Regulatory Roundup – April 2013
Membership bodies, good advice and highlighter pens vital: Small Business Commissioner
The inaugural Small Business Commissioner Mark Brennan urged small businesses to “work smarter and get better at operating their business” by joining industry or professional associations and paying for good advice from accountants, business advisers or lawyers. Instead of merely asking if it is sensible to sign a lease or contract, for example, Brennan said business owners should go to their lawyer with highlighters and mark all the things they have to do according to the lease, and everything the landlord or other party has to do. “I think it’s a useful, practical hint to give to businesses, and you come away with a better understanding of what you have to do,” Brennan said.
Price pressures and cost cutting biggest challenges in 2013: Ernst & Young
Pricing pressure and cost cutting have emerged as the top two business risks in 2013, as opposed to regulation and compliance two years ago, according to an Ernst & Young report. The other top business risks for 2013 are market risks – such as high oil prices and continued volatility in currency markets; managing talent and skill shortages; expansion of the government’s role on the back of tightened regulation; compliance; and political shocks – in the Middle East, South America, western Africa and Europe. Ernst & Young risk leader Rob Perry said business owners must find new ways to be profitable in response to pricing pressures, shrinking developed markets and ongoing global uncertainty. For those who get it right, the payoff is immense – Ernst & Young estimates that cutting costs by 1% can yield the same bottom-line results as a 10% boost in sales.
Cash flow and interest rates drop off list of business concerns
Small businesses are more concerned about the rising cost of fuel and the need to bring in more customers, ousting concerns about cash flow and interest rates from the forefront of their problems, according to research by accounting software provider MYOB. Price margins and profitability and competitive activity continue to concern businesses, according to the research, while a notable exit from the top five concerns were interest rates which dropped one spot to sixth.
Small businesses concerned about insurance prices as need for brokers decreases
The escalating price of insurance has cropped up as an issue for SMEs with more than 75% of SMEs expecting the cost of insurance to rise this year, and more than 54% expecting this increase to be 10% or more, according to the Vero SME Insurance Index 2013. Further, the index shows that although brokers remain the dominant channel for SMEs to obtain their insurance coverage, a substantial and slowly growing portion of SMEs are starting to purchase directly from insurers. Young SME owners aged between 18 and 39 years old as well as female entrepreneurs are the ones spearheading the change, preferring to do business online instead of enlisting an insurance broker.
Government extends Kickstart apprentice initiative to help struggling businesses
SMEs in the building, construction and engineering trades have an extra two months to capitalise on the Apprentice Kickstart Initiative after the government extended it from February 28, 2013 to April 30, 2013. Designed to increase the number of apprentices working in skills shortage areas, the initiative is open to enterprises that employ fewer than 200 people and rewards employers who take on apprentices with a payment of $3,350 in addition to an existing $1,500 commencement payment and a range of other bonus payments. The government has urged interested businesses to contact the Australian Business Apprenticeships Centre as the initiative is capped at 21,000 places.
Visa first to impose limit on credit card surcharging, others expected to follow suit
Visa became the first credit card company to impose a surcharge limit on retailers when customers pay with a Visa credit card, on the back of a decision by the Reserve Bank of Australia mid-last year which limits surcharging. Retailers are now required to limit surcharges to a “reasonable cost of card acceptance” for a Visa transaction and will need to justify any surcharges passed on to customers. A justifiable surcharge includes the merchant service fee, terminal line cost, credit card terminal rental, annual acceptance fee and employee training to operate the terminal. American Express has flagged that it will follow suit, with Master Card and Diners Club yet to make announcements (as at the end of March 2013).
Industry bodies up in arms over Fair Work’s decision to sustain penalty rates
The Fair Work Commission’s decision to protect penalty rates on Sundays has been met with howls of protest from various industry bodies who sought the halving of penalty rates on Sunday and the removal of the 25% penalty rate for evening work. Australian Retailers’ Association executive director Russell Zimmerman said the decision is “no longer relevant or workable for consumers and employees and will stifle both growth and employment in the retail industry”, while Australia Industry Group chief executive Innes Willox was concerned about the impact the decision would have on fast food businesses whose peak hours are not between 9am and 5pm.
Clues to business success lie in a comprehensive plan and long-term strategy
A complete business plan and a five to 10 year strategy is the key to success, according to newly released analysis of the top performing businesses in the country. The New South Wales Business Chamber surveyed more than 700 of Australia’s top SMEs to find that 90% have a five to 10 year strategy, while many of the businesses have a clear vision and mission statement, financial and budgeting plans, planned products, marketing strategies, competitor analysis and detailed SWOT (strengths, weaknesses, opportunities and threats) analysis.
Cut Australia’s company tax rate and lift GST, says OECD
The Organisation for Economic Co-operation and Development (OECD) said Australia’s 30% company tax needs to be reduced, pointing out that it is comparatively high for a capital-importing country. It also said that Australia’s GST needs to increase as well as have its tax base widened. GST has remained at 10% since it was introduced in 2000, and it does not apply to fresh food and most health and education products. According to the OECD, revenue raised from the GST, at less than 4% of Australia’s gross domestic product (GDP), is “relatively low” compared to the average raised by OECD countries through consumption taxes, which are typically 7% of their GDP.