribution, government needs to decisively deal with the core elements of economic management. We consider government effort must be directed at providing the correct settings in which business can operate and create wealth rather than relying on deliberate policy interventions, which may only help certain sectors.

A longstanding Productivity Commission review of the effectiveness of small business programs found the best way to assist small business is not through assistance programs, but by creating a sound economic environment.

We also recognise most business people have a well-developed sense of the limitations of government policy and have seen the economic waste when governments engage in knee jerk responses and policy overreach.

1. provIde For a balanCed budget

Strong fiscal management underpins a healthy economy and despite the budget challenges we cannot afford to settle for a vague and ever receding surplus objective. It’s an important economic benchmark that Australia returns to surplus commencing in 2013-14 and begins the task of reducing public debt.

For a mid-sized, trade exposed economy, which is vulnerable to commodity price swings, the consistent achievement of a balanced budget is sound practice and a useful bulwark where international conditions are less stable.

In 2008 a sound fiscal framework gave us the capacity to deal with a large external shock and kept the economy growing. Given our current budget outlook, if such a dislocation occurred in the foreseeable future, our capacity to respond would be greatly reduced.

It’s not just about risk management, a strong budget better places us to deal with future demands on the budget. From the changing structure of our community through ageing and seeking to assist more vulnerable groups, the dimension of these calls is debateable, but it is prudent to have budget flexibility when they may arise.

Lastly, a budget in surplus and lower public debt levels leads to lower overall interest rates and gives more opportunity for the central bank to focus on reducing inflationary pressures as they arise.

To achieve the surplus objective, ACCI considers this will require an independent root and branch review of government spending. This review needs to have a broad reach with no spending categories deemed to be off limits — including business programs.

2. reduCe the overall tax burden and restore InCentIves

Addressing our fiscal position provides the basis for not just tax reform but lower taxes that will lead to enhanced economic activity.

More immediately, ACCI considers no new taxes — or tax increases should be implemented immeadiately. For the purpose of providing certainty, the government should rule this out.

Our taxation system needs to be tilted to provide an incentive to invest, encourage workforce participation, and for small business, it needs to reward risk-taking and entrepreneurship.

It is a phony debate to suggest these objectives cannot be achieved at the same time as delivering the important public and social programs of government.

To some extent the economic slowdown affecting many of our trading competitors has provided a relief valve — alleviating the need for more timely and responsive improvements in our tax system. However, time has caught up, and a period of policy stall has left us with

to aChIeVe the surPlus oBjeCtIVe, aCCI ConsIders thIs WIll requIre an IndePendent root and BranCh reVIeW oF GoVernMent sPendInG. thIs reVIeW needs to haVe a Broad reaCh WIth no sPendInG CateGorIes deeMed to Be oFF lIMIts — InCludInG BusIness ProGraMs.

6 COMMERCE & INDUSTRY WINTER 2013

eLection 2013

an increasingly uncompetitive and productivity detracting taxation regime.

In short, our priorities include:

• Lowering personal income tax

• Changes to the design of capital gains tax so as not to penalise the sale of long held assets, while retaining existing provisions for small business

• Providing greater encouragement for investment with better designed capital allowance provisions

• Reform of state based transaction taxes and payroll tax relief as fiscal circumstances allow

• Nominating a timetable for a reduction in the company tax rate.

In relation to personal income tax, high personal rates can distort efficient decision-making, including workers choosing not to return to the workforce or encouraging income to be spent on consumption rather than saving and investment.

Personal income tax is not just a tax on wages and salaries. Personal income also includes individual income from unincorporated businesses that can be particularly responsive to the level of tax in their decision-making and preparedness to undertake entrepreneurial activity.

Therefore, personal income tax reform should remain the top priority in the government’s tax reform agenda. Specifically, the government should:

• Gradually reduce marginal tax rates, including for middle and higher income earners

• Ensure the elimination of bracket creep via the annual indexation of taxation thresholds.

It was disappointing following the introduction of the carbon tax in July 2012, that the Australian government has increased the tax free threshold from $6000 to $18,200 but at the same time increased the first marginal tax rate from 15 per cent to 19 per cent; and the second marginal tax rate from 30 per cent initially to 32.5 per cent and then to 33 per cent. These recent changes are aimed at providing compensation to low and middle income earners due to the cost of living increase under a carbon tax. They are not motivated by the aspiration to reduce the overall level and burden of personal income tax.

Apart from the temporary flood levy, these changes constitute the first increases in marginal rates in a generation.

ACCI understands the fiscal reality means much of the tax agenda is a medium to longer-term matter, but that should not prevent government from setting out its aspirations in this area.

3. Curb the groWth In regulatIon

A future government needs to recognise the impost of red-tape on business — both its direct cost and the way in which it alters decision-making by business owners — and have a commitment to reduce its burden.

The growth of regulation and the weight of existing regulation is an endemic problem across all modern economies. To mitigate its growth, lawmakers will have to be committed to resisting legislative responses as their first reaction. They also need to acknowledge it is not up to government to create a risk-free society for as many of its citizens as possible.

We urge government to listen to the concerns of small business in this area, especially as larger businesses can have a much higher tolerance for regulation.

Red-tape often arises when regulators feel that they must always err on the side of caution and thus frequently manage their regulatory program by adding more demand for paperwork, increasing compliance requirements and more audits and inspections than necessary. Regulators’ assumption that compliance risks for all businesses are identical is flawed, and thus imposing “one-size-fits-all” regulatory requirement is a poor approach, as it creates unnecessary compliance burden.

The 2012 ACCI National Red-tape Survey found that:

• 44 per cent of business spent 1 to 5 hours per week complying with regulations, with a further 11.7 per cent spending more than 20 hours per week on compliance

• 42.2 per cent of businesses reported that they spent more than $10,000 to comply with government regulatory requirements, with 26.1 per cent of respondents indicating that they spent up to $50,000 on compliance, which is almost equivalent to the cost of employing a full-time employee

• More than one-half (54.3 per cent) of businesses indicated that complying with regulatory requirements, has to some extent prevented them from making necessary changes to grow or expand their business.

The next government must improve its regulatory response to policy debates by better understanding the impact of regulations on the business community, especially smaller entities, and strengthening the regulatory impact analysis process.

4. reduCe energy Costs and abolIsh green programs

For a country that built its post war industrial base and urban expansion on the provision of accessible and affordable energy, it is a monumental failure of policy that many Australian states and territories now have close to the highest retail electricity prices in the developed world.

In NSW, for example, electricity prices are set to double in the period between 2009 and 2014.

Rapidly escalating energy prices are having a profound effect not just on households but across many industries and businesses of all sizes, with energy intensive sectors bearing the brunt.

Empirical work undertaken by ACCI has shown some of the largest negative impacts occur in industries including plastics and chemicals, food processing and metal manufacturing.

Price rises can be attributed to a number of factors, including inefficient network regulation in the case of medium and smaller users, and also the deliberate policy decisions of government in the form of the carbon tax and the full range of other carbon abatement programs,

our taXatIon sYsteM needs to Be tIlted to ProVIde the InCentIVe to InVest, enCouraGe WorKForCe PartICIPatIon and For sMall BusIness, It needs to reWard rIsK taKInG and entrePreneurshIP.

In the lead uP to, and sInCe the IntroduCtIon oF the CarBon taX, We haVe seen suCCessIVe announCeMents FroM larGer enerGY IntensIVe IndustrIes oF WIndInG BaCK or reloCatInG ProduCtIon FaCIlItIes oFFshore WIth Consequent joB losses.


which are significantly affecting the competitiveness of Australian companies.

Running at odds to the government’s message of support for the manufacturing sector, we are beginning to see evidence that high energy costs are inducing a de-industrialisation trend in the economy.

Consider that a medium to large gas user in Australia may pay up to twice as much for energy under a newly negotiated gas supply contract compared with their competitor in the USA. Accordingly, the US is beginning to register a commensurate upswing in manufacturing investment, based on access to low cost energy.

In the lead-up to and since the introduction of the carbon tax, we have seen successive announcements from larger energy intensive industries of winding back or relocating production facilities offshore with consequent job losses.

Such decisions always rest on a number of factors, yet escalating energy prices and uncertainty about further increases has been a strong negative influence. For example, industry comments from the oil refining sector and the closure of some domestic refining capacity were in part attributed to the carbon tax and the shifting Australian dynamic of higher energy prices.

In the case of smaller businesses there are negative spill-over consequences with such closures, while the direct impact of higher energy prices sees many enterprises unable to pass on the cost impost because of their relatively weaker position in the market place or supply chain.

The next government should abolish the carbon tax, the renewable energy target and other green programs which are all putting upward pressure on prices. A review of energy market regulation needs to be undertaken, which places far more weight on the views of energy users.

Moreover, significant budget savings can be made with the abolition of the Department of Climate Change and Energy Efficiency, the Clean Energy Finance Corporation and the Climate Change Authority, with any residual responsibilities to be undertaken by the Department of the Environment.

The next government needs to adopt a more neutral policy in relation to choices about the fuel mix for stationary energy. It should not allow the deliberate skewing of policy away from less costly options including modern coal fired generation, which can deliver carbon emission intensity equivalent to gas fired generation, using full life-cycle analysis.

ConClusIon

This article addresses how to best serve the interests of business and in particular small business. It deals with the most immediate and overarching policy responses, which can help restore confidence, promote economic activity and enhance national productivity.

There is a stream of other essential work including:

• Delivering labour market flexibility

• The provision of essential infrastructure based on sound cost benefit appraisal

• Ensuring competitive lending markets and the availability of finance for business

• Advancing the free trade agenda

• Enhancing the availability of human capital.

Each area has pressing claims for reform and also needs to be progressed. However, unless we get the fundamentals of domestic economic management right, we will severely curtail the benefits flowing from these important micro-economic reforms.

For more information refer to ACCI’s Pre-Budget submission to the federal government February 2013 at www.acci.asn.au/Research-and-Publications/Research/Submissions


eLection 2013

By the hon Kevin rudd mP, Prime minister of AustrALiA

a neW natIonal

CoMPetItIVenessaGenda

The china resources boom is over. The exTraordinary Terms of Trade we enjoyed in The lasT decade will noT reTurn and The surging invesTmenT phase ThaT our producers responded To so well is slowing. in This Time of global economic TransiTion, ausTralia needs a new naTional compeTiTiveness agenda.

The core of this agenda must be a national consensus to lift our annual productivity growth rate to 2 per cent or better. There are seven key areas where we must direct our policy priorities.

1. eleCtrICIty prICIng

Electricity and gas prices in Australia are too high. This is a problem that affects the competitiveness of big and small business and drives up the cost of living for families.

It is easy to blame the carbon price, but the electricity price hike predates that reform. Indeed, the price on carbon contributes less than 10 per cent to national electricity costs.

The fundamental cause of the rise in prices is that the current national electricity regulation regime offers excessive rates of return for publicly-owned transmission and distribution utilities. In recent times, public ownership of these utilities has become

something of a cash cow for various state and territory governments.

Changing this system is part of the solution. Reforms are also needed to ensure that Australian businesses and households have ready access to a supply of competitively priced gas.

2. labour market FlexIbIlIty

The Fair Work Act restored balance to the Australian industrial relations climate and has defied the alarms raised on its introduction.

Productivity did not grind to a halt. Under the Government’s system, productivity

our natIonal oBjeCtIVe Must Be to BuIld the Best eduCated, Best traIned, Best sKIlled WorKForCe anYWhere In the World.


in the market sector is running at almost 2 per cent per annum – one and a half times the pace achieved during the era of WorkChoices.

There has been no wage explosion. The Wage Price Index has grown at a moderate 3.2 per cent over the year.

Industrial disputes are low – today the rate of industrial disputes is around one third the rate in terms of days lost compared to the period of the Howard Government.

There are still opportunities under the Act to boost productivity and we are determined to cooperate with the business community and the unions to achieve these improvements. Our consultations have already identified large greenfields projects as an area where productivity can be improved.

Greenfields projects represent significant levels of investment and employ large numbers of Australians. Often it is these undertakings that showcase Australia’s broader industrial, regulatory and investment circumstances to the world. It is vital that we make them work and present Australia in the best light.

3. busIness produCtIvIty

The Business Council of Australia has recently reported on problems in Australian business productivity including, competent project management as well as the most effective use of capital by management.

This insight reveals that lifting the productivity agenda is not just the responsibility of the labour market. Sometimes bad industrial outcomes spring not from the hostility of any particular union but the poor decisions of management.

A shared problem requires a shared solution. All of us, government, employers and employees must look at boosting productivity as their collective responsibility.

The same sense of collective responsibility should drive us to broader and deeper engagement with Asia.

Not enough Australian business leaders are Asia-capable. Without this capability, we cannot properly seize the opportunities that our region offers.

We are living through the Asian Century, yet the undeniable truth is that Australia is under-represented in Asia beyond the resource and energy sector.

4. regulatIon

We need a new approach to the regulatory impost on business from all levels of government.

This applies to the multiple and conflicting environmental assessment requirements that currently exist for state and federal governments.

We must aim at having a single integrated assessment system. Integration will remove so much of the regulatory burden faced by businesses when trying to get a project off the ground.

5. eduCatIon, skIlls and traInIng

Our national objective must be to build the best educated, best trained, best skilled workforce anywhere in the world.

Australia now has universal pre-school education supervised by teachers for a minimum of 15 hours a week emphasising pre-literacy, pre-numeracy skills.

We have NAPLAN to make the literacy and numeracy performance of all schools publicly transparent.

The government’s Better Schools policy outlines a further $10 billion investment to lift school standards and education outcomes through transparent school performance plans.

Uncapping domestic university places has led to 190,000 more students at university than five years ago. We have also brought university education within reach of students whose socio-economic circumstances would have seen them miss out less than a decade ago.

We do, however, need to do more with vocational education and training, particularly given the recent withdrawal of effort by many of the states.

6. InFrastruCture

Infrastructure Australia is doing great work. For the first time in the nation’s history, a national infrastructure priority list has been developed on the basis of a rigorous cost-benefit analysis.

Major road, rail, port and urban transport projects are underway.

The National Broadband Network is being rolled out – the new infrastructure of the 21st century, a massive productivity driver for firms.

We do, however, need to embrace new forms of infrastructure financing and this must be our priority.

7. small busIness

We must improve the operating environment for Australian small businesses.

Partly this is about access to capital but other productivity drivers, such as an effective take up of the NBN, are also critical.

There is no challenge too great for the energy and ambition of the Australian people.

In the 80s, we did away with our old, inward-looking economy and embraced a modern, competitive model that has delivered 22 years of economic growth.

In 2008, we worked together to come through the Global Financial Crisis with our banking sector, job market and social compact intact.

Together, we can master this moment and put in place the policy changes that will secure Australia’s long term prosperity.

a shared ProBleM requIres a shared solutIon. all oF us, GoVernMent, eMPloYers and eMPloYees Must looK at BoostInG ProduCtIVItY as theIr ColleCtIVe resPonsIBIlItY.


eLection 2013

in my firsT speech To The parliamenT, 19 years ago, i expressed my belief ThaT “There is no limiT To whaT ausTralia can achieve”. over seven parliamenTs, i have never wavered in my belief ThaT our besT days as a naTion are sTill ahead of us.

A stronger economy is the key to almost everything we wish for as a nation: it means more jobs, higher wages, greater government revenue, better services and, ultimately, stronger and more cohesive communities. I thank ACCI, as well as the state chambers of commerce, for your contribution to the ongoing debate about how we can best maximise our economic opportunities.

We need higher growth across the economy, not just in mining and resources. Indeed, we need to avoid over-reliance on any one sector of our economy. The Coalition aims to build a more diverse, world class economy — a five-pillar economy — that builds on our strengths in manufacturing innovation, agricultural exports, advanced services, and world-class education and research, as well as in mining.

Strong economic growth makes it possible to cut taxes, increase the surplus and boost spending. That’s what actually took place for much of the term of the Howard government.

By contrast, since 2007, GDP growth per head of population has been only one-third of that in the Howard era. Over the past five years multi-factor productivity has actually declined by 3 per cent. At the same time, the private savings ratio is at the highest level in two decades. People don’t trust the government to save so they are saving so much more themselves.

By the hon tony ABBott mhr, LeAder of the oPPosition

the CoalItIon’s Plan For a stronG and

ProsPerous eConoMY


The current government believes the answer to every economic challenge is more taxes, more spending and more regulation. On top of the carbon tax and the mining tax, there have been a further 25 new or increased taxes. Spending is $90 billion higher this year than in the last year of the Howard government. As well, there are nearly 21,000 new regulations on the books since this government came to power.

There is a better way.

The Coalition will build a stronger economy through lower taxes, more efficient government and more productive businesses. We will get the Budget under control, abolish unnecessary taxes, boost productivity and deliver more growth through closer engagement with Asia.

Our Real Solutions plan (available to download from www.realsolutions.org.au) details our positive plans that will:

1. Abolish the carbon tax because you don’t improve the environment by damaging the economy.

2. Make substantial savings in government expenditure because governments, like families and businesses, can’t keep living beyond their means and because lower spending will make it possible to reduce taxes responsibly.

3. Deliver a modest cut in company tax – funded from savings in the Budget.

4. Introduce our deregulation reform agenda which includes cutting $1 billion of red-tape each year and making the parliament spend two days a year to remove regulation.

5. Scrap the mining tax because you don’t improve the economy by penalising success.

6. Get big, new road projects underway in our major cities.

7. Restore the Australian Building and Construction Commission so that there will be less union militancy.

8. Deliver a state-based one-stop shop for environmental approvals to streamline the environmental approval process.

9. Reform competition policy and deliver more competitive markets through a root and branch review of competition laws.

10. Establish a Registered Organisations Commission to overcome the inadequacies revealed by Fair Work Australia’s investigation into the HSU.

These are just some of the policy commitments that we have already made that form part of our plans for a stronger economy, more modern infrastructure, a cleaner environment, stronger communities and stronger borders. Taken together, our plans should significantly boost economic growth, which is the foundation of a better life for all Australians.

With the right polices, we can restore the jobs growth achieved under the Howard government, creating one million new jobs over five years and two million jobs over the next decade.

My message to ACCI is that the economic success of the last Coalition government was not an aberration or

fluke. If elected, we will be a government that keeps its word, delivers on its commitments and provides business with the certainty and confidence it needs to invest and generate jobs.

This is the positive alternative the Coalition offers.

stronG eConoMIC GroWth MaKes It PossIBle to Cut taXes, InCrease the surPlus and Boost sPendInG.

We WIll Get the BudGet under Control, aBolIsh unneCessarY taXes, Boost ProduCtIVItY and delIVer More GroWth throuGh Closer enGaGeMent WIth asIa.


eLection 2013

acci has launched a naTional push for an inTeresT raTe cuT by major banks, ouTside of The reserve bank cycle.

Decisions by the Reserve Bank that keep official interest rates on hold are not a get out of gaol free card for the banks. Reading the fine print, these decisions should pressure retail banks to reduce interest rates, especially to their small business customers. And it should be a sizeable reduction, at least the value of one of those monthly 25 basis point reductions in rates.

We can expect banks to resist, but that doesn’t make their position fair or logical.

ACCI’s call comes on the back of public comments on 14th February by Commonwealth Bank Chief Executive Ian Narev who told ABC Radio AM that an independent cut was ‘quite plausible over time’. It has also received independent support from commentators and analysts.

Banks now adopt a regular practice of not replicating Reserve Bank decisions in full. More often than not, when the Reserve reduces rates, banks withhold a portion of the cut for themselves. Some even change rates outside the cycle. The precedent has been set by the banks themselves for a rate cut even when the Reserve doesn’t do so.

The fine print of the February decision lets us into an important trade secret. It tells us that lending risks for banks have “narrowed” and that “funding conditions for financial institutions are more favourable”. This is official information that the banks should not sidestep. More favourable funding conditions for banks means that they are now accessing funds on overseas markets at a better (read, lower) price. Remember, the high price of funds on wholesale capital markets was used by banks as the reason for not fully passing on previous rate reductions.

The banks had a point then, but as the global situation has changed so should the price they now charge Australian small businesses and households.

The obligation banks now have is to allow the ‘more favourable’ conditions they are experiencing to also become more favourable for their customers, not just themselves.

The portion of past interest rate cuts the banks held for themselves, because of higher wholesale funding costs, should be returned to customers. The amount differs bank to bank, but the principle is clear. The unfavourable funding cost pressure that banks used as justification has eased. Keeping that portion of a customer’s interest rate cut on an ongoing basis, when the problem is not ongoing, is highway robbery.

For small and medium businesses the case for a rate cut outside the cycle is especially strong. The higher risk premium banks put on interest rates charged to small and medium business customers after the global financial crisis should be reviewed because the Reserve now tells us that these higher risks are less in play.

What’s also clear is that the Reserve Bank is still concerned about the health of businesses outside the resources sector. It says that these sectors have “experienced weaker conditions”. If that’s the case, and industry surveys confirm the point, then the viability of businesses and jobs is compromised if rates are not cut when they should be.

This should not be news to the banks. Day in, day out banks are checking out business conditions. They know that the cost of doing business in Australia has risen, with a high dollar, higher energy and labour costs, and extra red-tape burdens. Understandably, the credit departments of banks take a firm line about business viability and business models before lending money. But once they have secured their finance, banks must help lubricate the wheels of the economy by making sure that customers are dealt with fairly.

Governments also have a role to play, especially in making sure that the banking industry is well governed and competitive enough to allow the price of finance to reflect market realities. Some of the reforms by the Howard, Rudd and Gillard governments have helped us take steps towards these goals. However, most business people still find it a very unequal playing field when negotiating or renegotiating finance.

Financial institutions also have a role to help achieve national goals to take our economy more deeply into Asia. If we are to truly reap the benefits of “Australia in the Asian Century”, we will need plenty more capital for Australian businesses to expand at home and abroad. This can only be done with everyone, including the banks, looking at the bigger picture and adopting a prudent, but not overly conservative, approach to risk. Export finance for Australian small businesses pretty much dried up in the wake of the global financial crisis, and has only partially recovered.

There is a lot of frustration within the small business community with powerful forces swirling around them, whether governments, competitors or those overseas financial organisations that triggered the global financial crisis. Competition is a fact of life, and not all of that frustration can be eased. But, competition should not be at the expense of fair dealing by financial institutions. After all, their business model as well as that of governments should also be predicated on wanting business people to succeed in growing their business, creating jobs and getting ahead. The tide of a successful economy raises all boats.

We all want a well-managed banking system with a good bottom line. I believe in that strongly, and we’ve basically got it. What we suffer from is a lack of competition and a sensitivity to the customer. My message is simple: fair is fair. A rate cut that is withheld should be passed on when circumstances change, as they now have. Banks need to think big picture. If banks don’t have profitable small business customers, and mortgage holders with secure jobs, then everyone loses out. Play fair. Cut the rates. Cut them now, and cut the excuses.

aCCI Push For rate CutBy Peter Anderson, chief executive, Acci

We Can eXPeCt BanKs to resIst, But that doesn’t MaKe theIr PosItIon FaIr or loGICal.


someThing’s changing. The silenT majoriTy don’T usually sTand up To be counTed.

Local business people by nature are individually minded, spread across the country and in competition with each other. They’re more comfortable making and doing things and employing people than attending meetings or getting involved in political matters. With such independent streaks, they’re hard to mobilise.

Powerful forces like governments, politicians and banks know it and, too often, take advantage of it.

That’s why 10 April 2013 marked a turning point in our nation’s business history. Movements start from a moment, an idea, an event. On that day, more than 700 people running small and medium businesses took hours away from their business to come together in Sydney and start a main-stream mobilisation campaign to make themselves heard this federal election year, and beyond.

To do it, they’re not creating a political party or new organisations. They’re using the strength of the local, state, national and global chambers of commerce movement to tell their stories and use their voice to make a difference.

Grass roots movements work if they express a core truth, and work especially well if that truth reflects the silent majority.

The ‘Small Business. Too Big To Ignore’ campaign launched by ACCI in Sydney’s suburbs is that core truth. And being part of local communities in every region, town, suburb and capital means these business people and their staff are the silent majority, writ large.

There’s over two million small businesses and they employ seven million Australians. These are incredible numbers, yet it seems the needs of those that take financial risk in employing fellow Australians are routinely overlooked.

Being united like never before by the chambers of commerce and industry movement is a truly exciting moment. And good for Australian democracy and, if they are listened to, for the economy and community.

By combining new campaigning methods like social networking with tried and true

methods such as word of mouth, local visibility and advertising, this mobilisation campaign will stretch across the country over coming weeks and months.

And not before time. The importance of this historic partnership is brought about by the real frustration felt by business people, that decision makers have either stopped — or weren’t listening in the first place — to their plight.

Small business owners have watched with growing frustration as governments, politicians and activist groups have, for the most part, taken them for granted, taxed them more, overregulated them, denied them family time, eaten into their profits, tried to pit their staff against them, undermined their job and business security, broken promises to them, spoken to them in platitudes, forced them to fund everyone else’s retirement and disrespected them.

No longer does that frustration need to gnaw away on the inside. It’s time to get active in a civil but loud and visible way. To no longer be powerless, even if you feel powerless.

The launch event set the tone. No politicians on stage or blokes with pin stripe suits in the background. Instead, real business people telling their stories about why, collectively, they are too big to ignore.

The campaign’s objective is to get governments and politicians at all levels and of all colours to change attitudes and behaviours when making decisions that affect business people and jobs. This year’s federal election is an important test, but attitudes and behaviours that take business for granted are ingrained deep into the way governments work, at all levels.

For starters, hardly any politicians, and even fewer public servants, have direct experience in small business or as employers. The launch came in a week when the world remembered a former British Prime Minister who re-built an economy through the eyes of a grocer’s daughter; that’s quite a contrast.

Not to mention Small Business Ministers who seem to come and go all too rapidly, as if small business is just a springboard to

some other career path or a better offer.

None of this is grandiose. In a nutshell, it is about government making it easier, not harder, to succeed in business.

There will be at least four main themes in the campaign, around reducing government burdens, employment reform, tax relief and better infrastructure. But instead of telling small business what’s good for them, this campaign is about firstly listening to them, and letting them set the agenda.

One of the really practical ways this will happen is through an interactive web site, www.toobigtoignore.org.au and #2BIG2IGNORE where small business people can share, in their words, their stories.

Small business owners are positive by nature — they have to be by taking on the risks that go with starting up a business in the first place. But there comes a time when everyone reaches the point where they ask themselves: Is it all really worth it?

For our community’s sake it has to be worth it. And made worth it. Just imagine the impact, especially in regional Australia, if one hundred of the two million small businesses decided to close their doors today? And then another hundred did the same thing tomorrow? Where are they and their staff going to get jobs?

Now, through this united campaign, they have a collective voice to really show decision makers that they are too big to ignore.

Messages are being carried out by small business people around the nation, in shops, cafes, hotels, offices and on trucks. Give them the thumbs up, and let them know you’re behind them. If the broader community unite with small business, to say they are too big to ignore, then no politicians, not even the most hard hearted, can survive in politics without changing the way they do and see business.

To get involved, go to www.toobigtoignore.org.au and #2BIG2IGNORE.

sMall BusIness–too BIG to IGnoreBy Peter Anderson, chief executive, Acci

eLection 2013


worKPLAce PoLicy

january This year saw an addiTional Two jurisdicTions move across To The harmonised work healTh and safeTy (whs) sysTem, leaving only wesTern ausTralia and vicToria To join.

All the indications are that Western Australia will amend its WHS legislation and substantially align with the harmonised system. However, the Victorian government’s decision not to proceed with the harmonisation process is disappointing.

The Victorian system is the template for much of what is contained in the Model Act, so Victorian employers are likely to have the least to gain in the short term. However, as state boundaries become less relevant to the doing of business, it is to be hoped that the Victorian government will see the benefits of being a part of a harmonised system.

The adoption of a harmonised approach to WHS in Australia has not been smooth, nor has perfect alignment been achieved. Neither outcome should be a surprise. Each jurisdiction had a different starting point and local imperatives for change, and what each has done reflects the composition of their respective legislatures. So far it’s a pretty good fit.

It should be remembered that this journey started because harmonisation is a sensible and desirable outcome. Despite issues remaining with the Model Act, regulations and codes of practice, harmonisation is still a worthy pursuit, the benefits of which have been well documented.

So where to from here?

The greatest threat to a sustainable, harmonised WHS system will be what happens on the ground. If there are inconsistent approaches adopted by local regulators and courts, then harmonisation will exist in name only and the benefits which are expected to flow will be transitory. The test now is keeping everyone on the same path.

How Safe Work Australia, both the agency and its members, fulfils its leadership role will also be critical. The pursuit of safer workplaces is a continuous journey and the proof will be in the pudding — how the harmonisation package actually works in the workplace. The challenge for Safe Work Australia is to find ways for those making the journey to be willing travellers, not reluctant passengers.

Significantly, the most important travellers are the stakeholders in WHS — the employers and workers. From the employer perspective that means ensuring a system which is fair, balanced and underpinned by objective analysis, not ideology.

About NSWBC: NSW Business Chamber has been helping to promote the prosperity and capability of Australian businesses for more than 185 years. www.nswbusinesschamber.com.au

By GreG PAttison, GenerAL mAnAGer worKPLAce soLutions, new south wALes Business chAmBer

Whs harMonIsatIon – KeePInG to the Path

IF there are InConsIstent aPProaChes adoPted BY loCal reGulators and Courts, then harMonIsatIon WIll eXIst In naMe onlY and the BeneFIts WhICh are eXPeCted to FloW WIll Be transItorY.


if you’re an honesT person running a small business Trying To comply wiTh hundreds of workplace laws ThaT inspecTors enforce sTricTly, Things are geTTing harder.

The blockbuster movie, Lincoln, portrayed a wise and visionary political leader. His message about bad laws could equally apply to much of our modern day over-regulation. Workplace laws are a case in point.

For four consecutive days in February the government rolled out plans for extra workplace regulation. On current count, at least a dozen new obligations have been legislated on top of the 700 page Fair Work Act and the hundreds of extra award rules. Some commenced mid-year, others from January 2014. More were added in April, May and June, all in the name of work and family, worker flexibility and preventing bullying. Each worthy goals, but think about it; new worker rights have a flip-side. They have to be paid for. They have to be workable. Otherwise, they achieve nothing.

Don’t be tricked by announcements on a daily drip-feed. It’s the cumulative impact that matters. Who’s auditing the total burden on jobs and business confidence? No-one it seems. Parliament constantly passes workplace laws. Inspectors enforce them whether or not they make sense. Fines of up to $51,000 apply for every breach. Each new rule is a straw that can break the camel’s back but no-one looks beyond the straw.

If the government wants its fair work laws to be durable, they have to be fair and flexible for business, not just for workers or unions. You can’t run a small business when the rules are so skewed that unions and tribunals impose their will and then multiple people can, at the one time, also demand when they want to work, where they want to work, how they want to work and when they will take or return from leave.

Sure, reconciling work and family can help lift participation and that’s good for

productivity. But trying to do it through new rules is a really blunt instrument. Nothing can be reconciled if the rules aren’t fair to the business. A week of one-way traffic only adds to business fears that the government’s fair work laws are an overreach, swinging the pendulum far too far back to worker and union rights.

The irony in demanding that employers provide workers with flexibility to work in non-standard ways and use non-standard rosters is that many other parts of the government’s industrial relations system impose restrictions on the ability of employers to agree to that very flexibility. Unions want to limit casual and part time work, claiming it’s insecure, despite being a proven pathway to staying in the workforce while raising a family. Fair Work Commission awards regulate how rosters like the 38 hour week are to be worked. High penalty rates result in some weekend work being completely unaffordable. Rights to make individual workplace agreements were abolished. All employer-employee agreements now have to be add-ons to national rules, not rule changing. Unions have powers to block self-employed contracting, and do so. The list of inflexibilities goes on.

Industry must not allow itself to be wedged by these developments. The business case for industrial relations reform is all about fairness and flexibility that drives business efficiency and more jobs. That is, flexibility where a sensible set of rules apply but where more decisions are made in workplaces at a local level about working arrangements. That way, business capacity, the interests of workers and the practicality of worker requests can be decided without big brother looking over your shoulder threatening $51,000 fines if you don’t sign on.

It’s not a good outcome for the economy if business confidence in the fair work system completely collapses because the government adopts a one-way street to changes.

There are pressing industrial relations issues that need to be fixed, and some involve the fair work laws. The government knows about them. Many were acknowledged by its own review panel last year. These include fixing union vetoes over new infrastructure project agreements, union strikes without genuine bargaining, obstacles to workable employer-employee agreements, union abuses of workplace entry rights and penalty rates that are so high that some businesses can’t make a dollar if they open their doors on weekends or public holidays.

Fixing these grittier problems isn’t as easy as popular announcements about work and family. Unions will object, making it harder for a Labor government. But fixing them is what national leadership is about. Moreso, it’s what the economy demands.

“the Best WaY to Get a Bad laW rePealed Is to enForCe It strICtlY” — lInColnBy Peter Anderson, chief executive, Acci

IF the GoVernMent Wants Its FaIr WorK laWs to Be duraBle, theY haVe to Be FaIr and FleXIBle For BusIness, not just For WorKers or unIons.


internAtionAL AffAirs

By Andrew wiLLcocKs, certificAtes of oriGin comPLiAnce officer, Acci

many ausTralian Travellers will be familiar wiTh The documenTary requiremenTs for enTry inTo foreign counTries. These include holding a valid passporT, and ofTen The requiremenT for a visa To be arranged prior To deparTure.

Whilst border entry schemes vary from country to country, thanks to the harmonisation of international travel documentation there has always been a standard set of documents that Customs officers will look for at the destination airport. Many airports are famous for lengthy queues, but in the main processes run smoothly, with Customs receiving documents and accepting them following a level of scrutiny. The experience is smoother still if electronic reader systems are used, as is the experience in Australia and New Zealand.

Such is the case for the international trade in goods. When goods are imported or exported, a set of accompanying documents are required by the destination country, and processes are streamlined if the documents are presented in a standard form. The process of getting the goods across the border is even quicker if the standardised documents can be handled electronically.

To this end, delays or faults with the administrative aspects of international trade documentation can pose significant costs to business. If goods are exported with uncommon documents, or incorrect or faulty documentation, an exporter can expect their goods to be stopped at the foreign border, risking demurrage costs for the unloaded cargo and raising administrative costs in correcting

the problem. Inevitably, the longer the delay, the less likely an exporter will obtain repeat business from the importer. In short, businesses with trade documentation problems can expect increased costs, and ultimately, increased uncertainty.

Business representative groups such as chambers of commerce have interacted with Customs agencies for more than a century to improve and standardise the border-crossing relating to documentary requirements. Key to this work is promoting harmonisation of documentary requirements to allow exporters, importers and Customs across the globe to ‘plug in’ to an agreed system. We argue that the international norm of trade harmonisation aids in streamlining the border-crossing for goods, particularly where unique rules for treatment are implemented by foreign Customs on products of certain type and origin (also known in Free Trade Agreements as Rules of Origin).

International trade practices have long sought to eradicate uncertainty and facilitate trade through harmonisation. The tradition of harmonising trade documentation arose from common national (state) practice in the late 19th century, in which an importing state would require a Certificate of Origin to be issued in the exporting state by an independent and trusted third party, which would be sent with the exported good.

This gave an independent and crucial form of verification to the importing country that would ‘certify’ that, say, wool was indeed from Australia and not from New Zealand. By 1923, the League of Nations sought to formalise state practice on trade documentation, sponsoring the International Conference on Customs Formalities. At the conference, concerns were raised not about tariff levels themselves (cf the substantive product-by-product content of Rules of Origin) but about reducing the administrative complexity of formal documentation requirements unique to each state. In other words, the conference sought to remove red-tape and unify documentary requirements. Thus the International Convention relating to the Simplification of Customs Formalities 1923 emerged, entering into force 27 November 1924, requiring equity and harmony in treatment of trade, instead of a multitude of national documentary requirements.

MInIMIsInG red-taPe at the Border In InternatIonal trade

delaYs or Faults WIth the adMInIstratIVe asPeCts oF InternatIonal trade doCuMentatIon Can Pose sIGnIFICant Costs to BusIness.


Fast-forward to the present, and the International Convention relating to the Simplification of Customs Formalities 1923 is still very much in force, applying to Australia alongside state practice for trade across the globe. But in today’s trade there is a new player on the pitch – the emergence of preferential agreements (taking the form of Preferential or Free Trade Agreements — PTAs or FTAs) in which governments reach agreement on the treatment of goods via treaty. FTAs are to be encouraged — however, their administrative implementation must be trade facilitating. To this end, although FTAs seek to create barriers favourable to the parties, the sheer number of modern FTAs lacking harmonised features has been criticised for creating too many overlapping obligations. On this point, commentator Jagdish Bhagwati is often quoted:

‘As PTAs proliferate, the main problem that arises is the accompanying proliferation of discrimination in market access and a whole maze of trade duties and barriers that vary among PTAs. I have called this outcome the “spaghetti bowl” phenomenon.’ 1

Regionally, this phenomenon is also known as the ‘noodle soup’ or ‘noodle bowl’ effect. Regardless of culinary predilections, the illustration is clear: as the multitude of agreements increases, so too does the risk of complication from a lack of administrative harmonisation amongst them. The Australian Chamber of Commerce and Industry (ACCI) argues on this front that as the multitude of beneficial agreements increases, so too must the importance of harmonisation,

in order to ensure exporters, importers and Customs departments around the world continue to ‘plug in’ to a common administrative system. Adding more players to the pitch necessitates greater adherence to the common rules of the game.2

It is from this outlook that ACCI has recently published its concerns that when the Australian government negotiates new Free Trade Agreements, both bilateral and multilateral, it does so without any apparent platform relating to harmonised administrative requirements, and divergent approaches (and therefore divergent documentary requirements) have resulted. Our view is that agreements should be negotiated using harmonised administrative requirements that reflect state practice in international trade, thereby serving to aid business certainty and cut down on unnecessary red-tape. For example, the same international trade document serving function X in ordinary international trade should be able to serve function X in FTA1, in FTA2, in FTA3 and so on. Requiring four different documents of exporters, where one would suffice, serves to fill the noodle bowl even higher.

Rising above the noodle bowl, and indeed in an effort to combat this effect and minimise red-tape, the World Customs Organisation (WCO), in its 1999 revision of the International Convention on the Simplification and Harmonization of Customs procedures (Revised Kyoto Convention) presented Specific Annex K as an improved international common-ground in relation to documentation which prove origin. Australia was a signatory

to the Revised Kyoto Convention, but did not sign Specific Annex K. Similarly, the ongoing Doha round of multilateral trade negotiations seeks to eliminate a great deal of red-tape, including reforms to trade liberalisation and facilitation that some estimate represents more than $282.7 billion in global GDP gains. There is clearly benefit in following the lead of these international institutions in the name of better trade facilitation.

As is the case when Australians travel abroad, such a simple thing as recognised and universal documentation for goods can make a huge difference to facilitating better trade. The Australian Chamber of Commerce and Industry firmly believes that Australia should be following the lead of institutions such as the World Customs Organisation, and should negotiate Free Trade Agreements from a harmonised administrative platform that co-opts existing international trade practices, thereby enhancing trade facilitation and increasing business certainty in the process.

1. Bhagwati, J., ‘Preferential trade agreements: The wrong

road ‘ [1996] 27 Law and Policy in International Business

4, 865.

2. Hufbauer, G., Schott, J., Adler, M., Brunel, C., Foong

Wong, W., Figuring Out the Doha Round [Peterson Institute

for International Economics, 2010], 7.

suCh a sIMPle thInG as reCoGnIsed and unIVersal doCuMentatIon For Goods Can MaKe a huGe dIFFerenCe to FaCIlItatInG Better trade



ausTralia’s presidency of The group of TwenTy (g20) comes aT a criTical juncTure for The global economy. as posiTive signs emerge ThaT we may be beginning To exiT from The global financial crisis, inTernaTional cooperaTion is more viTal Than ever To sTabilize The world economy and sTimulaTe much needed growTh.

This will be uppermost in the minds of the G20 heads of state, and their Finance Ministers and Central Bank Governors when they meet in Australia next year. The private sector has a crucial role to play in this regard and the International Chamber of Commerce (ICC), the world business organisation, recognises the significant impact G20 leaders can have on economic growth and jobs worldwide. We are committed to supporting the Australian government to ensure an effective G20 presidency that helps the world finally rise out from the crisis.

our mIssIonThe work of the G20 is a natural focal point for ICC’s unique international policy stewardship. This mandate derives from ICC’s historic responsibility as the voice of world business to convey policy priorities to government leaders. The first time we sat down with the G8 was in Houston, Texas in 1990, when American President, and G8 Summit host, George H. W. Bush called on ICC to present business concerns. That tradition has continued for the past 22 years.

Now the larger, more inclusive G20 is driving a more intensive approach by business. For this reason, ICC has

strengthened its capabilities through our ICC G20 Advisory Group. The Group is comprised of CEOs who are actively concerned with the G20 policy agenda and are keen to engage with peers, set priorities and speak out on the issues most vital to business.

The principal objective of the group is to develop constructive and actionable policy recommendations for consideration by the G20 — and this is where we have focused our efforts. In preparation for G20 Leader’s Summits, we mobilize ICC’s worldwide policy-making expertise and solicit priorities from companies and business organizations of all sizes, in all regions of the world. The result is a series of policy recommendations addressing a range of policy priorities of concern to business worldwide, including trade, investment, financial regulation, anti-corruption, energy and information and communications technologies.

ConsultIng WIth busIness WorldWIdeThe member companies of ICC and our local Australian affiliate, the Australian Chamber of Commerce and Industry (ACCI), are the everyday practitioners of the global economy and, consequently,

have a clear stake in the success of the G20. To ensure that companies (large and small) have an opportunity to be heard in the global policy debates that ultimately impact their commercial opportunities, ICC has been hosting a series of regional policy consultations. Beginning in Mexico City in June 2011, these meetings have provided local businesses with an opportunity to help shape ICC’s policy recommendations for input into the G20 process on an ongoing basis.

These meetings have been held in Hong Kong, Zurich, Qatar, Istanbul, Washington DC, Beijing, Melbourne, Jakarta and Johannesburg. Future meetings in 2013 are planned in New Delhi, London, Riyadh, Geneva and Buenos Aires.

FoCus on australIaIn addition to the worldwide policy consultations, ICC and ACCI began the process in Australia this past August during the Australian Business Congress. ICC, Peter Anderson, Chief Executive of ACCI, and ANZ Bank hosted a first gathering of Australian business leaders to begin outlining policy priorities and constructing a process to engage the Australian business community throughout the Australian G20 cycle.

ICC: WOrLD busINEss

aT ThE g20By JeAn-Guy cArrier, secretAry GenerAL, internAtionAL chAmBer of commerce



In order to ensure alignment with government priorities, Dr Gordon de Brouwer, Associate Secretary of Domestic Policy of the Australian Government, participated and helped shape a forward-looking agenda focusing on trade and investment, employment, innovation, energy and engaging small and medium sized enterprises via global supply chains.

We then rolled out a robust schedule of policy consultations around Australia. This included visits to Melbourne, Canberra, Brisbane and Sydney, where we worked together with a number of state chambers and met with Ministers at both the state and national level, including the Department of Prime Minister and Cabinet’s office, Treasury, and the Department of Trade and Foreign Affairs.

polICy prIorItIes

The arrival of the 2014 G20 Summit in Australia presents an opportunity to feature Asia as a critical driver for global growth, focusing on key issues, such as trade liberalization and genuine progress on mitigating protectionism.

Clearly, the G20 must deliver on a highly interdependent set of policy challenges. This includes sustainable government finances, a strong global financial system and deeper structural reforms by all of the world’s big economies.

Energy and infrastructure investments will necessarily be critical to sustainable economic growth models. However,

the G20 has not yet fully addressed this despite appeals from the business community to support cross-border investment, promote schemes for more effective public-private partnerships and Public Private Partnerships (PPP) schemes, as well as to improve the global investment climate by increasing confidence in rule-based compliance systems. The role of infrastructure investment must also extend to food security – for improved harvest yield and improved logistics for transport, storage and handling of pre-market products.

WorkIng WIth loCal busInessDuring the 2013 Russian G20 presidency, the primary business input to the G20 process is being orchestrated by Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs (RSPP), who has been appointed by Russian President Vladimir Putin to lead business policy task forces. We are pleased to be working with RSPP and the B20 coalition of national business federations this year to ensure that G20 deliberations reflect the voice of business. The results from the policy consultations in Australia will be conveyed to the respective B20 task force leaders in Moscow so as to ensure that business recommendations reflect the broad base of companies, large and small.

The 2013 Russian G20 presidency culminates with the G20 Leaders’ Summit on 5-6 September in St.

Petersburg, Russia. From that point the G20 administration will be passed to Australia in preparation for the November 2014 Leaders’ Summit in Brisbane. We encourage Australian business to become involved in the process of engaging world governments through the ICC’s G20 CEO Group and its connection in Australia through the ACCI.

For more information please visit http://www.iccaustralia.com.au or http://www.iccwbo.org/global-influence/g20/advisory-group

the WorK oF the G20 Is a natural FoCal PoInt For ICC’s unIque InternatIonal PolICY steWardshIP


emPLoyment, educAtion And trAininG

across all parTs of The educaTion and Training sysTem, The besT form of learning is ThaT which is inTegraTed wiTh work. in vocaTional educaTion and Training (veT), This primarily relaTes To Traineeships and apprenTiceships, as well as work placemenTs for pracTical experience across The curriculum. in universiTy, iT is inTernships, cadeTships and oTher forms of work inTegraTed learning (wil) ThaT provide pracTical experience.

By Jenny LAmBert, director emPLoyment, educAtion And trAininG, Acci

Learning that can be immediately applied in practice improves skill retention and employability. This is true of all types of learning, including training that is undertaken outside of the ‘public system’, but is especially important in the context of publicly funding training. This nationally accredited, publicly funded training is the subject of most national debate as it is the type of training that provides benefit beyond the enterprise. It benefits the individual by leading to recognised and portable qualifications; and the economy, as it delivers efficiencies and adaptability by providing training relating to more than one enterprise.

The employer and individual have choices.

For the employer:

The strategic challenge for policy makers is that in order to achieve more work integrated learning with recognised qualifications, there needs to be a business case for employers to take on students, trainees and apprentices (whether in for-profit or not-for-profit enterprises) as the businesses themselves are striving for efficiencies and high productivity. Although there is a stronger business case for those businesses in the ‘trades’ to have formally trained (including licensed) workers, the choice for those businesses still remains one between the employment of someone fully trained or to take on apprentices. Of course, if all business opted for the latter then the system would collapse – which is the challenge. For other businesses beyond the licensed occupations, the business case is even more problematic. Importantly, this is not a question of whether businesses will train or not train, as all employers train (some with a more structured approach

the IMPortanCe oF WorK InteGrated learnInG

than others). It is the business case for employers offering work integrated learning opportunities within the ‘recognised’ training system which policy makers need to address.

For the IndIvIdual:

School leavers or mature learner/workers with no-post school qualifications have a choice – they can:

• Enter university either full or part time, pay a fee or incur a substantial HECs debt (with or without undertaking related or unrelated part time employment)

• Go to a VET provider with either an entitlement to a funded place, pay a fee, or incur (for higher qualifications) a VET debt

• Enter into a training and employment contract under the apprenticeship system, earn trainee wages which increase as the training progresses, in some cases tool allowances from the federal government, and fully subsidised training

• Enter or stay in the workforce and take up the opportunities offered by the workplace for formal training, often with the support of national (National Workplace Development Fund) or State funding

• Enter or stay in the workforce as a worker with no post-school qualifications, which in the short term may yield them a higher wage, but in the long term, evidence shows relatively weak earnings and job outcomes

• Not work, either by choice, lack of opportunity and/or as a result of disadvantage.


These choices for the individual are weighed up by looking at the long term benefit of the choice. In trade apprenticeships and university courses, the evidence is clear that there is a long term career earnings gain (despite the lower wages in the first years of the apprenticeship). The choices also highlight that the focus on first year apprenticeship wages is misguided, the other training options are much more expensive to the individual.

Although this discussion about work integrated learning may be taking it back-to-basics, the economics of the choices available to enterprises and individuals, and the assessment of the business case are often lost in a range of agendas ranging from apprentice wages and conditions through to concerns about unpaid internships.

Incentives for employers to accept work integrated learning in the apprenticeship area have become very complex but without them, the business case becomes weaker, often to the point where the costs outweigh the benefits. The history of apprenticeships comes

Similarly, as universities and higher education institutions increasingly seek to increase work integrated learning to achieve higher quality outcomes, we have questions placed on whether these should be paid (see Fair Work Ombudsman initiated review into unpaid work).

In its Pre-Budget submission, and in the run up to the election, ACCI is calling for policy makers to understand the fundamentals of the business case for employers participating in work integrated learning involving formal qualifications, reverse recent reductions in incentives and look at further ways to encourage employers to participate, particularly in these challenging economic times.

ACCI’s EET Unit works to allow people to progress within an enterprise, expand employment capability, achieve potential and contribute to the business, economy and community. To find out more visit www.acci.asn.au

from ‘the master’ being paid, rather than ‘the servant’, as the unpaid worker saw the value in obtaining the trade. We have come a long way from those times, but the business case challenge remains. In 2013 that business case for apprenticeships has been hit by a double whammy: employers are currently facing substantial claims by the union movement, with the support of the federal government, for increases in first year pay for apprentices while at the same time, there has been a dramatic cut back in incentives paid for apprentices by the government including for mature workers.

There has been a decline in the number of trade apprentices since 2010, and a major decline in overall apprenticeship numbers in the September quarter 2012. The next trainee/apprentice figures are likely to show a more significant decline due to the reduction in incentives, together with a weakening economic climate. Incentives should increase when the economic conditions are weak to further strengthen the business case. However, it seems the government has done the opposite.

InCentIVes For eMPloYers to aCCePt WorK InteGrated learnInG In the aPPrentICeshIP area haVe BeCoMe VerY CoMPleX But WIthout theM, the BusIness Case BeCoMes WeaKer, oFten to the PoInt Where the Costs outWeIGh the BeneFIts.


emPLoyment, educAtion And trAininGemPLoyment, educAtion And trAininG

Through iTs newly esTablished producTiviTy uniT, acci is working wiTh our members To promoTe producTiviTy improvemenTs in The workplace.

baCkground

The ACCI Productivity Unit has been established with the assistance of the Department of Education, Employment and Workplace Relations (DEEWR) under the Productivity Education and Training (PET) Fund. The funding has been made available over a 5 year period (concluding June 2017), with the majority of activity scheduled to occur during 2013 – 2015.

It is emphasised that the five pathways are not in sequential order but represent both related and concurrent activities. Unit activities will also operate at two levels:

• Across industry – ensuring a coordinated effort, and maximising the learnings across ACCI member Chambers and industry associations; and

• Within sectors and states/territories through activities and projects undertaken by member chambers and industry associations delivering productivity management skills directly to businesses.

By Zoe PiPer, Productivity unit mAnAGer, Acci

PathWaYs to ProduCtIVItY

pathWaysACCI will develop and deliver the program through the implementation of five key Pathways to Productivity:

1. PROMOTE workplace productivity and business engagement

2. BUILD capacity of business leadership to drive productivity improvement

3. EqUIP businesses to improve productivity

4. STRENGThEN industry-driven workforce development and employment participation

5. MEASURE and benchmark workplace productivity


Activities of the Unit include:

• Developing a productivity focused website with useful tools and resources

• Providing professional development opportunities for ACCI member staff through Capacity Building Workshops, the first of which took place in Canberra on 11th - 12th June

• The hosting of a Leadership Forum in Canberra on 13th June – this was a major statement about business leadership on the subject of productivity, involving prominent speakers and important discussions around key issues

• Supporting ACCI members to deliver training, tools and expertise to employers.

CollaboratIon

The Unit will seek to work with a range of organisations that have shown thought leadership on productivity issues in Australian workplaces. In particular we are exploring opportunities to collaborate on research, and on the development of diagnostic tools, to provide practical assistance to businesses. Through these collaborations ACCI is seeking to deliver ongoing value to members over the long term.

member engagement

ACCI recognises that maintaining an active dialogue with our members is essential in maximizing the impact of this program. While the Pathways to Productivity plan has been agreed between ACCI and DEEWR, there is still some scope to refine each of the pathways to ensure they best meet the needs of business. In particular we are seeking opportunities to add value to the significant range of productivity related initiatives already underway across the ACCI member network.

We encourage all ACCI members to keep in contact regarding any relevant activities they may be working on, or to provide feedback on the plan more generally. Further details on the project and the schedule of activities will be circulated to ACCI members over the coming months, along with additional information on opportunities to get involved.

ACCI Productivity Unit Manager Zoe Piper, [email protected], (02) 6273-2311


LeGAL

Collective bargaining is the central feature of employment regulation in Australia. Almost 50 per cent of Australian workers are covered by collective bargaining agreements (or

‘enterprise agreements’). Indeed, the law mandates collective bargaining where the majority of employers so decide. Most industrial disputes that you read about these days are bargaining-related.

In the 1990s, the move toward enterprise-based bargaining away from centrally arbitrated awards provided the parties with an opportunity to introduce workplace arrangements tailored for the particular workplace. For employers, enterprise bargaining was more an opportunity than a threat.

Today, enterprise bargaining is more a threat than an opportunity. For most employers, the goal now is to reduce, as far as possible, the higher cost/lower control demanded of them in negotiations. At the same time, they are often stuck with an existing enterprise agreement with obligations which might have made commercial sense 5 or 10 years ago but not today. And unlike other commercial agreements, enterprise agreements can only be replaced (by another one through collective bargaining) or terminated by the Fair Work Commission (but only in rare circumstances).

Any employer embarking on collective bargaining needs to apply certain fundamental analysis in order to assess its side of the bargaining equation – that is, the point at which it is prepared to agree to new claims (and wear the long-term cost of such claims) or not (and face the cost of industrial action).

To contextualise this: an employer need not make an enterprise agreement. The compulsion in the system is to bargain in good faith, but there is no requirement to agree. Given that genuine productivity-based bargaining is illusory, employers usually ‘bargain’ in order to diffuse union leverage. That leverage may involve: the right to take protected industrial action; other industrial action which is often difficult to monitor, such as “go-slows”; a public “anti-employer” campaign; the capacity of the union to stir employee antipathy against the employer. Sometimes this leverage is realised through the taking of such action. Often it’s not, and the employer baulks at the fear of it occurring.

Ultimately, the employer capitulates where it assesses that the cost of the union leverage (perceived or actual) outweighs the price of making the collective agreement. However, the former is usually short to medium-term at best. The latter represents a long-term cost to the business which compounds year upon year. The great challenge for many an employer is to make an informed assessment in this regard. It is not uncommon for the short-term cost (leverage) to be overestimated and the long-term price (being the deal) underestimated.

On the flipside, why does a union need to make a collective bargaining agreement? The collective bargaining process provides a union with an obvious opportunity to assume and grow its relevance in the workplace. It’s a time to strengthen and grow the all-important membership base. Put another way, if the union is not active in its representation of members at this time, when will it be? The enterprise bargaining process provides a union with the theatre to play its drive for member

solidarity and growth. The process is a vehicle for relevance. So for a union, the process is often as important as the outcome.

What is the union’s capitulation point? In turn, what is the employer’s leverage? The employer holds “the chequebook”. Its capacity to withstand the union leverage is a key ingredient of any shifting of the tide in the bargaining equation. Employees are loath to lose pay as part of collective bargaining negotiations (which is an inevitable product of taking industrial action). Only the most hardened of workforces, often supported financially by the union, will be prepared to take industrial action beyond the short term. Pressure mounts on the union when they have been unable to deliver the deal that they have promised and employees have borne some “pain” as a result. For the union, the benefit of continuing the campaign (ie the process) is outweighed by the cost of doing so.

Evaluating the bargaining equation is a key ingredient for any employer embarking on a collective bargaining process. This is particularly so for those who are faced with a challenging negotiating environment.

Chris Gardner is a Partner with Herbert Smith Freehills. He features in Best Lawyers Australia, Chambers Global Asia-Pacific Leading Lawyers and the Legal 500 Asia-Pacific Guide to the Legal Profession.

By chris GArdner, PArtner, herBert smith freehiLLs

LEvEragE aND ThE COLLECTIvE bargaININg EquaTION

for an employer embarking upon collecTive bargaining, iTs undersTanding of The “bargaining equaTion” is criTical in developing iTs negoTiaTion sTraTegy. puT simply, when should The employer “hold” or “fold”?

For Most eMPloYers, the Goal noW Is to reduCe, as Far as PossIBle, the hIGher Cost/loWer Control deManded oF theM In neGotIatIons.


shareholder class acTions in ausTralia have boomed as a resulT of a conflaTion of facTors: The availabiliTy of privaTe causes of acTion in The securiTies laws, availabiliTy of a class acTion procedure and The rise of liTigaTion funding.

Australia has historically banned contingency fees for lawyers; however, the law now allows for third party litigation funding where non-lawyers may finance class actions in return for a share of the recovery, usually 30 per cent.

Litigation funding is likely to increase the amount of shareholder class action activity because it raises the capital necessary to make available the financing needed for identifying and prosecuting potential law suits. Funders have also developed ties with institutional investors, allowing them to garner the critical mass needed to make funding of the litigation economical. The success of the funder’s model is shown by the settlement of shareholder class actions against Aristocrat ($144.5m), AWB ($39.5m), Multiplex ($110m), Oz Minerals ($39.5m) and Centro ($200m) which have taken place in the past five years.

For companies likely to be on the receiving end of claims, these developments are not welcome news. Commencing a class action creates a number of direct and indirect costs for a corporation. The ability to aggregate

claims through a class action means companies face a potentially large but uncertain financial liability. The uncertainty flows from the company not knowing the size of the group, who is in the group, or the strength of each group member’s claim. Further uncertainty is created by the law being unclear on the requirements for causation and quantification of loss.

The size and complexity of class actions also means they can be unwieldy and lengthy, giving rise to substantial costs. Management’s time is diverted away from the business to defending the litigation, including having to instruct lawyers, providing witness statements and attending to discovery. The commencement of proceedings, the use of the media by class action promoters, and the existence of a contingent liability may have both bottom line and reputational effects.

Even if a company succeeds in mounting a successful defence to a class action, there are still cost implications. The rules of Australian courts do not provide for complete recovery of costs expended in litigation. This difference between the costs that can be recovered and the actual costs incurred is used as a lever to promote settlement. There is also the need to ensure that the litigation funder is of substance so that a costs award against claimants can be honoured.

There are also concerns that class actions may be fanned by funders and lawyers in their own interests rather than for the benefit of shareholders. Frequently the funder has more at stake through its contractual entitlement to a share of the recovery than any single shareholder.

The company is not dealing with its shareholders that have an interest in a successful business that delivers profits and dividends, but instead a funder whose interest is in substantial damages payouts.

Companies need to be pro-active in avoiding the risk of a class action being brought against them. In particular, they should ensure they fully understand their obligations under the ASX’s continuous disclosure regime. This requires them to tread the fine line between timely disclosure, premature disclosure that may create a false market, and late disclosure that leaves the market uninformed. They should also revisit their insurance arrangements to ensure they have adequate coverage. With no cure in sight, prevention is the only approach.

By michAeL LeGG, AssociAte Professor, fAcuLty of LAw, university of new south wALes

lItIGatIon Funders, shareholder Class aCtIons and the IMPaCt on CorPorate australIa

CoMPanIes need to Be Pro-aCtIVe In aVoIdInG the rIsK oF a Class aCtIon BeInG BrouGht aGaInst theM.


LeGAL

PICkETINg: ThE CasE fOr

LEgIsLaTIvE rEfOrm

pickeT. you won’T find ThaT word in The fair work acT 2009 (fw acT), or in any oTher piece of federal or sTaTe legislaTion.

Which leaves employers faced with a challenge. What is a picket, and what can be done in response?

Picketing is overwhelmingly an industrial tactic, usually adopted in the context of enterprise bargaining. Pickets have been used in the past to restrict contractor or management access to the workplace, thereby frustrating an employer’s attempts to maintain continuity of operations during a period of industrial action.

In practice, ‘picketing’ can describe a broad range of activities: from employees and their families publicising their demands at the workplace (often described as a ‘community protest’), to a full blockade. But when does action cross the line from the lawful exercise of the rights of assembly and free speech, to unlawful conduct?

The FW Act is of scant assistance to an employer faced with a picket that is threatening to imperil its business. The reason is that the definition of ‘industrial action’ in that legislation does not including picketing. Further, the definition is limited to action taken by employees. The problem with that is that many pickets are formed with an unidentifiable ‘rent a crowd’, quickly assembled nowadays through social media connections. And, there is nothing in the FW Act which prohibits a union from organising a picket.

By Anthony wood, PArtner, And nAtALie sPArK, senior AssociAte, herBert smith freehiLLs

Police have the power to disperse a picket that involves a trespass or a nuisance, and arrest those engaged in unlawful conduct. Generally, however, the police are reluctant to involve themselves in what is seen as an industrial or civil dispute. As sad as that may seem, it may be for the best: police involvement can sometimes inflame matters and has the potential to lead to violent clashes.

Often, the only recourse available to an employer affected by a picket is to bring proceedings in a state court, relying on civil torts such as public or private nuisance, trespass, assault, intimidation, or interference with contractual relations. These are well-established causes of action in common law and in tort, and although injunctive relief is available, they are ill-fitting avenues for dealing with what is, ultimately, an industrial dispute. The difficulties of relying on state courts enforcing the common law was highlighted recently when Grocon, faced with a national picket organised by the Construction, Forestry, Mining and Energy Union (CFMEU) (but not including Grocon employees) was forced to bring parallel proceedings in three different state jurisdictions.

Assume that an employer can convince a court that a trespass has occurred, or that contractual relations are being interfered with, or that the picket is causing a nuisance. What then? A significant practical difficulty that flows from the current state of the law is the onus placed on the employer (as plaintiff) to identify against whom the court should make orders. Unions invariably distance themselves from any unlawful picketing. It can be extremely challenging to obtain and produce evidence which satisfies a court that the union is directly responsible


for inciting or organising the unlawful action. This is coupled with the well-established reluctance of courts to issue open-ended injunctions against the ‘whole world’: the people bound by the order must be specified. Even if individuals can be identified on the picket line, the burden of proof requires the employer to produce video footage and a witness who can attest to their identity. It is understandable that, in some cases, potential witnesses have chosen not to give evidence for fear of their safety.

Even if the court does grant orders, there are instances in which such orders are disobeyed. The only remedy for an employer in that scenario is to bring further proceedings, alleging contempt of court. Obviously, that sort of litigation is expensive, time consuming and burdensome from an evidentiary perspective. More importantly, irreparable damage may already be done by the time contempt proceedings are initiated.

Isn’t it time to open the debate for legislative reform as an alternative to the piecemeal common law approach? The impact of an obstructionist picket on a business can be profound. Unlawful pickets might reflect the public right to protest, but they also infringe the lawful rights of individuals and businesses to conduct their affairs.

What can be done?

One option is for federal trade practices legislation to expressly prohibit obstructionist picketing of a business. Regulation by the Competition and Consumer Act 2010 may avoid the need to establish an industrial or employment motive behind the unlawful activity. The debate about the legitimacy of regulating secondary boycott conduct within trade practices legislation ended years ago. Governments of all persuasions have agreed that anti-competitive conduct belongs in our trade practices laws. Why should unlawful picketing be any different? After all, an obstructionist picket impacts on the ability of a business to trade and, while it does, puts that business at a significant competitive disadvantage. Although the existing secondary boycott provisions may be relied on by an employer in some picketing scenarios, those protections are arguably not enough. The legislation could be quite simply amended to include a prohibition against any action which is taken in concert and has the effect of restricting trade. As now, the Australian Competition and Consumer Commission (ACCC) could be armed with investigatory and prosecution powers, and perhaps the power to issue dispersement orders.

Another option is for pickets with an industrial flavour to be regulated by the FW Act. The scheme for regulating unprotected industrial action might be a good reference point. Currently, an employer faced with unprotected industrial action can apply to Fair Work Australia for an order at short notice that the industrial action stop and not occur again. Provided that industrial action has occurred or is likely to take place, Fair Work Australia must make an order that that action stop and not occur. Stop orders granted by Fair Work Australia can be enforced by the Federal Court by granting an injunction, imposing a financial penalty, and awarding compensation to cure and loss suffered.

Fair Work Australia could be empowered to grant orders requiring that an unlawful picket be dispersed. As with protected industrial action, the Federal Court could have jurisdiction to impose penalties and award damages which flow from an unlawful picket, and to generally enforce dispersement orders granted by Fair Work Australia by granting injunctive relief.

Most members of the community would raise their eyebrows at the vehement protests of innocence from unions regarding their involvement in recent pickets. A union’s flaunting of tribunal orders might be deterred by the possibility of its deregistration. Where picketing takes place in the context of enterprise bargaining, perhaps it is appropriate for unions to be assumed to have organised the picket unless it can prove otherwise. This concept is not new to the FW Act: a person accused of adverse action is presumed to have acted unlawfully unless they can prove the contrary.

Recent disputes have highlighted some serious inadequacies in the current state of the law. We have seen how crowds of anonymous faces assemble quickly through the use of social media tools can seriously imperil a business.

Of course, our laws must maintain a delicate balance between the protection of individual liberty and the descent into lawlessness. Many observers of recent picketing conduct in Australia would certainly question why a business lawfully conducting its affairs should be put to the hardship and cost associated with the current unsatisfactory remedies.ISN’T IT TIME TO OPEN ThE DEBATE

fOR LEgISLATIVE REfORM AS AN ALTERNATIVE TO ThE PIECEMEAL

COMMON LAW APPROACh?


LeGAL

dId I BuY a dud?a noVel aPProaCh to ManaGInG enVIronMental rIsKs throuGh a ProteCted VoluntarY audItBy GerALdine cini And dru mArsh, LAwyers, worKPLAce reLAtions, sAfety & environment LAnder & roGers

increasingly, legacy issues associaTed wiTh environmenTal non-compliance are forming an imporTanT elemenT of pre-acquisiTion risk assessmenT processes.

Even after the most diligently conducted pre-acquisition exercise, the acquirer may find they have inherited an environmental issue that went undetected or was underestimated — be it an errant underground storage tank leaking into a local waterway or a forgotten effluent system operating without a licence. It is therefore important to be aware of the protection from prosecution available, when undertaking voluntary environmental audits at newly acquired and currently owned/leased sites.

Whilst warranties and indemnities are normally negotiated in order to provide a level of pecuniary comfort and protection for the new occupier, significant environmental issues — discovered after taking possession of a site – may still require notification to the local environmental agency. Such notification attracts the risk of prosecution by state environment authorities, due to the operation of occupier liability regimes in respect to environmental pollution, and may also be associated with reputational risks should the notification draw adverse public attention.

Fortunately, in most Australian states and territories, it is possible to voluntarily embark on an environmental audit process of a site under which an organisation can benefit from a level of protection against prosecution. The key attraction of the voluntary audit process is that it can facilitate a method of uncovering and addressing environmental non-compliance issues outside of

the litigation environment. A range of mechanisms operate in each jurisdiction, with the exception of Western Australia and Victoria, which vary in the level of protection on offer and the formalities that must be complied with by an organisation.

In New South Wales, a voluntary audit process can attract protection from prosecution of findings in both the audit report itself as well as its supporting documents whereas in the Australian Capital Territory, Northern Territory, South Australia and Tasmania, protection is conferred only on the audit document itself, which is rendered inadmissible as evidence in the prosecution of an organisation. In Queensland, an organisation can attain protection against prosecution for non-compliances it identifies by negotiating with the Department of Environment and Heritage Protection to enter into a novel transitional environment program. Significantly, however, conducting such an audit does not in itself protect against being required to address the environmental harm, but rather provides a method of ‘buying time’ in taking appropriate action to redress the non-compliance issue and avoid penalties being imposed for the previous occupier’s conduct.

Invoking a voluntary audit has two key attractions in the context of an acquisition process. Firstly, it provides a formal approach by which the new owner can implement a ‘housekeeping’ programme following occupation without the fear of discovering any nasty surprises. Secondly, it may assist in the formation of the indemnities sought prior to acquisition by stipulating a process by which indemnities will be managed post-acquisition. The approach may also appeal in acquisition processes comprising multiple bidders where the opportunity to undertake comprehensive due diligence is curtailed by the competitive process. Critically, a post-acquisition voluntary audit can provide the impetus to pro-actively identify environmental issues within time limits imposed by the indemnities and enable the rebuttal of inaccurate warranties and representations given by the seller during the sale process.


Acci memBer networK

reInForCInG the saFetY MessaGesupporTing The inTroducTion of The model work healTh and safeTy acT, The aircondiTioning and mechanical conTracTors’ associaTion (amca) has produced an informaTion dvd, wiTh exTended websiTe supporT To assisT iTs members undersTand The new model legislaTion.

AMCA National Director, David Eynon said: “A primary function of any industry association is to keep its members abreast of legislative changes which lead to new responsibilities and obligations.”

The DVD, which was launched by the Minister for Employment and Workplace Relations, the Hon Bill Shorten MP, is the latest addition by AMCA to its comprehensive range of services available to members.

The Minister noted that while all industry parties now place more importance on safety in the workplace, the actual causes of accidents at work has not changed much in 30 years. He added: “Everyone must be able to expect to return home from work each night safely.”

Australian Chamber of Commerce and Industry (ACCI) Chief Executive, Peter Anderson was also in attendance and commended AMCA for demonstrating a great example of leadership in workplace health and safety.

The DVD was prepared by AMCA with funding provided by the Department of Employment and Workplace Relations via the ACCI.

About AMCA: AMCA is the pre-eminent employer and industry association representing the commercial airconditioning and mechanical services industry. AMCA has offices and full-time staff in all states. Should you like to become a member or for more information visit http://www.amca.com.au

Pictured, from left: Peter Anderson, Chief Executive, ACCI; Earl Sakareassen, National President, AMCA; The Hon Bill Shorten MP, Minister for Education and Workplace Relations; David Eynon, National Director, AMCA; Carmel Coate, Executive Director, NFIA; Brian Davies, National President, NFIA


Acci memBer networK

neCa PlaYInG an IMPortant role In aPPrentICeshIP PIlot

The peak ausTralian elecTrical indusTry body, The naTional elecTrical and communicaTions associaTion (neca), is playing a major role in a new elecTrical apprenTiceship piloT.

The pilot is being trialled throughout Australia by the industry skills council E-Oz Energy Skills Australia, and focuses on improving electrical apprentice completion rates across the country. The pilot will also provide electrical apprentices the opportunity to progress through their training once they demonstrate competency. Industry endorsed benchmarks will ensure the progression model is comprehensive and rigorous — ensuring quality outcomes.

As part of the program, NECA, who is involved in the training of over 2,000 electrical and communications apprentices through its group training companies, will employ some 40 mentor/advisors across Australia — with 16 already in place — to talk to and advise employers, potential apprentices and their parents, which is designed to ensure completion rates increase.

NECA Chief Executive Officer, James Tinslay, said the initiative — which was launched by the federal government at the NECA Apprenticeships’ Victorian facility — was needed because completion rates across the country were inconsistent.

“Apprentice completion rates in the electrical trade are highly variable across Australia with NECA’s Group Training Schemes having completion rates of over 90 per cent in comparison to the overall industry average which sits just above 60 per cent,” said Mr Tinslay.

“NECA knows that these completion rates can be improved as it has the knowledge and track record of delivering outstanding completion rates. The key to increasing completion rates is the selection process and then mentoring the apprentice throughout the term of their apprenticeship to ensure they’re satisfactorily progressing through both on and off the job competencies.”

The initiative is about flexible delivery, allowing individuals to complete their apprenticeship and be competent, and this could mean before or after the traditional four-year duration.

Mr Tinslay said that the program is not about watering down the requirements but rather strengthening the electrical apprenticeship training program.

“NECA acknowledges that many in the industry feel that four years is the minimum that an apprenticeship should be served, but this pilot would accommodate those apprentices that are able to demonstrate competencies prior to the traditional four-year completion rate and also those who would benefit from additional time served,” he said.

“This program allows flexibility both ways with the focus being on safety and quality of skills application.”

The Managing Apprentice Progression (MAP) pilot is being trialled across 28 participating Registered Training Organisations (RTOs) throughout Australia and will see 1,000 first year apprentices commencing this year and another 1,500 apprentices in 2014.

E-Oz Chief Executive Officer Bob Taylor said: “The severity of skills shortages in our sector and the increasing number of mature apprentices has necessitated a comprehensive rethink of apprentice training. Currently, approximately a third of those who start an electrical apprenticeship end up not completing, which represents a huge cost to industry and an equally huge waste of government resources to the nation.”

Candidates have commenced booking into Readiness Assessments throughout

the participating RTOs. Successful completion of the Readiness Assessment will assist with identifying any potential barriers to undertaking an electrical apprenticeship.

The final challenge is to secure employment with an employer, and E-Oz is calling on electrical contractors to get involved by registering to be part of the pilot program.

By registering, employers have access to a pool of candidates who have achieved the Readiness Assessment benchmark. This will assist and advance recruitment efforts and provide employers with the confidence that their selected candidate is suitable for an electrical apprenticeship.

During the pilot program, the apprentice will be assessed against industry-agreed progression benchmarks with final sign-off against on-line national assessments. This means that flexible progression is undertaken against quality indicators and the apprentice will progress and complete the trade when competence is achieved.

The pilot program provides an assigned industry mentor to guide the employer, the apprentice and the RTO through the relevant on and off the job components of the program, keeping all parties on track.

Employers interested in participating in this national pilot should visit www.energiseoz.com.au to register their interest.

About NECA: NECA is a national industry association member of ACCI. It is the peak industry body which represents the best interests of the electrical and communications contracting industry in Australia. www.neca.asn.au

By Peter scott, mediA And communicAtions mAnAGer nAtionAL eLectricAL And communicAtions AssociAtion

Pictured, from left: Wes McKnight, President, NECA, James Tinslay, CEO NECA, Bob Taylor, CEO E-Oz, Chris Evans former Tertiary Education, Skills, Science and Research Minister, and Phil Honeywood, Chairman of the 370° group board.


The Australian Made Campaign invested in the future of Australian children in regional and rural Australia, by sponsoring the Fed Cup Foundation, and through that, the Foundation Cup, the only interstate challenge for children 13 and under living outside Australian capital cities. The Fed Cup Foundation has been running the Foundation Cup for 13 years.

Australian Made Chief Executive, Ian Harrison, said: “The Australian Made Campaign is all about ensuring a better future for Australians, particularly for young Australians and generations to come. Regional Australia plays a very important role in that future. We are proud to align the Australian Made, Australian Grown logo with a Foundation that is working towards those same goals.”

The ‘Australian Made Foundation Cup’ was one of a series of events in the ‘Australian Made Summer of Tennis’ campaign, which highlighted the importance of supporting our Aussie growers and manufacturers as well as

our Aussie athletes. Australian tennis great, Alicia Molik, was the face of the ‘Australian Made Summer of Tennis’ campaign.

Other events included the Fed Cup Foundation’s ‘Breakfast with the Stars’ events in Sydney (250 people) and Melbourne (540 people), which promote the achievements of women in tennis.

“But above all we want you, your families, your friends and their friends to think more about the positive consequences of buying genuine Aussie products and produce when shopping. Not only are you getting a quality product, but reinvesting back into the community creates jobs, jobs and more jobs, right across the country; better career opportunities for our kids; better prospects for our farmers, manufacturers and fisherman; and a better future for all Australians,” Mr Harrison said in his address at the events.

The Minister for Sport, the Hon Kate Lundy MP, attended the Breakfast with

the Stars event in Melbourne, and expressed her support for the Australian Made Summer of Tennis campaign.

“[Australian Made]’s sponsorship and support of tennis, with a particular focus on young people is most welcome,” Senator Lundy said.

“I love seeing the Australian Made Campaign coming together with Aussie sport. It’s a great initiative.”

About AMAG: ACCI is a founding member of AMAG, which was established in 1999. AMAG is committed to promoting goods that are made and grown in Australia. www.australianmade.com.au

the australIan Made suMMer oF tennIs

Pictured: Ian Harrison, Chief Executive, AMAG and Alicia Molik

Are you a small business owner?

Do you need information to help you run your business?

Do you need to find assistance to resolve a dispute?

Do you have a dispute with a government service or another business?

Do you have an issue with regulation that impacts on your business?

The Australian Small Business Commissioner can help.

Contact us on 1300 650 460 or at [email protected].

For further information and updates, visit www.asbc.gov.au and sign up to the Commissioner’s newsletter.


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consulT ausTralia has developed and launched a seT of guidance Tools To assisT consulTing firms To comply wiTh Their obligaTions under new model workplace healTh and safeTy (whs) laws, and To ensure safer design of sTrucTure and planT, leading To safer workplaces in The consTrucTion and manufacTuring secTors.

The Toolkit was launched by NSW Senator Matt Thistlethwaite as part of National Safety Week, in an event also featuring presentations from Greg Pattison of the NSW Business Chamber, and Scott Myles from Coffey, who was a member of the Task Group that led the development of the Toolkit.

To assist our members and industry in adapting to their safety in design obligations, Consult Australia has developed a suite of guidance tools to assist firms in developing their policies and procedures, and to take much of the stress out of transitioning to the new set of laws.

The guidance tools draw on the expertise of our larger firms, ensuring that the

consulting industry can collectively enjoy the benefits of a safer work environment and greater compliance. The Safety in Design Toolkit has been developed by the Consult Australia Workplace Health and Safety Roundtable in response to the new obligations that have followed the passage of harmonised WHS legislation across Australia in recent months.

The centrepiece of the Toolkit is a simple flowchart that explains action items that should be undertaken at each step of the design process. It also links to important supporting documents including: a template letter to clients; a sample risk matrix and risk register; and a safety report template.

A particular challenge of safety in design that sets it apart from other areas of WHS compliance is that there is not a simple checklist of items to meet. Rather, there is a potentially limitless field of issues that must be brainstormed and then addressed, including anything from (for example) preventing falls from heights, to safe exit from confined spaces, to preventing harm from toxicity or live electricity. Traditional guidance tools have tended to include lists of guidewords to assist designers develop a hazard risk register. The Consult Australia guidance tools will include an example of a hazard risk register, but rather than creating a table of terms to draw upon, the emphasis will be on designers considering their specific job, and developing project specific terms.

This approach is intended to lead to better overall outcomes by taking a broader view of how to create a safer workplace.

The Toolkit will be continually revisited and updated as our understanding of best practice safety in design evolves, and also in response to changes to the regulatory framework accompanying the model legislation.

Consult Australia would like to thank the Australian Chamber of Commerce and Industry and the Department of Employment, Education and Workplace Relations for their support of this initiative. We would also like to give special thanks to Clayton Harrison, Group Health, Safety and Environment Manager at GHD; Nicola Davies, HSE Manager - Western Australia at GHD; and Scott Myles, Group HSSE Manager at Coffey, for their hard work as members of the working group as well as all member firms who contributed documentation to assist in the development of these tools.

The Toolkit is available free to Consult Australia members, and will be available for purchase to non-members from www.consultaustralia.com.au in the coming weeks. If you are interested in purchasing the Toolkit or would like to learn more, please contact Consult Australia on (02) 9922 4711 or email [email protected].

Consult Australia also runs regular safety in design training across Australia: building capacity and capability for firms to meet their Safety in Design obligations under the new WHS acts. For more information on available training contact Alexia Lidas on (02) 9922 4711 or [email protected].

By meGAn motto, chief executive, consuLt AustrALiA

saFetY In desIGn toolKIt

to assIst our MeMBers and IndustrY In adaPtInG to theIr saFetY In desIGn oBlIGatIons, Consult australIa has deVeloPed a suIte oF GuIdanCe tools to assIst FIrMs In deVeloPInG theIr PolICIes and ProCedures, and to taKe MuCh oF the stress out oF transItIonInG to the neW set oF laWs.


reForM needed to unloCK the BeneFIts oF the MedICInes seCtoriT’s preTTy easy To Take for granTed The medicines ThaT millions of ausTralians use every day for a hosT of common complainTs – colds, flu, headaches, skin irriTaTions, and The like.

These non-prescription medicines, including complementary medicines, represent a $4 billion industry, employing 17,000 people.

However, in recent years, the business landscape for the over-the-counter (OTC) and complementary medicines sector has become more difficult, largely as a result of an increasingly risk-averse regulatory environment.

This has made it more challenging for medicines manufacturers, but more importantly, it means Australian consumers are not always getting access to the medicines that they need.

The central issue, ASMI believes, is that more medicines should be able to be down-scheduled from Prescription Only to OTC, while there exists a whole class of OTC medicines which cannot be advertised to consumers.

We believe that the Therapeutic Goods Administration (TGA) has become overly risk-averse in the way that it scrutinises medicines, and in its reluctance to allow safe, effective prescription medicines with a long history of use to be “switched” to OTC status.

ASMI believes that improved access to non-prescription products is consistent with a growing push for increased personal responsibility for health, in an era where there is increased pressure on budgets and limited healthcare resources.

Examples of successful prescription-to-OTC switches in recent years include antihistamines for treatment of hayfever, antifungals for nail infections and athlete’s foot, antimicrobials for conjunctivitis, and Orlistat for weight management and obesity.

The notion of “self-care” is one that is yet to be widely embraced in Australia but the public health benefit of greater self-care has already been recognised in the UK for example. It simply means encouraging individuals to take greater personal responsibility for their health, including good diet, exercise, avoidance of risk-taking behaviours such as smoking, and access to appropriate consumer medicines to maintain health and wellbeing.

Greater self-care would improve health outcomes, ease the burden on overstretched GPs and provide considerable savings to the budget through better use of Commonwealth healthcare resources.

A study commissioned by ASMI found that 7 per cent of all GP consultations involve the treatment of minor ailments. This represents approximately 96,000 GP consultations per day or 25 million annually. Also, approximately 59 per cent of minor ailments resulted in a prescription, suggesting almost 15 million prescriptions annually for minor ailments.

Many consumers continue to consult GPs for conditions which could be safely managed by a pharmacist as a first port-of-call, with considerable savings to health budgets.

ASMI has proposed the establishment of a Self Care Alliance, comprising government, consumers, healthcare professionals, health economists and industry. The aim would be to build evidence to support policy decisions in relation to self care and identify opportunities for more cost-effective healthcare delivery.

On the regulatory front, the combination of a risk-averse approach to scheduling and the restrictions on advertising presents major obstacles to consumers having access to safe, effective and affordable medicines. The reality is that consumers remain largely unaware about treatments which become newly available without a prescription.

ASMI has proposed a new regulatory approach, based on OTC-specific benefit-risk model, which takes account of the unique characteristics of the non-prescription sector. It has already been adopted in the UK and Canada and we believe it should be embraced by the TGA.

Australia has a regulatory system that has served us well for many years, but we need to keep pace with international best practice. We believe that it is time to deliver a real burst of reform, by genuinely empowering consumers with the tools to embrace self care, generating greater efficiency from healthcare delivery, and rebooting the regulatory system to deliver for the 21st century.

About ASMI: The Australian Self Medication Industry (ASMI) is the peak body representing sponsors of non-prescription medicines – over-the-counter (OTC) and complementary medicines. Its members make up 85 per cent of the $4 billion self care market. ASMI members employ approximately 17,000 people with exports estimated at $600 million. www.asmi.com.au

By dr deon schoomBie, executive director, AustrALiAn seLf medicAtion industry


Acci memBer networK

WhY Gst reForM Is an

essentIal WIn For BusIness

By russeLL ZimmermAn, executive director, AustrALiAn retAiLers AssociAtion


There has been a greaT deal of informaTion and commenTary circulaTing laTely abouT The low value imporTs Threshold (lviT) on The gsT, as a resulT of The producTiviTy commission’s reporT on The issue.

This was followed by the federal government’s response, and then the Parcel Processing Taskforce’s recommendations, which outlined a plan to reduce the LVIT over a period of time.

The Australian Retailers Association (ARA) welcomed the various reports and recommendations, which outlined the need to see a lowering of the threshold if it’s to compete on a level playing field with its online overseas counterparts, who are marketing products to many of the Australian consumers who are also reached by Australian retailers as their target market. Indeed, by the end of last year Assistant Treasurer David Bradbury also recognised the tax neutrality issues and the need for business cases to be implemented by Australia Post and Customs to allow collection.

The ARA believes delays in implementing recommendations create an inherent tax divide between onshore and offshore retailers, but also hamper the ability of the states to collect much-needed revenue; which ultimately goes towards employing the likes of teachers and police, not to mention cutting business and household taxes and charges, which will in turn further stimulate the economy. The last thing state economies need is for hundreds of thousands of dollars in potential revenue to slip through their fingers.

The economy also relies on Australian consumers being able and confident to spend money to stimulate both retail, a $243 billion industry, and a somewhat suppressed economy. Furthermore, the consumer, shopping online at unprecedented levels, is also buying from Australian retailers who are running sustainable, multichannel retail operations. Those retailers have every right to question why their Australian- based online stores attract the GST but overseas competitors don’t.

Research released in January by MasterCard showed Australian consumers were ‘hard-wired’ to shop locally. In truth, the Australian consumer is just that — a consumer, who can and will shop wherever he or she desires- and

that includes from overseas retailers. Conversely, Australian online retailers are reaching customers both onshore and offshore. Thus, the retail environment is global.

While the ARA doesn’t expect online buying behaviour to reverse, Australian retailers have a right to be able to compete equally in the online space. Here, they’re meeting the needs of a connected customer who shops wherever is convenient at any given time — online, via mobile or tablet — and the in-store experience is still incredibly relevant (and one which retailers are investing in to make it an essential part of multichannel shopping).

Australian retailers wanting to reach their consumers online are currently being impeded by the LVIT, which puts them at a disadvantage when marketing products to their consumers, who will then make the choice themselves as to where they buy from.

To ask whether a 10 per cent tax break will entice people to shop onshore is too simplistic. For one, Australians are already shopping onshore and onshore online. Secondly, the lowering of the GST threshold is one reform Australian retailers need in order to grow and be able to compete in a global economy. The need for the LVIT loophole to be reduced can be added to the need for a range of business costs and pressures to be addressed — including GST overhaul, removal and streamlining of inefficient taxes, a relieving of tax pressure on financially stressed consumers, and the need for tenancy and workplace relations reform. Retail needs to be looked at holistically, as an economic sector responsible for employment, growth and business innovation, as well as

looked upon for its potential to grow and innovate.

The growth in online shopping is the very phenomenon that uncovered the GST loophole and found it to be a source of missed revenue for state governments. There’s a very real possibility that state governments will benefit from not seeing money necessary for surplus, economic stability and infrastructure go through a sieve, while overseas economies somehow escape what might seem like a small break, but in reality is a big-picture necessity for economic prosperity.

There are a number of political realities facing this issue in an election year. No government facing an election is going to impose an increase in a consumption tax on consumers before an election. The ARA along with other retailer organisations, stakeholders and politicians, managed late last year to get agreement that the processes be put in place to make the changes necessary to commence reducing the GST threshold. Unfortunately it became quite clear those processes would not be completed until after the election and it would be the minister responsible for the GST who will make the decision on what level the threshold is dropped to until after the election. Some, including me, see this as a short-term political reality and unfortunately one which won’t be resolved until after 14 September.

I would like to recognise the fact that Assistant Treasurer David Bradbury has put the process in place to allow the reduction of the GST and the Coalition has allowed this to occur. The pressure now needs to be stepped up during the campaign to ensure whoever wins the election reduces the threshold.

The sweeping reforms recommended by the Taskforce will also ensure that Australian retailers can innovate and grow towards business success as a vital part of Australia’s economy, regardless of whether these retailers are operating bricks and mortar, online or multichannel businesses.

About ARA: ARA is a national industry association member of ACCI. It is the peak industry body representing Australia’s $243 billion retail sector since 1903. It has more than 5,000 independent and national retail members throughout Australia. www.retail.org.au

retaIl needs to Be looKed at holIstICallY, as an eConoMIC seCtor resPonsIBle For eMPloYMent, GroWth and BusIness InnoVatIon, as Well as looKed uPon For Its PotentIal to GroW and InnoVate.


Acci memBer networK

afTer more Than 80 years of supporTing communiTy pharmacies, The pharmacy guild sTill shows a pracTical, no-nonsense approach.

The Pharmacy Guild of Australia was established in 1928 and was registered under the Federal Industrial Relations Act as an employers’ organisation for the owners of community pharmacies. It was set up for the protection and betterment of its members. Eighty-plus years later, that is still the reason for the existence of the Guild.

The Guild is the chief body for community pharmacy, supplying members with advice, education, support, policy-making expertise, and the all-important representation at all government levels. And in this election year, the Guild will work behind the scenes to maintain the next federal government’s understanding of the issues and the policies, be it of either persuasion.

Recently Kos Sclavos, the National President of the Guild, was asked if he was worried about a possible change of government. He said: “All politicians know and appreciate that health is important to the Australian public.” In a time of limited resources, governments are being cautious in their expenditure. “That means that in many areas we are probably not investing as much as we should in preventative health. That tends to be the first thing to drop by the wayside if a country is short of

funding. But overall I think we have done remarkably well. I don’t think many people realise just how difficult it is for governments to balance their books at the moment.”

Sclavos believes in the idea of governments investing in healthcare for all Australians, as a healthy population brings growth, employment and taxes, and the Guild works diligently to include the community pharmacist as providers of that healthcare.

However, it is not always government money that underpins positive change in the community pharmacy space. Sclavos points out: “Most other health organisations go to government and offer to develop something for them but only after receiving some funding. The Guild has a different approach — we invest our own money, establish programs or prove their worth, then go to government and advise that they should be rolled out as national programs.”

Politics and governments aside, each and every community pharmacy has to be concerned with its own business model, efficiency and profitability. Kos Sclavos says the Guild will continue to “give them support and management tools to run successful businesses, because at the end of the day you can be a great clinical pharmacist, but if your business is not profitable you’ll go broke.”

Wise words, indeed.

About the PGA: PGA is a national industry association member of ACCI. It is the national peak body representing community pharmacy. The Guild is committed to supporting and maintaining the community pharmacy model as the most appropriate and efficient system of delivering medicine. www.guild.org.au

By diAnA o’neiL, nAtionAL mAnAGer, communicAtions, PhArmAcy GuiLd AustrALiA

WIse BeYond Its Years

PolItICs and GoVernMents asIde, eaCh and eVerY CoMMunItY PharMaCY has to Be ConCerned WIth Its oWn BusIness Model, eFFICIenCY and ProFItaBIlItY.

Pictured: Kos Sclavos, President, Pharmacy Guild Australia


The role ThaT indusTry associaTions can play in supporTing ausTralian-based research and developmenT has been underpinned by a recenT invesTmenT in pioneering cancer research made by acci member, The ausTralian denTal indusTry associaTion (adia).

“Industry associations are uniquely positioned to bring together industry and the university research sector to pursue shared objectives” says ADIA Chief Executive Officer, Troy Williams. “Whether it is in the provision of grant funding or fostering development of collaborative research teams, industry associations have an important role to play.”

ADIA, through the Australian Dental Research Foundation (ADRF), has recently awarded the 2012 ADIA Research Grant to Associate Professor Hans Zoellner from the University of Sydney. The grant, funded by ADIA, is awarded each year to the primary applicant for the highest-ranked research project of those considered by the ADRF. Associate Professor Zoellner’s project, Characterisation of protein and mRNA exchange between malignant cells and fibroblasts, was considered by the ADRF Grant Committee to be ground-breaking research into how cancer cells behave and potentially evade treatment.

The research examines the relationship between malignant cancer cells and those of healthy gingival structural tissue (fibroblasts). The findings of this research

originated from earlier work studying aspects of oral cancer and have shed light on other forms of cancer.

Associate Professor Zoellner said: “We have recently observed that cancer cells exchange cellular material with fibroblasts, and the resulting cancer cell diversity may help cancer cells evade chemotherapy. Separately, from an immune standpoint, it seems likely that the cancer cells receive enough components of fibroblasts so that they are less recognised as foreign, while the fibroblasts now bearing cancer cell components would act as immune decoys.”

He added, “In understanding this process, we hope to eventually inhibit the mechanisms through which it occurs and therefore increase the effectiveness of treatments.”

Mr Williams said ADIA is proud to be associated with such important work. It is congruous with ADIA’s mission to support product development within Australia, and through that the growth of the Australian dental industry.

“ADIA is pleased to support research such as that of Associate Professor Zoellner’s as it potentially leads to the development

of new products and pharmaceuticals used in dentistry in Australia. As the association representing the Australian dental industry, we recognise that supporting such work is in the industry’s long-term interest,” Mr Williams said.

The Australian Dental Research Foundation is jointly supported by ADIA and the Australian Dental Association (ADA) for the purpose of sponsoring dental research towards improving the dental health of the people of Australia.

About ADIA: ADIA is a national industry association member of ACCI. It is the peak representative body for suppliers of quality dental products. www.adia.org.au

aCCI MeMBers suPPortInG unIVersItY researChBy troy wiLLiAms, chief executive, AustrALiAn dentAL industry AssociAtion


Acci memBer networK

The aha’s 5,000 members have recenTly endured Trade inTerrupTions resulTing from addiTional public holidays declared by sTaTe and TerriTory governmenTs. The pracTice of governmenTs dealing wiTh public holidays falling on weekends by declaring The following monday as an addiTional holiday has an enormous impacT on The hoTel indusTry.

The requirement to pay penalty rates of 275 per cent for casual workers makes it almost impossible to trade profitably in a labour-intensive industry like hospitality. Accordingly,

our members are forced to take measures such as reducing trading hours, limiting product and service offerings or simply closing the doors for the day.

Public holidays disrupt the trade of the venue and results in a loss of work and income for casual employees (who make up three-quarters of the industry workforce). The AHA is not opposed to employees receiving some compensation for working on public holidays, but the practice of declaring additional days is a major concern for our members and a source of confusion and frustration for any employer operating across state/territory borders. The number of public holidays observed in 2012 varied from 10 (Western Australia) to 13 (South Australia) and everywhere in between.

The AHA has applied to vary the Hospitality Award to limit the number of public holidays each year where penalty rates must be paid to 11. This is consistent with the AIRC’s 1994 public holiday test case decision and also a recommendation

from the 2012 Fair Work Act Review Panel.

Importantly, our proposal does not impede on the right of state and territory governments to declare additional public holidays, but means that hoteliers would only be required to pay public holiday penalty rates on eleven days per year.

South Australian hoteliers are still reeling from the recent disaster of the two half-day holidays declared in South Australia after 7pm Christmas Eve and New Year’s Eve just so the major retailers in Rundle Mall could trade. Many hotels closed from 7pm.

Although we have pursued this through the Award review process, the ideal outcome would be for the National Employment Standards to incorporate a nationally consistent number of public holidays. We agree with the 1994 AIRC decision that 11 is the appropriate number of public holidays that should attract penalty rates.

About AHA: AHA is a national industry association member of ACCI. It is the national voice of Australia’s vibrant hotel industry. www.aha.org.au

eleVen annual PuBlIC holIdaYs Is enouGh

By des crowe, nAtionAL chief executive officer, AustrALiAn hoteLs AssociAtion

south australIan hotelIers are stIll reelInG FroM the reCent dIsaster oF the tWo halF-daY holIdaYs deClared In south australIa.


The board, members and staff of the Australian Chamber of Commerce and Industry honour the service and mourn the loss of our esteemed colleague, Dr Christopher Peters AM OI JP, who passed away on 24th February after an inspiring battle against illness. Chris was a man of character, a leader of business, respected by governments, a servant of his community and honoured by the nation. He leaves a legacy of achievement that makes us all proud. He will be very sorely missed.

The Australian business community will be deeply saddened, and some shocked. It is the day we all dreaded. Chris is the first state or territory Chamber of Commerce Chief Executive to pass away in office in the modern era. In these early days, it is hard to fathom how the business sector or ACT community can fill the gap he leaves. But to honour his legacy, we will and must do so.

Pictured: ACCI’s Peter Anderson and ACT & Region Chamber’s Chris Peters at the ACT Chamber’s Post-Budget breakfast briefing, May 2012.

In MeMorIaMdr chrisTopher peTers am oi jp

ACCI NATIONAl MEMbER NETWORk: ACT & REGION ChAMbER Of COMMERCE & INDUSTRY bUSINESS SA

ChAMbER Of COMMERCE NORThERN TERRITORY ChAMbER Of COMMERCE & INDUSTRY QUEENSlAND

ChAMbER Of COMMERCE & INDUSTRY WESTERN AUSTRAlIA NSW bUSINESS ChAMbER TASMANIAN

ChAMbER Of COMMERCE & INDUSTRY VICTORIAN EMplOYERS ChAMbER Of COMMERCE & INDUSTRY

ACCORD - hYGIENE, COSMETIC AND SpECIAlTY pRODUCTS INDUSTRY AGRIbUSINESS EMplOYERS

fEDERATION AIRCONDITIONING & MEChANICAl CONTRACTORS ASSOCIATION AUSTRAlIAN bEVERAGES

COUNCIl AUSTRAlIAN DENTAl INDUSTRY ASSOCIATION AUSTRAlIAN fEDERATION Of EMplOYERS

AND INDUSTRIES AUSTRAlIAN fOOD & GROCERY COUNCIl AUSTRAlIAN hOTElS ASSOCIATION

AUSTRAlIAN INTERNATIONAl AIRlINES OpERATIONS GROUp AUSTRAlIAN MADE, AUSTRAlIAN GROWN

CAMpAIGN AUSTRAlIAN MINES & METAlS ASSOCIATION AUSTRAlAlIAN pAINT MANUfACTURERS

fEDERATION AUSTRAlIAN RETAIlERS ASSOCIATION AUSTRAlIAN SElf MEDICATION INDUSTRY

bUS INDUSTRY CONfEDERATION CONSUlT AUSTRAlIA hOUSING INDUSTRY ASSOCIATION lIVE

pERfORMANCE AUSTRAlIA MASTER bUIlDERS AUSTRAlIA MASTER plUMbERS & MEChANICAl

SERVICES ASSOCIATION Of AUSTRAlIA NATIONAl bAkING INDUSTRY ASSOCIATION NATIONAl

ElECTRICAl & COMMUNICATIONS ASSOCIATION NATIONAl fIRE INDUSTRY ASSOCIATION NATIONAl

RETAIl ASSOCIATION OIl INDUSTRY INDUSTRIAl ASSOCIATION phARMACY GUIlD Of AUSTRAlIA

plASTICS & ChEMICAlS INDUSTRIES ASSOCIATION pRINTING INDUSTRIES ASSOCIATION Of

AUSTRAlIA RESTAURANT & CATERING AUSTRAlIA VICTORIAN AUTOMObIlE ChAMbER Of COMMERCE

commerce & industry winter 2013

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