WorkChoices’ new requirements… Research funding threat… Bakers Delight under fire… Coping with higher interest rates… Banks fail small business…

Record keeping requirements hit as WorkChoices turns one

Employers will face prosecution and increased fines if they breach record-keeping obligations imposed by new WorkChoices regulations that take effect today.

As the political debate on WorkChoices hots up around its first anniversary, many employers face the more prosaic task of ensuring their record keeping systems meet the requirements of the regulations.

Under the new regulations, inspectors from the Office of Workplace Services (OWS) have the power to issue on-the-spot fines of up to $110 for individuals and $550 for corporations who breach the laws, while more serious breaches that come before courts can result in the imposition of fines 10 times these amounts.

The record-keeping requirements apply primarily to businesses with employees who are paid on the basis of hours worked or who can access overtime and penalty rates.

VECCI workplace relations lawyer Peter Vitale says that although the new obligation on employers to record overtime hours worked by employees is significant, it is much less onerous than the sweeping record keeping duties the Government had initially planned.

OWS has yet to release prosecution guidelines in relation to the new obligations, but director Nicholas Wilson says: “First-time or minor errors in meeting the requirements will be unlikely to attract a penalty.”

Prime Minister John Howard ramped up his defence of WorkChoices this morning, telling ABC radio that a rollback of WorkChoices would be the first time in a generation that a major economic reform in this country has been reversed.

Labor will take its industrial relations policy to its national conference next month. The draft policy proposes abolition of the small-business unfair dismissal exemption and re-introduction of pattern bargaining.

– Mike Preston

Research funding threat from productivity report

Commercialisation of research that has been a key government focus for the past six years would be put on the backburner, if recommendations from a productivity commission report released this morning are adopted.

The report, Public Support for Science and Innovation, looks at the impact of public support for science and innovation and considers the prospects for improving outcomes by eliminating barriers and changing the way government support is channeled.

It calls for major improvements in some key institutional and program areas.

The report found that:

• Adequacy of program evaluations and governance arrangements is mixed, with some notable shortcomings in business programs.
• The level of government subsidies for some narrower, industry-focused arrangements is likely to crowd out private activity and produce weaker external benefits outside the supported rural industry.
• The CRC program is only suited to longer-term arrangements but more collaboration could generate significant benefits. There are complementary options for business collaboration with public sector research agencies and universities that could provide more nimble, less management-intensive arrangements.
• Problems in the governance and IP frameworks of universities, weakness in their commercial arms and shortcomings in proof of concept funding needs to be addressed.
• The net payoff from the R&D tax concessions could be improved by only allowing small firms to access the 125% tax concession, changing the thresholds for tax offsets amending the base for the 175% concession and considering a narrower more appropriate definition of R&D

The report is based on the assumption that R&D concessions are “business welfare” and that many businesses actually have the money to do R&D but choose to take the money from the public purse.

“One of the major limitations is that the criteria for the basis of the 125% tax concession do not screen out R&D that would have happened anyway – the bulk of business R&D,” the report says.

But Heather Ridout, chief executive of the Australian Industry Group, says this is nonsense and that the report again puts the commercialisation of research on the back burner. “Under this report, medium-sized companies might not be able to access R&D concessions.”

She dismisses the report as written by economists trying to get value for money and says she is not sure of its purpose. “The Government’s industry report is out soon, which will look at policy and R&D. What is in this report is not timely or helpful.”

– Amanda Gome

Bakers Delight under fire for “dishonest and possibly criminal conduct”

Franchised bakery chain Bakers Delight came under vicious attack last night in Federal Parliament.

The Liberal member for Gilmore, Joanna Gash, told the House of Representatives that she had been given information “that suggests the principals of the franchisors of Bakers Delight engaged in practices that I can only describe as not only dishonest but possibly criminal”.

She said the case concerns Deanne Deleeuw, who bought a Bakers Delight franchise in December 2001 in Vincentia, and then outlets at Kiama and Shellharbour. She asserts that Bakers Delight was involved in fraudulent accounting that reduced profitability, removed marketing and other support based on a bogus breach, while still requiring weekly payments of marketing and royalty fees.

Gash alleges that Bakers Delight induced financial stress to prompts a fire sale of the business, causing financial catastrophe, controlling sales and increasing a ‘bogus” debt of about $1 million. She also alleges there were physical and financial threats and intimidation condoned by Bakers Delight.

Gash told Parliament that she believed the complaint, which she has referred to the ACCC, was “the tip of the iceberg”. “I have material being forwarded to me from other franchisees of Bakers Delight, all suggesting similar questionable practices which require further detailed investigation.”

Gash said that Deleeuw has insufficient funds to challenge Bakers Delight in court so she, Gash, will be raising more specific details in this case and others brought to her attention until justice is done and “seen to be done”.

SmartCompany has contacted Bakers Delight for a response. A company spokeswoman had not provided a response before our publication time.

– Jacqui Walker

Business, households can handle interest rate rise: Reserve Bank

Businesses and households are not overexposed to credit, according to a Reserve Bank of Australia report released yesterday, strengthening the case for an interest rate rise when the RBA board meets next week.

The Financial Stability Review says that although a pickup in leveraged buyout activity has caused business credit levels to have risen significantly over the past few years, “business balance sheets currently remain in good shape”.

The household sector is also in a strong position to handle a rate rise, the report says, with “few signs that the household sector is struggling to meet the higher debt servicing costs”, although there are some households under strain “in western Sydney, and among households that took out loans with high loan-to-valuation ratios in 2003 and 2004.”

Westpac chief economist Bill Evans says: “There appears to be nothing here that would cause us to change our opinion that the RBA will raise rates by 0.25% next week.”

– Mike Preston

Business banks failing business

Australian banks, faced with falling customer sentiment, are becoming more proactive in keeping touch with their business customers. But smaller businesses are failing to respond to the banks overtures, according to a report released this morning by East & Partners.

The Business Banking Sentiment Index for February 2007 shows that 55.4% of businesses had direct contact with their bank. This is a big increase from the 30% figure of June 2006.

But banks are still losing the battle, with the Business Banking Sentiment Score falling every month since June 2006 and reaching a new low of 42 points (out of 100) in February 2007.

More than two-thirds of respondents say the bank initiated the contact. Customers of BankWest, Westpac, HSBC and NAB were most likely to get a call from their bank. In stark contrast to the rest of the market, 94.4% of CBA customers say they had to initiate contact with their bank.

Smaller businesses were less likely to get attention from the banks. Only 34% of micro businesses ($1–5 million turnover) and 43% of SMEs ($5–20 million turnover) were in contact with their bank during February.

“Despite the intense competition in business banking, and plenty of rhetoric that banks are upping the service to small business, customers are increasingly feeling estranged from their banks. They are yet to be convinced that the larger commercial banks in particular are genuinely interested in them,” East & Partners financial markets analyst Zoran Knezevic says.

– Amanda Gome

Big business: hands off

Calls are growing for a study on whether small business is being driven to the wall by a concentrated business sector dominated by big business with extraordinary leverage.

Allan Fels, the dean of the Australian and New Zealand School of Government and former chairman of the ACCC, was reported in today’s Australian Financial Review as having called for a “serious independent study across retailing, banking, petrol, communications and other sectors to reveal whether concentration is having a crippling effect on small business”.

He and Fred Benchley, a former editor of the AFR, say solutions for small business could include price discrimination laws to clear legislative recital of the importance of preserving small business competition.

– Amanda Gome

Collective bargaining threshold rises

From today, higher thresholds for collective bargaining under the Trade Practices Act notification regime apply to certain industries.

The collective bargaining notification regime, which started on January 1, 2007, is designed to make it easier for SMEs to collectively bargain with big business. For most businesses to be eligible for notification, the annual value of the transaction must not exceed $3 million.

Higher thresholds apply to: petrol retailing (up to $15 million); motor vehicle retailing ($20million); farm machinery ($10 million); and primary production, including, but not limited to, fruit and vegetable growing, livestock farming, dairy farming, egg farming, wool farming, grain farming and cotton farming ($5 million).

– Jacqui Walker

New focus for Small Business Council

The federal Minister for Small Business, Fran Bailey, is revamping the Small Business Council. The new members are expected to focus on innovation, marketing and home-based business, instead of late payments by big business, unfair dismissal laws, tax compliance costs, succession planning and insurance premiums.

– Jacqui Walker

Green tech company quits Australia

Fast-growing green waste processing company Global Renewables has been driven overseas by Australia’s slow uptake of renewable energy, the Australian Financial Review reports.

The lack of incentives for clean renewable energy sources in Australia compared to Europe meant the company had no choice but to make the move, Global Renewables chairman John White says.

– Mike Preston

Farmers’ optimism grows

A predicted return to normal seasonal conditions and summer rainfall in some areas of has buoyed farmers. The quarterly Rabobank rural confidence survey shows renewed hope that the worst drought in 100 years is nearing an end, reports The Age.

Nationally, 45% of 2000 farmers surveyed expect the agricultural economy to improve over the next 12 months, up 30% from the previous survey. Confidence has returned to a similar level to when the 2002-03 drought broke. To maintain their confidence, farmers will need consistent rainfall.

– Jacqui Walker

Economy roundup

New home sales increased by 2.9% in February, the third consecutive monthly increase recorded, Housing Institute of Australia figures released today show.

The S&P/ASX 200 is down 0.1% on yesterday’s close to sit at 5983.5 at 11.55am; while the Australia dollar is trading strongly at US80.82¢, up on yesterday’s Sydney close of US80.45¢.

– Mike Preston