December 2007 In this issue … New governments at two levels 2 ACCI small business policy 3 Smallbix Snippets 4 Who we are 4 SBANT NEWS SBANT NEWS SBANT NEWS

Council of Small Business Associations of Australia chair Bob Stanton has congratulated the new federal Minister for Small Business Dr Craig Emerson on his appointment. But Mr Stanton called on the Prime Minister to include Dr Emerson’s position in Cabinet. “This (is) vital to reflect the importance of small business to the economy of Australia” he said. “Worth a total of $4300 billion, small business employs about 3.6 million people and numbers 1.88 million in total. “These numbers reflect a sizable proportion of the economy and a great opportunity for productivity gains for Australia. “This should have been enough to convince the Prime Min- ister of the importance of the sector but once again our call has fallen on deaf ears.” Dr Emerson will be assisting Lindsay Tanner, the new Fi- nance Minister, on business deregulation. (see page 2) COSBOA congratulates new federal minister Council of Small Business Associations of Australia chief executive Tony Stevens says that while interest rate rises may have been necessary to dampen the demand within our economy because we find our selves constrained by a lack of skills, labour and in some cases infrastructure; the impacts will hit small businesses as spending falls. “If you consider the fact that as costs go up, such as inter- est rates, so will prices to compensate and so spending by consumers will reduce, we then see businesses trying to find a balance to stay profitable,” he said. “Interest rates are a sledge hammer on the inflation walnut, the collateral damage is extensive. “Only highly geared home and business owners are cur- tailed from spending. In Australia there are enough of them to make a difference. “As an economic lever interest rates may be effective but the effect is two fold on small business, spending falls and the cost of their loans rise. “The answer lies in productivity increases and reducing capacity restraints. “We must engage the under employed in this country, the long term unemployed, mature age workers, the disabled work force and our under utilised indigenous community. “Training and motivation is crucial. “Also we have to educate businesses in ways to operate more efficiently by assisting owners and managers to work on systems within their business rather than just operating in their business. “Any future government must continue to ensure education and training and also workplace arrangements are such that we can engage more Australians in the workforce and then business must utilise them more effectively. “This is a much more effective tool against inflation than us- ing the blunt instrument that is interest rates.”

See the Australian Chamber of Commerce and Industry statements on page 3. Interest rates: more effective fiscal tools are available There are better ways to control inflation that don’t damage small business!

 - Small Business Association NT Newsletter, December 007

With the recent changing of the guard in the Territory Government, Kon Vatskalis is the new Business and Eco- nomic Development Minister. Kon also takes on the role of Regional Development Min- ister, although Chief Minister Paul Henderson has retained the portfolio of Major Projects and Trade. So what changes - if any - will these changes in the heady heights of the parliament house fifth floor have on Terri- tory small business? According to his detractors, mostly from the opposite side of the parliament, Kon is accident prone and has been known to have problems with that most-dreaded of political viruses, foot-in-mouth disease. His first major portfolio - lands and planning - landed him in a ton of trouble with several key public servants providing him with advice that in some circles would be better de- scribed as a set-up. He ultimately paid the price and became primary indus- try and mining minister, a portfolio he embraced with such enthusiasm he was on first name terms with the organisers of every trade fair and promotional event in the country. Whatever observers may say about the results he obtained, he was well respected in both sectors for his optimism and energy, and his willingness to get out, meet people and learn. Should Kon Vatskalis bring the same attributes to his new portfolio, he could be a powerful friend of small business. The new chief minister is another who has shown an under- standing for our sector and was counted as one of the better ministers by both industry and his department when he was Business and Economic Development Minister. On the other side of the fence, distractions such the federal intervention, the lack of depth in the ministry and the changes sure to take place at federal level will mean less focus on small business affairs. It’s a price those in small business pay for their can-do attitude and Henny-Penny approach to life - if you buggers won’t help us, then we’ll do it ourselves. It begs the question of how much influence governments at any level really play in the success or failure of the economy and small business in particular. At best they create an environment that makes success easier or they can make life more difficult with taxes and un- necessary red tape. In the end, those businesses driven by people who work hard, do their homework and deal well with other people usually survive far better than most politicians. - Jack Ellis

Changing the guard or shuffling deck chairs Australia’s new federal minister in charge of small business Craig Emerson is out to convince the nation’s 1.88 million smallbusiness operators that a Labor government will sup- port them. While admitting that some groups advocated protection for certainpartsofindustry,aLaborgovernmentwantedtoprotect competition and consumers, rather than a particular business. “We are keen to protect against anti-competitive behaviour, but not to protect against competition,” Emerson says. Hedefendshisgovernment’sdecisionnottomaketheportfo- lioacabinetposition,whichwascriticisedbythepeakCouncil of Small Business of Australia (COSBOA). Emerson says that being in the outer ministry rather than cabinet will not constrain small business development. Heplanstokeepinformedofsmall-businessconcernsdirectly through contacts with industry associations such as COSBOA, and state-based industry groups, and indirectly through the Business Enterprise Centre network. OneofEmerson’sfirsttaskswillbeassistingFinanceMinister Lindsay Tanner on business deregulation, which will focus on harmonising individual state-based business regulation. “It’s a priority, there’s no doubt about that,” he says.

The new minister, who has run his own economic and envi- ronmentalpartnership as asmallbusinessman,promises thata Labor government will differentiate itself from its predecessor byworking”energeticallyinacollaborativeway”withthestates to address the 10 regulatory hot spots identified by the Council of Australian Governments last April. While he declines to set out the work program, it is expected that it will include the mutual recognition between the states of each other’s professional trade qualifications. Suchworkisunlikelytoforeshadowanewroundofreviews. “It is very important we don’t have reviews of business regula- tion for the sake of it,” Emerson says. Asked about rolling back Australian work-place agreements and unfair-dismissal legisla- tion, Emerson (left) reiterates comments made by Deputy Prime Minister Julia Gillard, thenewMinisterofEducation, Employment and Workplace Relations, that Labor’s indus- trial relations policy will be “fair and flexible”. “Too much regulation stifles productivity and innovation. We’re interested in regulatory reform that limits overbearing regulation,” he says. On the question of late pay- ments that has dogged small businesses in recent years, withbigcustomerstakingupto 50daystopaytheirbillscomparedwith30daysadecadeago, Labor will apply penalties to federal agencies that pay late. But it will not be getting involved in business-to-business transactions or making “unwarranted interference in commer- cial relationships”. “It’s not for the government to manage commercial relations between business,” Emerson says. “Too much regulation stifles productivity and innovation. We’re interested in regulatory reform that limits overbearing regulation which stifles productivity and risk-taking.” - AFR New minister keen on deregulation

Small Business Association NT Newsletter, December 007 -  Principles of small business policy TheAustralianChamberofCommerceandIndustrybelieves thefundamentalprinciplestounderpinimprovedgrowthpros- pects for small business are: economic and fiscal stability; minimisationofpublicexpenditureconsistentwithadequate levels of infrastructure and social cohesion; maximisation of competition in the marketplace; minimisation of regulatory burden; minimisation of impediments to employment. Policy objectives ACCI’s overarching policy objectives are to: provide national leadership on issues affecting the growth, investment and competitiveness of small business; achieve recognition by government in its policies that the circumstances, strengths and weaknesses of small business are different from those of medium to large firms. Policies which recognise these differences can promote economic efficiency and growth; drivetheissueofregulatoryreformwithgovernmentparticu- larly from compliance and cost burden perspectives.

Specific small business policy objectives include: comprehensivetaxationreformwhichreducescompliance costs, complexity and uncertainty for small business; access to and cost of finance for small business to promote long term growth in the sector; continuedderegulationoflabourrelationswhileatthesame time promoting better workplace practices in areas of oc- cupational health and safety; extension of competition policy principles, including com- petitive neutrality, to ensure government business enter- prises compete fairly with the private sector; increasedtake-upofnewcommunicationstechnologiesby small business including electronic commerce; small business involvement in telecommunications policy development through input of research and commercial analysis into government and industry forums; and greater access to and increased involvement of small busi- ness in government purchasing. Policy framework Thesmallbusinesssectoraccountsforaroundhalfofnational employment and one-third of domestic product. Smallbusiness,likeallbusiness,hasfarmoretogainfromgov- ernmentpoliciesaimedatpromotingtheinterestsofthebusiness community as a whole rather than policies aimed at promoting some business because of a particular characteristic - whether size, location, industry or market. Aconducivebusinessenvironmentwithefficienttaxationand industrialrelationssystems,responsiblefiscalandmonetary poli- cies and a well educated and trained labour force will deliver to small business more opportunities for growth than policy prescriptions affecting the operations of small business. But business policy should achieve neutrality and efficiency by recognising that apparently uniform taxes or regulations can impose different burdens on different types of businesses. Whereuniformtaxschedulesorbusinessregulationsarelikely toresultinsignificantlyhigherproportionatecostsforsomebusi- nessesthanforothers,discriminationintheapplicationofthose taxes and regulations may be appropriate. In addition, the benefits to government of administering taxes • • • • • • • • • • • • • • • orregulationsshouldbewellinexcessofcostsincludingrecog- nising the costs to business of compliance.

While small business operates in the same commercial, eco- nomicandlegalenvironmentaslargerbusinesses,policiesmust allowforthedifferentneedsandcapacities.Smallbusinesspoli- ciesmustbeanadjuncttobroaderindustrypoliciesandrecognise the characteristics of small business. Smallbusinessesarenotminiatureversionsoflargerenterprises and not all small businesses necessarily want to expand. Thecompetitiveandentrepreneurialspiritofsmallbusinessis thevitalunderpinningofAustralia’seconomicfutureasthelevel of growth in larger corporations has steadied, with restructuring more in favour of medium and smaller enterprises and the ex- ploitation of specialist skills and niche markets. Smallbusinesspolicyshouldbedirectedatthecharacteristics which are different from medium and large businesses. These characteristics include: legal structures differ between small and large businesses. small business is generally financed with debt financing. small businesses are usually run by owner/managers who do not have the time to strategically manage their business as well as the day-to-day operations; small businesses typically operate in localised markets and from a single location. Despiteeffortsbygovernmenttoaddressimpedimentstosmall business, some areas continue to present difficulty, including: Deregulation-Thegovernment’sresponsein1997totheDe- regulationTaskForceReportaddressedasignificantderegulation agenda, but highlighted the need for fundamental tax reform to achieve significant reductions in compliance costs. Taxation-Themostimportantproblemareaforsmallbusiness is taxation. Surveys of more than 1500 businesses consistently demonstratedthatthetaxsystem,taxationrulechangesandcom- pliance costs represent the greatest burden for small business. Finance - Cost and accessibility of finance, especially patient capital for business expansion, is a barrier to SME growth. Management training and development - Surveys indicate small business operators lack the necessary management skills andinformationtoruntheirbusinessessuccessfully.Theprimary focusforimprovedmanagementhastobethebusinessimprove- ment, training and development processes within individual enterprises themselves. Government purchasing - The issues of government procure- ment and contracting out are a major concern for industry as governments at federal, state and local levels are significant purchasersofgoodsandservices.ACCIisworkingwithgovern- menttoensureitsguidelinesonprocurementmaximiseindustry development outcomes especially for SMEs. Innovation-ItisimperativethatAustraliadevelopsaninnova- torycultureinenterprises,particularlysmallenterprises,whichis conducive to a higher level of research and development. Mutual recognition - Mutual recognition of qualifications, regulationsandstandardsbetweentheStatesandTerritoriesisan important initiative in improving competition and efficiency. Fairtrading-Businessdealingsbetweenlargeandsmallbusi- nesses was the subject of a House of Representatives Report to whichtheGovernmentrespondedinSeptember1997.Although Government reforms have achieved successful outcomes in terms of improving the small business fair trading environment, ACCI will continue to ensure that the Government does not put inplacesystemsorlegalobligationsthatwillhampercommerce and industry or create greater regulatory burden. • • • • Chamber releases small business policies

 - Small Business Association NT Newsletter, December 007 Who’s who at the Small Business Association NT Various industry bodies and Local, Territory and the Federal Governments frequently seek advice from the Private Sector when considering legislative and other changes. Councillors give their time voluntarily to attend meetings and prepare submissions in their area of expertise. If you need advice or can offer your expertise in any way, please contact any of the people listed below. SBANT receives no government funding. SBANT President ALAN MORRIS, JP - 5 Star Supermarket Winnellie P0 35994 WINNELLIE NT 0821 PH: 8981 6960 email: aem @octa4.net.au JOHN WHITE, Delta Electrics PH: 8984 4033 FAX: 8947 0421 email: john@deltaelectrics.com.au SBA Secretary/Treasurer CAL Assessment Panel COMMITTEE MEMBERS MICHAEL LYNAGH, Diesel Contract Services PH: 89844568 FAX: 8984 4574 email: dieselcontract@bigpond.com CAL Assessment Panel Member CAL Accreditation Board Member COSBOA Board Member Delegate to NT Business Council Chair of Government Procurement Advisory Council STEVE SCARLETT, R.A.M.S Alice Springs PH: 8952 3177 FAX: 8952 3199 email: alcorta@blgpond.com PENNY LA SETTE, Sadgroves Quay PH: 8981 9625 FAX: 8981 9663 email: sadgrove@d130.aone.net.au KEITH SAUNDERS, Total Health Rehab PH: 8945 0044 FAX: 89456756 email: ksaunders@octa4.net.au

YOUR SUPPORT IS CRITICAL! PLEASE ADDRESS ALL CORRESPONDENCE TO: SMALL BUSINESS ASSOCIATION NT

Smallbiz snippets Crackdown on illegal workers The Federal Government is enforcing stiff penalties against businesses that employ foreign workers who do not have valid visas to work in Australia.

The sanctions also apply to anyone hiring an independent contractor who does not have a valid visa. It is now a criminal offence to ” knowingly or recklessly” hire an illegal work either as an employee or as a contrac- tor. Anyone convicted of this offence can face a fine of up to $13,200 or two year’s imprisonment as an individual or fines of $66,000 if it is a company that commits the offence. Illegal workers are defined as “non-Australian citizens work- ing in Australia without a visa or with a visa that doesn’t allow them to perform the work that they are doing”. For more information call 1800 040 070 Benchmarking your business Humans are by nature a competitive bunch. We like to know how we are doing and faring against others. But how do you accurately know how you are performing relative to others? Access to data is a vital basis for making comparisons and providing insights into your business performance. Chris Russell has developed a means of benchmarking key factors including the costs of goods and services, staff, and other inputs. Are you paying too much for staff compared with your business peers and competitors? What are your sales like compared with others in your industry? He has established a business - Business Reporting Bureau - that enables participating businesses to pool information on wages, rent, input costs and revenue so comparisons can be drawn against like businesses. It is very useful when negotiating with suppliers: quoting in- dustry benchmarks with some authority places people in a far stronger position. A cafe may be paying more for coffee beans than a competitor but armed with facts and figures can negoti- ate a better deal with the supplier.

Chris Russell outlines how the benchmarking can assist busi- nesses to improve their margins in his article in the November issue of My Business. Getting on the road to mobility In his technology review in the November issue of My Busi- ness, IT guru Simon Sharwood reviews the capabilities of basic mobile phones, smartphones, BlackBerry, laptops and tablet PCs. He issues a warning about these portable devices, recom- mending at very least a PIN is used as security to prevent data - often more valuable than the machinery itself - landing up in the hands of criminals. Simon also checks the latest ‘must have’ gadgets on the market, including a new GPS, modem/router, podcasts, and a wireless mouse packed with grunt like a USB transceiver com- plete with a gigabyte of memory, inbuilt battery charger and its very own Bluetooth. Director required to pay tax on phantom income A recent case (Wood v Commissioner of Taxation AATA 1802) involves the controversial topic of derivation of income.

The taxpayer argued that the inclusion of a $507,900 direc- tor’s fee was erroneously credited to her loan account during the 06/07 financial year. The amount should not have been assessable income because she did not give consent to receive the payment and therefore there was no derivation of income. The Administrative Appeals Tribunal found that due to a lack of evidence to call witnesses (ie the company accountant) and despite contrary arguments, the taxpayer had derived income when the amount was credited to her with her agreement. It shows how mere journal entries can have a real impact.

Next Meeting
Delta Electrics  1751 coonawarra road Winnellie     26th June 2008
for  5.30 pm     (approx duration 60 mins)