Self Employed Australia

"Everyone needs an Advocate"

“Everyone needs an Advocate”

News Updates

They say there’s “trouble Down Under?”

by

trouble-down-underThe speed with which Australia’s fundamental operational structures are being changed is quite breathtaking.

At the beginning of February, the Federal Treasurer, Jim Chalmers, released a ‘thought’ article where he announced “…the beginnings of a new economic model” by creating “…a new values-based capitalism for Australia”.  This embodies a surprisingly radical intent, even given the tradition of the labour movement’s ambitions over the last 50 years.

On my thesis, ‘The New Australian Socialist Experiment’  (also released in February), I saw Chalmers’ declaration as part that emerging experiment. What I hadn’t expected was the rapid rate at which this new agenda unfolded, became apparent and ignited a vigorous debate.

Gary Banks was the head of the Productivity Commission from 1998 to 2013. The Productivity Commission is the major government-funded ‘think tank’ that looks at, and reports on, how to make Australia efficient and productive. Normally any criticism by such government bodies directed at government (even by retired heads) is cautious, using toned-down bureaucratic language.  But this week Gary Banks came out swinging.

In a damning assessment of the current policy direction Banks referred to “…policies that have damaged our economy’s ability to cope with change, to be competitive and support economic growth.” He refers to “monumental bungling”, policies that are “…contrived to maximise the cost…” and “…we [Australia] have been busily eliminating our competitive advantage…”

Gary Banks’ criticism is directed at all governments, not just the current federal government. What is significant is not simply his criticism of specific policies, but the unexpected tone of his criticism. He is flagging an Australian structural, self-created, economic downslide.

Banks’ blunt warning comes just as many retirees are reeling in shock at unexpected significant changes to superannuation tax rates. While the proposed tax regime only appears to affect ‘rich’ people, those changes also signal that using superannuation for retirement is now much more risky. Is this the beginning of the end for superannuation?

To us (SEA), it’s not just what’s already happened that’s caught our attention, but what seems to be pending. There are tea leaves to be read!

  • There is broad media reporting of a rental crisis. But emerging policy seems to be pushing housing rental supply in a negative direction. One much-touted ‘solution’ is the imposition of rental price controls and rent freezes.
  • Influential, wealthy unions are supporting and calling for price controls—not only on energy but, seemingly, more broadly as well.
  • State workers’ compensation schemes are in financial crisis, unable to fund their obligations.

Our experience is that when this sort of media coverage starts happening it’s usually followed by new regulations to ‘solve’ such problems.

And we know that the policy knives are out to harm self-employed people. We reported in February on just one agenda item designed to kill off independent truck drivers.

Over the next few weeks we’ll try and put together analysis of these issues and more. Things are certainly moving at a rapid rate!

The New Australian Socialist Experiment

by

socialist-experimentJanuary was ‘thinking’ time.

Yes, we/I needed to absorb and contemplate the outcome of our Supreme Court action to require WorkSafe Victoria to do its job, that is to apply the law. We reported to you on this in mid-January.

But something else unfolded in late-2022 that made me think more deeply. The new Federal Labor government passed major labour laws that threw out the very laws that the ALP themselves made in 2009. And they went hard on regulations covering the gas industry. Some commentators referred to this as ‘quasi-nationalisation’. “What is going on?”, I had to ask. But a picture started to emerge—so fingers went to the keyboard.

Then on Monday last (30 January 2023) the Federal Treasurer, Jim Chalmers, released his own thought piece (6,000 words) called ‘My plan for the rebirth of Australian Capitalism.’

Goodness, the picture became stark. I’ve produced my own thesis called ‘The New Australian Socialist Experiment.’

Jim Chalmers talks of “…the beginnings of a new economic model” with “…a new values-based capitalism for Australia.”

He says that “…2023 will be the year we build a better capitalism, uniquely Australian” where “…we will create a new, sustainable finance architecture…”

The Australian reports that the Treasurer says he is “Foreshadowing a seismic policy shift …(where) Labor will ditch the free-market policy consensus that has steered rich countries over two generations.” In short, this is BIG. And the thinking over January has been worthwhile.

I offer you, then, a perspective on what’s going on. It’s not just what Treasurer Chalmers says that’s important, but what has already been put in place. This is a new socialism with Australian characteristics. And counter to the usual ‘reds under the beds’ narrative, socialism does not mean poverty. It depends. Hence I’m not seeking to debate the rights or wrongs but to understand the thinking.

My analysis is as long as the Treasurer’s (6,000 words) so I’ve broken it up into sections. And I’ve taken an additional step in opening an account with Substack, a platform for writers where you can access my analysis.

  • I provide an Introduction and overview here.

And the detail covering:

The scale of what is occurring is major.

It’s important to understand, particularly if you are self-employed, your own boss, running your own business. I hope that my analysis and facts paint a helpful picture.

ATO watchdog to be closed down/neutered?

by

ATO-watchdog-robodebtIf there are two things to be learnt from the current Royal Commission into the Robodebt scandal, it’s that governments can and do ‘get it wrong’ and that governments can and do inflict massive harm on individuals.

In the Robdebt affair the Australian Taxation Office supplied the income data of tens of thousands of welfare recipients to Services Australia, the federal government’s welfare department. The data was misused by Services Australia resulting in up to 200,000 people who didn’t owe the government anything being hounded by the department over incorrectly assessed debts. The scheme was illegal but the department pushed ahead anyway.

Some might say that the Royal Commission is political payback by the Albanese government against the Morrison government. That’s nonsense. The inquiry is an important investigation into how government can ‘stuff up’ even while claiming to be acting in the public interest. Lessons must be learnt, and remedies implemented to limit the misuse of government power over individuals.

That’s why we are deeply concerned to read media reports of a push to dismantle the independent ATO watchdog, the Inspector-General of Taxation and Taxation Ombudsman. The Tax Ombudsman is a small federal government department that is legislatively charged with investigating complaints against, and reporting on the performance of, the ATO.

In our view the ATO hates this oversight because it creates some measure of transparency. The ATO has a powerful media unit that pumps out stories about how perfect the ATO is. But we know that the ATO gets things wrong on too many occasions. Take this one example.

In the Robodebt Royal Commission the ATO has given evidence that the ATO remained silent about the illegality of the Robodebt program in order to protect the Human Services Department (Services Australia) from adverse publicity. The ATO wanted to show solidarity with other government departments. In fact, the ATO should have spoken up, but they didn’t. This is what happens in governments.

Good public servants will often see the protection of the institution as more important than the protection of ‘the people’, even when government inflicts harm on the people. On the other hand, public servants can have their lives destroyed if they tell the truth. Look at the treatment of ATO whistleblower Richard Boyle.

Governments need to have strong internal watchdog departments. This is what the Taxation Ombudsman does. The Ombudsman has a legislative charter to watch the ATO. Such internal watchdogs act as early warning radar systems. They make for better, more transparent government. They reduce the ability of government to harm ‘the people’. Who knows? A Services Australia watchdog might have prevented the Robodebt scandal.

We’re writing to the Prime Minister and others to ask for commitments to retain the Taxation Ombudsman. In fact, we’re asking for reform and an increase in the Ombudsman’s powers. A parliamentary committee last year recommended just this. Read our summary ‘One Giant Step for Taxpayers – ‘Taxpayer Rights’.

ATO Small Business Debt: Patience Needed

by

patienceThe Australian Taxation Office views small business tax debt as a major problem. The ATO says that small business debt is two-thirds of the $37 billion owed to the ATO—in other words, $24 billion.

Fortunately, the ATO does recognise that much of existing small business debt is the direct result of huge losses small business people suffered due to Covid lockdowns and restrictions. The ATO is showing some understanding. But we hope that the understanding is sufficient and that it will ‘stay the course’. Here’s one story that demonstrates the ‘Covid business disaster’ experienced by (at least) tens of thousands of self-employed people.

I had a chat the other day with a single mum who’s been running her own small business for about six years. She rents a commercial space that’s critical for her particular business. Things were going reasonably well and in 2019 she needed to move from one premises to another. She spent quite a bit of money upgrading the new premises, moved in and business was looking up. Then Covid hit in early 2020.

During the entire Covid lockdowns of 2020–21 the rules meant that she was prohibited from operating at all. Income dropped to zero. Yes, zero! She’d signed a five-year lease and had a bank mortgage. In early 2022 she could start operating again. But the loyal customers she had built up had drifted away. She’s had to rebuild, and although things are looking better, they are not yet back to pre-Covid (2019) levels.

She owes money to the ATO related to her pre-Covid trading. The ATO (fortunately) has her on a payment plan. She’s been very upfront with the ATO. But she’s still needing to cover her mortgage payments plus pay the rent on her premises. If she loses the premises, she’s out of business.

She talked to me about the struggle. I really don’t know if she can survive. She’s a self-motivated, positive, ‘go getter’. But my words of encouragement and support are just words and don’t cover the bills. She’s the sort of person who is most likely to battle through and, give her several years, get on top of the mess and start to make a profit again.

This lady is just one typical story. The economic pain of Covid has impacted the most vulnerable in our community—the ‘go getter’ small business individuals.

We hope that the ATO maintains its small business patience and support. But this needs to happen on a case-by-case basis, with high quality ATO communication and realistic assessments of individuals’ circumstances. It will be a long haul over several years. This is the economic ‘long Covid’.

Victorian Labor promises to destroy gig work and self-employment

by

destroy-gig-workIn late October this year the Victorian Labor Government announced new gig laws it intends to introduce. The promised laws have all the nice-sounding language of ‘rights’ for gig self-employed people, but in fact the laws amount to a stripping of rights.

We’ve seen this sort of cunning stuff before. In California, in 2020, new laws came into effect that outlawed the use of self-employed people. That is, the structure of the laws didn’t ban people being their own boss. But by making it illegal to use self-employed people, California destroyed the incomes of people who worked as their own boss.

The promised Victorian Labor laws would perform a similar underhand trick. Effectively the laws would impose huge union control and centralised regulation over gig platforms, thereby destroying their business models. The platforms would become unprofitable and be forced to leave Victoria.

This is why Deliveroo recently closed in Australia. They’d done deals with unions that made their business unviable. Close down was the answer!

And who suffers? Yep, you got it. It’s the thousands of self-employed people—try students, retirees and the rest—who use gig platforms to top up their income. Only 0.19 percent of gig workers use gig for their full-time work. Everyone else uses gig for income top-up.

The promised Victorian Labor law is a business destroyer. It’s a policy that says that Labor despises people who work as their own boss, working when they want to work. It’s a policy of hate toward small business people.

We saw this before in Victoria when, around 2017, the Victorian Labor Government forced the breaking of the contracts of hundreds of self-employed cleaners who had direct contracts to clean schools. Labor forced these ‘own boss’ cleaners out of business and handed the contracts to big business. Cleaners were forced to become union members or have no work.

The promised Victorian Labor gig destruction laws would:

  • Force gig platforms into industrial-style ‘negotiations’ over how they manage their business and what the terms of their contracts are. This process would give unions power over gig platforms and gig workers.
  • Force gig platforms to change their contracts.
  • Destroy the entire concept and practice of ‘offer and acceptance of contract’ which is the core fundamental of commercial activity.
  • Impose pay rates.

And more.

In effect, self-employed gig people would retain their theoretical ‘right’ to be self-employed. But gig work and income would simply disappear. This is a Labor policy that attacks the ability of low-income people to find income through being their own boss. It’s pretty disgusting!

This commentary should in no way be construed or taken as an endorsement (or otherwise) of any political candidate or party or as a suggestion as to how anyone should vote or not vote at the 26 November Victorian state election. 

If the ATO is serious, it should legislate tax fairness

by

JordanWe’re challenging the Australian Taxation Office to enshrine fair treatment of taxpayers in legislation. It’s a major campaign priority for us.

Far too often we see self-employed, small business people in particular being treated badly by the ATO. The ATO has an internal policy that’s supposed to ensure that all taxpayers are treated fairly by ATO officers. The policy is stated in its Taxpayers’ Charter. The ATO is currently reviewing this policy. We’ve made a submission.

Most ATO officers behave fairly. There are some rogue ATO officers and there’s occasional incompetence. Taxpayers deserve legislated protection from rogues and incompetence. That’s fair. That’s justice.

We’ve said in our submission:

The Taxpayers’ Charter is an ATO ‘feel good’ statement of well-meaning intent as to how the ATO will or does treat taxpayers. It does not do anything to create a legislative obligation upon the ATO to treat taxpayers with any measure of fairness.

If the ATO were genuine and serious about ensuring that taxpayers were treated fairly and required to be treated fairly, the ATO would encourage and support a legislated Taxpayers’ Charter. Such legislation would impose sanctions against the ATO and ATO officers for breaches of the Charter. We recommend that the ATO support such legislation.

On a straightforward reading of the ‘Taxpayers’ Charter – essentials’ there is nothing in the wording of the Charter itself that triggers the need for compliance by the ATO if the Charter is breached by the ATO.

Our analysis of tax administrative laws is that any supposed taxpayer ‘rights’ are scattered through complex different legislative Acts that require expensive and specialised legal advice to comprehend, let alone apply. The upshot is that few people outside the ATO know or understand the rules and what the ATO lawfully can and cannot do in administrative terms.

We compare this with the USA, where taxpayers have rights to fair treatment in legislation. The USA tax office (IRS) must comply with these fair treatment laws.

In comparison, the ATO Taxpayers’ Charter is only a public relations exercise. We’re calling on the ATO to support taxpayer fairness in legislation.

Our submission to the ATO is here. It’s not too long a read and sets out:

  • The ATO Taxpayers’ Charter;
  • A table of the complex laws covering alleged Australian taxpayer rights; and
  • The USA Taxpayer Bill of Rights.

We’ve been running this campaign for over a decade now and will continue to do so.

Government report: Don’t destroy self-employed gig workers. We agree

by

report-gigDespite the Albanese government’s description of self-employed ‘gig’ work as a ‘cancer’, a recent government report (interim) says that such work and workers should not be ‘stymied’. We totally agree and have made a supporting submission.

The Productivity Commission is a high-powered federal government economic research think-tank. What it says is important.

In its (interim) report it studies and makes recommendations on the gig/platform economy. It says:

Regulation should evolve to meet the workplace relations challenge of innovative new business models, without stymying their potential contributions to productivity.

This is a heap of common sense. We hope the Albanese government takes note. Don’t throw the baby out with the bathwater!!

Our submission makes key points of fact.

There’s no confusion between an employee and a self-employed person:

  • An employee earns income through the employment contract.
  • A self-employed (independent contractor) person earns income through the commercial contract.

This legal fact is supported by research conducted by the International Labour Organisation and by international standards to which Australia is a signatory. Like the Productivity Commission, the ILO says:

National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships…

We say that employment-structured firms are under competitive threat from gig/platforms and self-employed people. These firms are marshalling their well-entrenched political power to stop or limit the competition for power. This explains the ‘third way’ push which is on the Albanese government’s agenda.

The ‘third way’ push is highly dangerous. It has been rejected by the ILO and is causing great harm in the UK, for example. We explain this in our submission.

We also say that self-employed people are entitled to ‘protections’ but through commercial regulation not employment regulation. For example, protections are already available under laws covering unfair contracts, work safety, collective bargaining (under competition rules), minimum rates guarantees and dispute resolution.

But there is urgent need to reform the workers’ compensation schemes, for example, to allow individual self-employed people to register directly with the schemes without being forced into ‘employment’. Currently, self-employed people are banned from workers’ compensation, a glaring discrimination.

We explain these issues and more in our submission.

Unfair contracts ‘beef up’ – Big tick for Albanese

by

albanese-tickIn our comment earlier this week we heavily criticised the Albanese government for its plans to attack Australia’s 2.1 million people under the con of ‘gig protection’. We will continue to mount that criticism.

But today a huge tick for Prime Minister Albanese and his government. The government is moving with great speed to ‘beef up’ the unfair contract laws. This will give real protections to self-employed, small business people from bullying, unethical big businesses. It’s a game-changer for the economy in ways which few people, we think, would understand.

A brief background:

To the credit of the Labor Party, it has supported the creation of these laws since the beginning. In fact, in 2016 the laws would have been useless if not for the hard Senate negotiations conducted by Labor. Now the ALP is moving quickly to beef up the laws. We explained this in August this year.

Our summary of the new laws is here.
The Explanatory Memorandum to the Bill is here (with our highlights).

The key thing with the new laws is that there are big fines for breaching them. $2.5m for an individual and $50m for a corporation.

But back to basics. What do the laws actually prohibit? The laws make it clear that a contract is ‘unfair’ if it gives one party, but not the other, the ability to:

a)  Avoid or limit the performance of the contract.
b)  Terminate the contract.
c)   Apply penalties against the other party for a breach/termination of the contract.
d)   Vary the terms of the contract.
e)   Renew or not renew the contract.
f)    Vary the contract price where the other party cannot terminate the contract.
g)   Unilaterally vary the characteristics of the goods or services under the contract.
h)   Unilaterally determine if the contract has been breached or to interpret its meaning.
i)    Limit one party’s vicarious liability for its agents.
j)    Permit one party to assign the contract without their consent.
k)   Limit one party’s right to sue the other party.
l)    Limit the evidence one party can use in legal proceedings.

That is, the law balances the contractual power between big and small businesses. This is real, serious protection for self-employed and small business people. Now with real teeth, big business will be forced to comply.

To gig or not to gig. Is that the question?

by

pub-gigIf you’ve ever been to a pub gig, you’ll have taken part in what the Albanese government wants to (effectively) close down. The Albanese agenda is starkly clear after Workplace Relations Minister Tony Burke declared the ‘gig economy’ is a ‘cancer’.

Here’s a simple example of why we strongly oppose the Albanese/Burke agenda.

The gig economy is not something new. The Stones, Cold Chisel, AC/DC all did and/or do ‘gigs’. Gig is the contractual lifeblood of the entertainment industry locally and globally.

A gig is pretty simple. There’s a contract for a set price to do something. “Come to my pub. Play for three hours and I’ll pay you a thousand bucks”, says the pub manager. “Done”, says the singer. The singing done and the money paid. End of contract.

Somehow, for the Albanese government this is a ‘cancer’.

However, this familiar entertainment industry ‘gig’ model has taken new forms. Now gig work is available for ride-share, food delivery, aged and disability care, and odd jobs. The list goes on. And, yes, the entertainment industry has gig platforms. Gigsmash is but one.

What’s happened is that online technology has made gig work secure. Gig platforms enable anyone wanting to do a job to connect with someone needing a job done. The revolution is that job specifics and price are upfront and agreed by the parties. The gig platforms also make the payments and enable both the ‘doer’ and the ‘receiver’ of the service to rate each other.

It’s fantastic. The risk of not being paid is massively reduced. Think of how many times a pub manager has failed to pay the full amount agreed, screwing over the worker (singer)? It’s the security of payment and security and clarity of the gig work agreement that’s made this expansion of gig work so seemingly popular. And it’s all happened without government sticking its nose in!

But Minister Burke has promised to create laws that will require gig workers to have holiday pay as one eample.

So the pub manager will have to pay holiday pay on top of the $1,000 agreed. How is this to be calculated? Holiday pay is for full-time employees who’ve worked a full year. How is this to be calculated for 3 hours work and no more? Ouch! That has heads scratching! But let’s say it’s $10. It’s clear what will happen. The pub manager will only agree to $990 for the gig. $10 will have to be held back.

But when does the gig singer get the $10? Does the singer determine when it’s ‘holiday’ time or does the pub manager decide? Sounds like a recipe for scamming! So will Albanese/Burke then set up a massive new government-run department to manage gig workers’ holiday pay? Will the singer need to apply to the government for the $10?

But there’s more. Around 830,000 Australians do gig platform work in any year. But only 22,000 use gig for their full-time work. In other words, around 810,000 Australians (about 7 per cent of the workforce) only use gig work as part-time top-up work. How is gig holiday pay to be calculated for all these part-timers?

Whatever Albanese/Burke do, it’s destined to be a mess. The proposal/promise is illogical. It doesn’t fit the reality of how people work. It’s dumb. Its dangerous. It will do much harm.

We will keep arguing against this.

New UK PM sets benchmark for self-employed (tax) rights

by

truss-albaneseWe’ve been campaigning for more than a decade for major reform to how the ATO treats self-employed small business people. And since 2000 we’ve studied how the UK tax authority (HMRC) treats the UK’s self-employed. Both the ATO and HMRC seem to have been trained at the same bureaucrats’ ‘bully school’. Both defile the ideas and practices of justice and fairness.

But late last week, the new Truss government took a giant leap by repealing tax administration laws that HMRC has been using to bludgeon the UK’s self-employed. The Albanese government should take note.

What drove the UK repeal was a realisation that the UK laws were doing major harm to the UK’s economy. But more, the issue was cancerous for the Conservative Party’s political future.

The UK issue goes back to 2000. The UK tax authority, His Majesty’s Revenue and Customs (HMRC), views all self-employed people as tax dodgers. In 2000, laws were introduced (called ‘IR35’) which enabled HMRC to declare self-employed people to be employees. The trouble is that, invariably, when the courts looked at HMRC’s declarations, HMRC lost. But they kept destroying small businesses.

In 2017 HMRC shifted tactics. Instead of directly attacking self-employed people, additional new rules, called ‘Off Payroll’, required the engaging business to be responsible for deciding if a person was self-employed or an employee.

In 2021 HMRC applied the new Off Payroll rules to the private sector. This is where disaster struck (again). Third-party operators had evolved since 2017 who claimed that they could manage the Off Payroll rules. The public sector, followed by the private sector, forced self-employed contractors to work through these third-party operators. But far too many of these operators ran their own tax-dodging schemes, stole from contractors, and operated outside the UK to avoid UK laws.

In August 2022 the London School of Economics reported that UK self-employed numbers were down by 500,000, and dropping. It said, “The economy is not going to recover until we start treating them (self-employed people) better.”

This message about economic reality was delivered shortly after Boris Johnson had resigned as PM, but it was already resonating throughout the UK. Rishi Sunak was Johnson’s Chancellor. He introduced Off Payroll to the private sector in 2021. When Sunak made his pitch to become Conservative Party leader he was hammered on social media for his trashing of the self-employed. Liz Truss promised to do something about IR35. Truss won the leadership.

What has caught everyone by surprise is that the new Chancellor’s announcement last week is a complete destruction of Off Payroll. This is a massive embarrassment for HMRC but shows the extent to which the Truss government is seeking a total reset. Dumping Off Payroll is a headline part of a substantial package of UK business encouragement reforms aimed primarily at easing regulatory complexity.

What has all this to do with Australia? Business regulation complexity and bureaucratic stupidity grinds down economic growth. The UK’s HMRC has been doing huge harm to the base of the UK economy, self-employed people.  The ATO is doing the same in Australia. At some point we need a government that will seek a fix.

It’s about collecting tax within a framework of legislated fairness and justice. Here’s our model for a solution. (YouTube)