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Can Split open banking save Christmas?

CHRISTMAS is often a time associated with increased financial stress for many Australians. A time of year when household budgets blow out due to presents, special events and summer holidays.

The problem is now amplified with so many different ways to pay – from credit cards and digital wallets to buy-now-pay-later schemes like Afterpay and zipMoney. 

One Australian fintech is using 'open banking' to deliver fairer repayments for people faced with larger than expected bills this holiday season or, in some cases, significant debt.

Split Payments, a Byron-based company which has won accolades in 2019 - including the Australian FinTech Award for Payments Innovation - have created a platform that can eliminate dishonours and deliver a happier path for those struggling to get on top of their bills. 

Kristofer Rogers, Split’s CEO, explained, "By using open banking connectivity, we have created a world-first capability to perform a balance check prior to processing a bank payment. If there are insufficient funds in a customer’s account, we simply notify the merchant and don’t process the payment. This avoids that unhappy path of bank fees for both the customer and the merchant, which is a game changer."

Open banking is a regulatory change being implemented in Australia that requires banks and financial institutions to allow approved third parties to securely access a customer’s transactional data, with their approval, to obtain better financial services. Such a move should level the playing field for financial services providers but also helps technology companies like Split Payments innovate and create unique capabilities. 

Mr. Rogers said, "Without giving away too much of our secret Santa recipe, we have built an enduring consent platform that allows customers to agree to specific terms that allow merchants to perform balance checks and gain a better understanding of spending behavior via machine learning. Ultimately, this technology delivers a fairer outcome. It has also modernised direct debit payments, which were antiquated and not really suitable for the digital economy that we live in today."

Since launching in January 2018, Split Payments has already processed more than 14 million transactions and works with businesses including Australia Post, MoneyMe and illion to deliver new direct debit products.

"We are really proud to sprinkle a little bit of payments magic this Christmas to help Australians doing it tough," Mr Rogers said.

 

Insolvency Practices Inquiry reveals small business pain points

THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell says the Insolvency Practices Inquiry has heard a vast number of harrowing small business stories, shining a light on the failures of the insolvency system as well as the challenges faced by industry professionals.

Ms Carnell today released a discussion paper, seeking feedback on developing a best practice framework for small businesses facing insolvency and for practitioners managing external administrations.

“More than 300 small businesses have come forward to share their experiences of going through the insolvency process,” Ms Carnell said.

“Many have spoken of being left with nothing – no business, a ruined reputation and often no home and broken families. It’s absolutely gut-wrenching.

“The overwhelming experience of small businesses has been a loss of control, costs that strip the value of a business and a lack of transparency throughout the process.

“We also appreciate the constructive feedback we’ve had from insolvency practitioners, industry groups, lawyers and financial advisors," Ms Carnell said.

“They have sent the clear message that small businesses experiencing financial difficulties are often leaving it too late to seek help.

“What we know is the sooner small and family businesses get help, the more likely it is they can achieve a turnaround or restructure.

“ASIC has just released new data revealing more than 8,000 businesses entered external administration in 2018/19. 51 percent of those businesses reported inadequate cash flow as the key cause of failure.

“It’s crucial that small and family businesses experiencing financial difficulties understand they don’t have to go it alone. This is the time to lean on a trusted advisor, like an accountant," Ms Carnell said.

“Industry professionals have also called for a streamlined insolvency process for small business, with minimal red tape that provides a real option to turn around the profitable parts of the business.

“In releasing this discussion paper, we’ve outlined the key pain points for small businesses as well as the challenges for registered liquidators.

“In the meantime, this discussion paper poses a number of questions we are seeking feedback on, particularly around the transparency of the insolvency process.

“We have also extended the deadline to share insolvency stories via our online survey or by providing a submission to This email address is being protected from spambots. You need JavaScript enabled to view it. to the end of January 2020.”

The final report will be released in March 2020.

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PFAS remediation and health: first report

TODAY the PFAS Sub-committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) tabled the first report of its inquiry into PFAS remediation in and around Defence bases.

The chair of the PFAS Sub-committee the Dr John McVeigh MP said that committee members have made a commitment to keep the public informed about Defence’s progress under its National PFAS Investigation and Management Program, while research continues to better understand the nature and impacts of PFAS substances.

This report presents key information from the Department of Defence about its ongoing  evaluation and remediation of per-and poly-fluoroalkyl (PFAS) contamination at 28 Defence sites, and also updated advice about research into the health impacts of PFAS from the Australian National University’s PFAS Health Study, at the National Centre for Epidemiology and Population Health.

"The sub-committee welcomed frank advice from Defence— about what it is getting right in its PFAS remediation program; as well as the nature of ongoing research. The Department also outlined its ongoing communication strategy in communities and online, to keep the public up to date about progress in this work," Dr McVeigh said.

The ANU’s PFAS Health Study provided a progress report on work commissioned by the Department of Health. The Committee heard that the Health study is in a vital phase of evidence gathering and analysis. The data collected will allow for a longitudinal evaluation of any potential PFAS health impacts including any mental health issues. It will be local and verifiable, based on blood samples and surveys of people living in affected communities, of past residents, and of three unaffected communities for comparison.

"The information in this first report provides a solid foundation for further review when the inquiry proceeds in the new year," Dr McVeigh said. "In particular, the sub-committee will seek further clarification from responsible agencies about the relationship between health advice, food safety and environmental impacts which could remain of concern in the community."

The PFAS inquiry’s First report is now available on the inquiry website.

Information about the PFAS Sub-committee’s ongoing scrutiny program, and forthcoming public hearings, will be available on the JSCFADT committee website in 2020.

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MUA calls for bushfire action: protection of workers from dangerous smoke

The Maritime Union of Australia is demanding drastic action from the NSW and Federal Governments to address the public health emergency caused by bushfire smoke and to rectify the completely inadequate responses to this major health crisis.

MUA Sydney Branch secretary Paul McAleer said this was a public health emergency that needs to be fixed.

“The bottom line is the people of NSW, and more broadly across the whole country, are faced with a climate crisis driving the largest bushfire season ever and bankrupt conservative governments can’t even buy a plane nor equip the community and firefighters to adequately deal with this inevitability,” Mr McAleer said.

“Politicians have manufactured a climate crisis through ignoring science and failing to resource communities to face the threat. Workers are exposed to the consequences of this failure and must act to defend their health, safety and homes. The MUA Sydney Branch will promote all efforts to protect ourselves against the climate catastrophe that has been thrust into our communities, our workplaces and our lives”.

Even worse, multi-national stevedore DP World has attacked workers, putting wharfies off the payroll because the workforce had to act on its own due to the boss’s lack of consideration and care to the public health crisis facing workers.

MUA assistant national secretary Warren Smith said: “For the third day in two weeks, smoke has become so intolerable in Sydney that maritime workers have been forced to stop work. Maritime workers in Newcastle and Port Kembla have also been forced to down tools due to the severe health risks and effects of working in such high levels of smoke.

“We demand action from governments to protect workers and protect the community, and will continue to stand up to employers who want us to work in intolerable conditions.”

Respected doctors and medical organisations have declared a public health emergency, making the lack of action disturbing and of great concern.

Organisations including the Royal Australasian College of Physicians, Lung foundation, Asthma Australia and the Australasian College for Emergency Medicine all agree we are in a public health crisis.

MUA Southern NSW Branch secretary Mich Cross said of Port Kembla: “Operations where our members are involved have been reassessed. The workforce at the stevedoring operations, as always, are working safely and continually monitoring the smoke and heat situation. They will not put themselves or workmates at risk.”

Prime Minister Scott Morrison was warned this would be the worst fire season we have ever faced. In April 2019, a group of former fire chiefs wrote to Prime Minister Scott Morrison to warn him that there was insufficient equipment in Australia to deal with it, and that we should not be relying on volunteers to address natural disasters.

They called for immediate funding for large aerial fire tankers, and a recognition that climate change has fundamentally changed the nature of firefighting in Australia. The Prime Minister ignored their advice, and is still refusing to meet with them.

The MUA asks:
- Where is the public health campaign and response?
- Where are the clear instructions to employers about keeping workers safe?
- Why no guidance from Worksafe NSW or Safe Work Australia on managing risks of bushfire smoke at work?
- Why no hourly reporting of PM 2.5 when the government already collects this information? We need to know the facts to make good decisions about when it is safe to work outside, when it is safe to take kids to the park, or let children outside for recess?
- Why is there no clear guidance to schools on what actions to take at different levels of air pollution?
- Why are workers being put off the payroll when conditions outside are hazardous?

The MUA calls on all governments to support our communities by supporting our firefighters and giving them the resources they need immediately.
We also demand that no worker be docked pay due to the climate crisis which has resulted in days of hazardous levels of smoke across NSW.

https://www.mua.org.au/news/mua-safety-bulletin-bushfire-smoke-work

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Banking Code still unfair to small business: Ombudsman

THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has a range of concerns about the newly approved version of the Banking Code of Practice in effect from March 2020, saying it doesn’t go far enough to protect small businesses.

“The ABA claims it has implemented the Royal Commission recommendations but it has not acted on all of the recommendations including one that is critical to small business,” Ms Carnell said.

“Commissioner Hayne recommended that the definition of a small business should be businesses that apply for a loan up to $5 million and have fewer than 100 employees.

“Despite our repeated efforts, the Code only protects small businesses with up to $3 million in total debt to all credit providers.

“What that means is that a large number of small businesses, particularly those capital intensive businesses such as agriculture, building and manufacturing, are not covered by the Code.

“While we support approved amendments to the Code to help drought-affected farmers, that same level of protection ought to be given to small businesses in these rural and remote communities that are also suffering," Ms Carnell said.

“Of particular concern, is a new addition to the Code under paragraph 115 b)** which in effect, allows banks to take action against the small business guarantor, before enforcing recovery against the security provided by the small business borrower.

“This is totally unacceptable and has the potential to be seriously detrimental to the small business borrower.

“During the Royal Commission, Commissioner Hayne acknowledged the ABA Banking Code of Practice is the chief protection for small business borrowers and as such, it needs real and meaningful changes to give it teeth," she said.

“While the Code has been improved, the number of get-out-of-jail clauses for the banks still dilute the protections for small businesses.

“We will continue to push for a better framework for a balanced relationship between banks and their small business customers.”

www.asbfeo.gov.au

 

Background:

(*) Commissioner Hayne Recommendation 1.10 – Definition of ‘small business’

The ABA should amend the definition of ‘small business’ in the Banking Code so that the Code applies to any business or group employing fewer than 100 full-time equivalent employees, where the loan applied for is less than $5 million.

(**)Banking Code of Practice 2019:

  1. 115. However, the restrictions under paragraphs 113 and 114 do:
  2. a)  not apply if you have specifically agreed in writing after the default notice is issued and we have informed you of the limitations of our enforcement rights under this chapter that they do  not apply; or
  3. b)  not require us to first enforce any mortgage or other security that  the borrower has provided if we reasonably expect that the net proceeds of that enforcement will not be sufficient to repay a substantial  portion of the guaranteed liability, or because of the borrower not providing us with information, documents, or access to premises or assets as required, we are unable to reasonably assess whether the net proceeds of that enforcement will not be sufficient to repay a substantial portion of the guaranteed liability.

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Full Federal Court finds racing clubs are liable for Superannuation Guarantee Charge on unpaid superannuation for jockeys

THIS WEEK, the Full Federal Court ruled in favour of the Australian Taxation Office (ATO), agreeing that horse racing clubs and state racing boards are required to pay superannuation contributions on behalf of jockeys. 

The court upheld the ATO’s superannuation guarantee (SG) charge assessments that were issued to a New South Wales thoroughbred race club and Queensland’s principal racing authority with respect to riding fees paid to jockeys during the period 1 July 2009 to 30 June 2014.

ATO Deputy Commissioner John Ford said this outcome is an excellent example of the ATO’s ongoing focus on reducing the incidence of non-payment of superannuation guarantee in the community, especially by larger businesses.

The ATO takes the non-payment of SG very seriously. Employers that do not pay the correct amount of SG contributions for their workers deprive them of their retirement savings they are entitled to.

“Super is money set aside for employees’ future retirement and financial wellbeing,” Mr Ford said.

In the matters of Commissioner of Taxation v. Scone Race Club Limited (SRC) and Commissioner of Taxation v. Racing Queensland Board (RQB), both SRC and RQB argued that they weren’t liable for super payments, because they only made the payments of riding fees to the jockeys on behalf of the owners for administrative purposes.

The court ruled in favour of the commissioner, agreeing that it was the SRC and RQB which were liable to pay riding fees to jockeys for riding in a horse race and are therefore deemed to be their employers for the purposes of the SG legislation.

Where the ATO finds that an employer hasn’t met their obligations, they are liable for the super guarantee charge (SGC), made up of:

  • the amount of super the employer should have paid,
  • interest on those amounts, and
  • an administration fee of $20 per employee per quarter.

SRC and RQB have 28 days to seek special leave to appeal to the High Court.

The ATO has a range of strategies and activities in place to educate, support, monitor and enforce compliance by employers. The ATO encourages people to report instances of non-payment and responds to every report of possible non-payment of SG from employees or former employees.

“We will pursue outstanding debts, aiming to collect and distribute unpaid super and interest to employees as soon as possible,” Mr Ford said.

In 2018-19, the ATO contacted more than 22,000 employers as a result of reviews or audits, and raised assessments of over $805 million.

ato.gov.au/unpaidsuper

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NHMRC grant furthers IPA's mental health research effort

THE Institute of Public Accountants (IPA) has confirmed a grant from the National Health and Medical Research Council (NHMRC) which will support the IPA’s research endeavours into the mental health of small business.

“The IPA is very pleased to partner with Beyond Blue, Mental Health First Aid Australia, Worksafe Victoria and Deakin University and to receive the research grant of $559,073 from the NHMRC,” said IPA chief executive officer, Andrew Conway.

“It is an exciting development considering this is a world first in this type of research and I am humbled to be recognised as introducing this initiative.

‘In terms of mental health research, this is a genuine game changer; we intend to put our collective backing behind this. 

“Through our Australian Small Business White Paper development, we have heralded the fact that the mental health of small business is a significant issue in Australia, and we are intent on doing what we can to arrest the tide of growing health concerns," Prof. Conway said.

“Our nation-wide small business road show in 2017 provided many anecdotes of small businesses battling with depression, anxiety and other issues; too many stories to ignore.

“We are very grateful to the NHRMC for this funding which will extend research in protecting the mental health of SME owners; evaluating real-world approaches to mental health first aid; and, client-relationship building training for small business advisers," he said.

“Our members are very often the first to see the struggle signs within their clients and therefore, we would like to see our members better equipped to support their clients and themselves through mental health first aid training. 

“They need to be skilled appropriately, to have those early conversations and point the way to the health professional that is required,” Prof. Conway said.

About 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 38,000 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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International parliamentarians gather in Canberra

CANBERRA will play host to a meeting of parliamentarians from around the world, with the 28th Asia Pacific Parliamentary Forum to be held at Parliament House in January.

The APPF is an annual forum where national parliamentarians from the Asia Pacific region meet to identify and discuss important matters of common concern.

Speaker of the House of Representatives and president of the APPF Executive Committee, Tony Smith MP, said the forum would bring together more than 300 delegates from parliaments from the 27 member countries and another 11 observer countries.

"Since the first APPF in 1993, the forum has been an incredible opportunity for parliamentarians to share experiences with colleagues from around the world," Mr Smith said.

"I’m especially pleased that in 2020, the forum will welcome delegates from countries in the Pacific Island Forum.

"Events such as APPF28 form part of the Australian Parliament’s International Program, which helps to promote understanding, sharing of knowledge and democratic development with our fellow parliaments around the world."

Australia was one of nine originating countries of the APPF. The Australian Parliament hosted the second preparatory meeting in Canberra in 1991 before the inaugural meeting of the APPF in January 1993 in Tokyo. Australia last hosted the APPF in 2000.

Delegates will participate in a number of plenary sessions, discussing subjects such as security, economics and trade, and regional cooperation. At the conclusion of the forum, a joint communique will be published, outlining all agreed resolutions from APPF28.

For more information about the forum, visit appf28.org.

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Coles’ digital transformation should translate into quicker payment times

THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has welcomed Coles Group’s announcement of adopting world-class core finance and procurement platforms, saying this should translate into quicker payment times for small to medium enterprises (SMEs) in its supply chain.

“We hope this digital transformation will mean all SMEs will be paid in 20 days or less, without discount,” Ms Carnell said.

“Better still, if Coles can implement e-invoicing for all SMEs in its supply chain, businesses should be able to be paid in five days.

“If the Federal and NSW Governments can pay suppliers in five days, Coles with its ‘multi-enterprise connectivity’ and improved speed should be able to do so as well.

“Coles Group works with an enormous number of farmers and suppliers across our nation. We hope Australia’s SMEs will directly benefit from this digital transformation.”

www.asbfeo.gov.au

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Solid lending figures indicate brightening housing outlook for 2020

THE NUMBER of owner occupier loans relating to new homes reached a 14-month high during October while investor participation in the market also stretched higher, according to Master Builders Australia chief economist, Shane Garrett. 

Today’s new set of figures from the ABS indicate that the number of loans to owner occupiers for new home building rose by 5.5 percent during the month, with the number of loans for the purchase of new dwellings up by 1.3 percent compared with September. Taken together, this means that the volume of loans relating to new homes has reached its highest level since August of last year. 

“There is also solid evidence that confidence has is returning to the investor side of the market with the value of lending on that side of the market up by 1.4 percent during October. Having declined for 11 straight months since mid-2018, investor lending has turned around registering increase during four of the past five months,” Mr Garrett said. 

“Based on recent results around building approvals, house prices and lending, it does seem that people are optimistic about the prospects for the housing market in 2020. Activity is going to get a further boost in January with the activation of NHFIC’s First Home Loan Deposit Scheme,” he said. 

“Managed properly, the clear improvement in housing market sentiment could help re-ignite confidence amongst consumers more widely and across the business community. The absence of optimism amongst these players is one of the main stumbling blocks for economic growth at the moment.

“The best way to build momentum is for the government to do everything it can to get new infrastructure projects rolling as early as possible. Building and construction projects are highly visible and represent the best way to signal to everyone that we are gearing up for a bright economic future,” Mr Garrett said.

www.masterbuilders.com.au

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Redoubled commitment to economic growth needed after MYEFO say Master Builders

“THE Mid-Year Economic and Fiscal Outlook (MYEFO) released this morning shows that short-term prospects for economic growth and employment are weaker than was expected six months ago,” Denita Wawn, CEO of Master Builders Australia said. 

“While we welcome the expectation that we will still record a Budget surplus this year -- and continue to do so over MYEFO’s forecast horizon, the immediate priority must be for the Federal Government to redouble its commitment to economic growth,” she said. 

“Fast-tracking the actual construction of infrastructure projects so that there is money being spent to generate activity on the ground is the most effective way to achieve to this. 

“Our industry depends on growth to be the biggest provider of full time jobs in the economy. The Federal Government has enough fiscal space to boost demand in the economy while still achieving budgetary surplus.

“An expanded productivity agenda is also needed to build on the government’s continuing initiatives such as the deregulation taskforce to strengthen economic growth over time,” Ms Wawn said. 

“The government still needs to look at ways of providing an immediate and effective boost to demand in the economy to get us over the soft patch we currently find ourselves in.

 “Ramping up spending on construction of infrastructure is the best course of action. It offers a real opportunity to restore confidence amongst households and businesses and send everyone the message that our economy’s best days lie ahead of us,” Ms Wawn said.

www.masterbuilders.com.au

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