THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has revealed fresh data showing the extent of the cash flow crisis for small and medium-sized businesses in Australia, much of it due to a scarcity of functional business loans.

Business finance solutions group Scottish Pacific's latest SME Growth Index has found one in five small-medium enterprises (SMEs) are experiencing cash flow problems due to business loans being rejected - mainly by the major banks.

According to the data, the percentage of SMEs reporting significantly worse cash flow has doubled since March 2018, with 7.3 percent saying it is significantly worse and 12.3 percent saying it is worse than the previous year. 

“Australian small businesses are in the midst of a cash flow crisis and the SME Growth Index indicates the situation is getting worse,” Ms Carnell said.

“Small businesses are telling us time and time again that a lack of access to funding is their biggest barrier to growth. This has major implications for the sector as a whole as well as the economy more broadly.

“Interestingly, the Index found just one in 10 SMEs said they had no cash flow concerns in the past year. This highlights why it is so important for small businesses to be paid on time," Ms Carnell said.

“More than a quarter of small businesses (27.8%) said they had difficulty meeting tax payments on time – up by around 12 percent from March 2018.

“That’s why it has never been more important for small businesses to understand the range of funding options available on the market. The big four banks are not the only game in town," she said.

“My office, in partnership with Scottish Pacific, has created the Business Funding Guide which not only offers comprehensive, up-to-date information about what’s out there in terms of finance options, but also helps small businesses get ‘finance fit’ to give them the best chance at securing the funding they need.

“At the moment we are seeking feedback on the guide from businesses and their advisors before it’s finalised later this year.”

Feedback on the Business Funding Guide can be provided by completing a survey before the October 18 deadline.

The SME Growth Index research is conducted twice yearly by banking analysts East & Partners on behalf of national working capital funder Scottish Pacific.  More than 1000 owners, CEOs or senior financial staff of SMEs across a range of industries and all states, with annual revenues of $A1-20 million, are surveyed.


THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell is concerned by reports the Federal Government clawed back $200 million in the 2018 financial year from businesses who have claimed the R&D Tax Incentive and has been investigating the impact of the ATO’s policy and enforcement practices on small businesses.

“My office has received a number of complaints from small businesses about unfair treatment in relation to their research and development tax incentive claims by the ATO and AusIndustry,” Ms Carnell said.

“Of particular concern are audits going back several years, which have resulted in the ATO demanding businesses repay the R&D Tax Incentive, often with a severe penalty applied. 

“Unfortunately some of these businesses have been told to pay back the tax benefit years after the R&D has been completed. This is well after they received the refund from the ATO and reinvested that money back into the business.

“Most of these businesses were genuine in their belief they were undertaking R&D and that their claims were totally justified," Ms Carnell said.

“We’ve had additional feedback from software industry representatives that the interpretation of the laws by AusIndustry and the ATO, regarding the eligibility of software claims, has become more rigid.

“These issues have prompted a review to clarify the R&D Tax Incentive legislation and how it’s enforced," she said.

“Certainty is essential if the R&D Tax Incentive is to fulfil the purpose of the legislation, which is to incentivise small businesses to invest in R&D.

“We welcome the recent decision by the Full Bench of the Federal Court in the Moreton Resources Limited v Innovation and Science Australia, which has provided greater clarity around the interpretation of the laws.

“This case concerned the question of whether activities in relation to an underground coal gasification pilot facility were eligible for the R&D Tax Incentive. The court took a common sense approach and found in favour of Moreton Resources," Ms Carnell said. 

“For Australian small businesses to continue to thrive, the government needs to support investment in science and research to drive innovation and growth.”

The Australian Small Business and Family Enterprise Ombudsman will deliver the findings of its investigation in a report to be published shortly.


By Leon Gettler >>

MARKETS will be booming right up until November next year, right to the lead up of the US presidential election, according financial analyst Rod North.

Rod North is the founder and managing director of Bourse Communications. Mr North has survived four market booms and busts and has worked in the financial services industry for 30 years.

He has very strong views about which way the markets will be heading next year. 

He said the Australian market would perform well and the back drop to that will be the US market and the political cycle in America, with the election in November 2020.

“Donald Trump may be many things but he’s certainly a clever businessman when it comes to looking at how to position his best chance of being re-elected,” Mr North told Talking Business.

“So he will want the US economy to continue to power ahead. He will want unemployment to continue to stay low. He will probably want to see interest rates start to come off.

“All these things will mitigate towards a higher Dow Jones which is taking us beyond where it currently is at 27,000,” Mr North said.

“Into 2020, in the lead up to the US election next year, I think we will see some pretty powerful share markets and a lot of it is because investors have little space and movement as to where to put their money.”

Mr North said while the outlook for markets was looking up to next year, there was a question about what would happen after that.

“It’s probably 2021 we need to look out for, but I think the stars are aligning for a stronger market over the next 12 months and into 2020,” he said.

The big issue of course is what happens in the trade war with China.

Mr North said President Trump will try to resolve this, “simply because it’s in his best interests”.

“I do think from the US-China (perspective) Donald Trump will want to do a deal because he won’t want that not to occur in the lead up to the next election,” he said.

Me North said from Australia’s perspective, it would see China’s economy surpassing America’s in the next few years, and that would be a plus for Australia.

“The shifts of wealth are clearly to this region and Australia can benefit most from that,” he said.

“We’re in a hundred years of growth in this particular region. We’re in the same time zone, we can really benefit from that.

“We’re in the hundred years’ shift of wealth to the Asia Pacific region, Australia can really benefit from that.”

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at  

By Dan Hadley >>

JULY of this year saw the Reserve Bank cut interest rates again by another 0.25 percent. While this spells an immediate celebration for homeowners and investors keeping up with mortgage payments, other factors are at play.

Banks’ failures to pass on the full saving, in an attempt to increase profits, gives rise to consumer frustration and the rising cost of imports.

The landscape looks brighter for some, while tougher for others and there is a slowly rising concern over Australia’s slowing economy. 



This is what economists call ‘Monetary Policy’.  In short, the Reserve Bank of Australia (RBA) engages in transactions in domestic money markets.

These transactions resemble auctions with commercial banks who intend to buy or sell cash. They follow public announcements (to all banks) that the central bank intends to make such transactions. 

The price a commercial bank is willing to pay for cash determines who is successful in obtaining cash. Referred to as Open Market Operations, this ‘toing and froing’ of money effects how much cash is out there in the economy. 

The more money available in the economy, the lower the interest rate.



When the RBA cuts interest rates, consumers expect that the banks they deal with will follow suit and pass on the rate reduction. Any difference in the RBA rate cut and what banks pass on to their customers is an easy win for the banks.

Those consumers not aware of the RBA rate cut amount may see a reduction in their mortgage interest rate, albeit a lower one than otherwise possible, as a win.

In the last week, banks announced how much of the interest rate cut will be passed on to customers and the landscape for the ‘Big 4’ banks now looks like this:


Interest Rate Reduction

Variance from RBA cut













The ‘Big 4’ Banks and their respective interest rate reductions to customers


With this in mind, Australians are feeling more let down by banks than ever.

One of the difficulties is the cost and difficulty involved in changing banks for mortgage loans. The amount of paperwork required, since the Royal Commission, coupled with mortgage fees of all kinds makes it hard for consumers to vote with their feet easily.

Banks have certainly given consumers the impression that they are aware of this and have no difficulty taking advantage of it.

Australian Treasurer Josh Frydenberg said the Australian Government “…expects all banks to pass on the benefits of sustained reductions in funding costs.”

Even though ANZ Bank quickly announced it would pass on the full 0.25 percent cut to its customers, this follows a mere 0.18 percent pass on in June when the RBA previously cut interest by 0.25 percent.

This recent announcement may represent ANZ’s response to angry customers not happy with June’s profit pocketing.



Interest rates influence more than just mortgage payments. Every movement affects industries and sectors in different ways.

One of the big winners is the building and construction sector. As individuals and businesses are able to borrow money more easily and borrow more than they previously could have, investment into new building, construction and property development naturally increases.

Builders will see an increase in demand for both existing property renovations as well as new builds.

Another key winner is the mining export sector. As interest rates fall, so does the value of the Australian dollar relative to other currencies. This makes exports of any kind, particularly minerals, cheaper to foreign buyers and thus more competitive.

Other exports such as manufactured products and produce becomes more attractive to export as the price drops immediately in the face of RBA cuts.

Australia can also expect to see a stimulus in the tourism industry. All of a sudden, it is cheaper for foreigners to visit Australia and enjoy all that we have to offer. This comes as good news to regional Australian areas dependent on tourism numbers.

But with the good news comes the bad. As our Australian dollar drops in value, anything imported costs more as our dollar has a lower purchasing power. Fuel is expected to rise in price which in and of itself affects the price of many other goods and services. Imported electrical goods and vehicles are expected to rise in price amongst anything else imported into Australia.

Australians can also expect to see new car sale prices increase, overseas travel to be more expensive and foreign items be dearer in the face of interest rate cuts. Affected too, are those with their funds in savings accounts, the return on investment now dropping again. This can ultimately hurt older Australians who may be reliant upon this form of investment and return in retirement.



The RBA has had a steady downward trend in interest rates now since 1990. It is clear that in the face of various economic challenges the need has arisen to push the interest rate lower and lower to maintain certain key parameters.

RBA’s Governor, Philip Lowe said the recent decision to cut the rate would serve to:

“…lower the cash rate (that) will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.”

The cut comes just one month after the RBA’s decision in June to cut the interest rate by 0.25 percent then. This back to back cut in interest has not been seen in Australia since 2012.



Lowe’s statement has given Australians strong indications that further cuts are very likely in the quest to achieve a lower unemployment rate. As interest rates drop, generally speaking, so too does unemployment.

The government has made it clear that an unemployment rate of 4.5 percent is the intended outcome.

With a current rate of 5.2 percent there is more to be done. 

With more cuts likely on the horizon, homeowners and investors can get a little more back in their pockets but those savings may be gobbled up when they next travel, stop in to get fuel or purchase that new imported European luxury car… 


Dan Hadley is a British/Australian economist and business management consultant for JLB based in Adelaide, South Australia.


By Leon Gettler >>

AUSTRALIA’S EMBRACE of payments platforms could see it become a cashless economy, according to Michel van Aalten.

Mr van Aalten is the country manager of Australia and New Zealand for Adyen, a leading payments technology company that provides businesses with a single global platform to accept payments anywhere in the world.

Mr van Aalten has worked with retailers across Europe, the US and the Asia-Pacific region and has extensive experience in the global payments industry. He said the systems would encourage the growth of cashless payments in Australia.

Mr van Aalten  said Adyen research has found a growing market in Australia for mobile wallets.

“It all started with cash, and from cash it went to card and now we’re seeing the rise of mobile wallets,” Mr van Aalten told Talking Business.

“We are seeing more and more Australian banks offering mobile wallets to their consumers as well as more merchants offering these payment methods. It’s an ongoing trend and one we definitely welcome. 

“Based on insight from our own platform, we can see the use of digital wallets in Australia is relatively low.

“However, 35 percent of Australian companies have accounts in place to support digital wallets, more than our international counterparts, so I think as a nation we are equipped to accommodate these types of payments and it seems we are slowly starting to warm up to it.”

Mr van Aalten said the other big trend is the emergence of other payment methods.

“Payments are culturally determined and that’s always evolving,” he said. “As you look at the Adyen platform, we are the only solution that connects directly to Australian consumers’ preferred payment method of Visa and MasterCard.

“But now we’re seeing a rapid change with the likes of WeChat and AliPay and UnionPay are becoming more and more important.”

Mr van Aalten said the Chinese payment methods offered great opportunities for Australian retailers.

He said there were $12.8 trillion worth of mobile transactions in 2017 in China – and China is the world’s largest mobile payments market. This was an enormous opportunity for Australian retailers to tap into the Chinese tourism market.

“In 2017 alone, Australia saw 1.3 million Chinese tourists spend a record A$10 billion accounting for a quarter of Australia’s tourism earnings for the year,” Mr van Aalten said.

“This figure is set to boom if Aussie retailers can effectively embrace the power of these payment methods.”

He said Australia was a unique market which was now on the cusp of a behavioural change in how Australians pay for their goods. ANZ bank, for example, had recently reported a big uptake in mobile payments.

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at

By Leon Gettler >>

FACEBOOK’S ENTRY into cryptocurrency is likely to see big tech companies like Apple and Microsoft moving into banking as well.

Professor Jason Potts, a director of the Blockchain Innovation Hub at RMIT Univeristy, believes banks will be challenged worldwide.

Facebook’s ambitious plan creates an alternative financial system that relies on a cryptocurrency that the company has been secretly working on for more than a year.

The cryptocurrency, called Libra, will shake up the banking system and will have partners as diverse as Mastercard and Uber. Facebook hopes to begin it next year with 100 partners. 

It would be the most far-reaching attempt by a mainstream company to jump into the world of cryptocurrencies and could become the foundation for a new financial system not controlled by today’s power brokers on Wall Street or central banks. 

The social network hopes it will help 1.7 billion people without a bank account to transfer money instantly and affordably, from their mobile phones.


Technology to make transactions with Libra will be available as a standalone app – as well as on WhatsApp and Facebook Messenger platforms – as early as 2020. It will allow consumers to send money to each other as well as potentially pay for goods and services using the Facebook-backed digital currency instead of their local currency.

The Libra digital token will be directly backed by government currencies like the dollar or euro, according to a paper describing the technology. Unlike Bitcoin, the best-known cryptocurrency, it will not fluctuate in value any more than real-world money, and it is not likely to appeal to speculators.

To acquire Libra (a reference to the Roman measurement for a pound, once used to mint coins) through a new Facebook subsidiary, called Calibra, users are likely to have to show government identification like a driver’s licence, which would make it unappealing for black market transactions like buying drugs. 

Facebook said the design of Libra would allow individuals to store, spend and transfer money with close to zero transaction fees. Libra is partly targeted at the $613bn annual market for cross-border remittances. Analysts are suggesting Libra could be a huge moneymaker for Facebook, arriving as its growth slows.


Dr Potts said if Libra gets regulatory approval, we can expect to see other tech companies moving in.

“If Facebook can do it, what that means is that companies that have much higher levels of trust around securities, such as Apple, it will be open slather for them,” Dr Potts told Talking Business.

”It will be a really interesting test with Facebook doing this.

“Facebook and its consortia of other large companies have come in but there’s a few that are obviously missing. Microsoft wasn’t on the list, Apple wasn’t on the list and we can expect them to have the same idea and the same reason to do the same thing.

“They also have billions of customers that they’re providing communication, social media or tech services for. Facebook is the first.”

Dr Potts said, at this stage, “we don’t know what the regulations will be” but suggested it could be something like Uber, which went in and funded legal protections, declared war on the taxi industry globally and fought it out in the courts.

He said it will be an interesting battle to watch.

“Banks are large, tech companies are larger. So I think it’s going to be a fair fight,” Dr Potts said.

“If we were having this discussion 20 years ago, you’d say what’s big tech? How powerful can they possibly be? Right now, if we go through the list of the top 10 companies in the world, nine of them are big tech.” 

Dr Potts said it was not clear, at this stage, what the outcomes will be but it’s the first time there has been a competitor to global banking.

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at


By Andrew Conway >>

WITH THE END of the financial year fast approaching, some taxpayers are turning their mind to organising themselves in preparation for lodging their 2019 tax return early in July.

We at the Institute of Public Accountants (IPA) understand there is a strong incentive to lodge early to get your hands on some extra cash courtesy of our tax system if a refund is expected. 

We want to remind taxpayers that there are added complexities in lodging early, particularly this year due to two new factors at play.

First, Parliament needs to pass the announced increase in the low and middle income offset which applies for the 2019 income year.  Eligible taxpayers can receive up to an extra $530 for singles or $1,080 for a couple. The ATO has stated that it cannot process the higher amount until the law is passed but will be able to automatically amend a return if the law changes after a taxpayer receives their assessment.

Second, single touch payroll has come into operation. Some employers no longer need to provide a payment summary to employees as this information can now be accessed via myGov. The information available in early July may not be accurate until the employer completes a finalisation process. Until this happens employment income will show a notation 'tax not ready'.

Consistent with prior years, third party data such as dividends, interest, share disposals etc. is progressively uploaded onto the ATO systems during the month so it normally takes some time for the pre-fill information to be finalised.

The ATO has the right to auto-amend a return which it has been doing for discrepancies, but interest and penalties can be applied by the ATO.

Our advice is that unless you have certainty and completeness around the information used to finalise your return, we are encouraging all taxpayers to rethink lodging returns early this year especially in light of the above changes.

Last, and more importantly, work related deductions (WRE) has been a focus area which has come under more scrutiny. The tax gap for individuals of $8.7 billion has been largely caused by overstatement of WRE.

Random audits have revealed high error rates from both agent and non-tax agent returns. The ATO will be using tools such as data analytics to highlight possible over-claiming. 

Taxpayers need to be constantly reminded that our tax system relies on self-assessment so the buck stops with the taxpayer.

Some 70 percent of the population seek the services of a trusted professional for assistance in navigating their way through the tax return process.

Tax can be complex depending on personal circumstances so if you are unsure of your obligations professional help is recommended.

Andrew Conway is the chief executive officer of the Institute of Public Accountants. The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 36,000 members and students in over 80 countries.  The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants.


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