Election 2022

Is your superannuation money safe? Morrison v Albanese

May 17, 2022 by Self-Employed Australia Leave a Comment

It’s the final run to election day and it’s anyone’s guess as to the outcome!! We’ve put out several news alerts comparing Labor and Coalition policies. We’ve sought to highlight the policy facts affecting self-employed people. Here’s our final pre-election analysis.

Last Sunday Scott Morrison made a big pitch with a new housing policy. It’s a pitch to first-home buyers. Morrison announced that if he retains government, first-home buyers will be allowed to dip into their superannuation money to boost a deposit. His theme is ‘it’s your money!’

Our comment, however, is on a broader issue affecting everyone with money in the big superannuation funds, including self-employed people. This issue shows a stark difference between Labor and the Coalition.

Do superannuation funds present a risk?

Incredibly, up until now, super funds—particularly the union/employer association-controlled Industry funds—had few if any legal requirements to be public about how they manage your superannuation money.

Compare this to listed companies, particularly banks. Banks have strict disclosure requirements. Heavy penalties apply if the banks breach these laws. Disclosure means that government, the media, financial analysts and so on can keep a close eye on the banks, not just from a performance perspective but also in terms of the key question of whether deposits are safe.

Superannuation funds have effectively faced none of the disclosure requirements that apply to the banks. We know this because of a review into superannuation (The Cooper Review) conducted by the Labor government in 2009. The global audit company Morningstar said in its submission to the Review:

Australian superannuation scheme providers and fund managers currently have a mish-mash of approaches to holdings disclosure … Superannuation and managed funds disclosure in Australia is also poor when compared with the extensive mandatory disclosure requirements for listed securities …. Regular, comprehensive holdings disclosure would also provide greater opportunity for detection of undesirable behaviours…

Neither APRA nor ASIC appeared to undertake any form of direct auditing. APRA only reported what the super funds reported, saying it took no responsibility for the data reported.

The Cooper Review recommended major changes to require disclosure. But Labor chose to ignore these, and nothing was done.

Last year the Morrison government pushed through laws that force superannuation funds to disclose how and where they invest your superannuation money. These laws took effect in March this year. Labor, along with unions and the industry superannuation associations, strongly opposed the new disclosure laws and actively sought to block them. More disclosure requirements are needed.

There is now $2.3 trillion in the big Australian superannuation funds. It is extremely concerning that Labor would oppose complete and major disclosure requirements. As Morningstar stated in 2009, without proper disclosure there is always the threat of ‘undesirable behaviours’.

Morrison’s dead flat small business pitch

May 11, 2022 by Self-Employed Australia Leave a Comment

Last week Morrison made his pitch for the small business vote. It fell dead flat. That’s strange really.

It’s almost an Australian political truism that political parties cannot win government in Australia without a sizable chunk of the small business vote. So, for Morrison, who’s supposed to be ‘Scotty from marketing,’ his seeming blindness to this alleged truism is odd.

Morrison’s pitch was that by lowering overhead costs and energy bills he’d create a vast number of new small businesses. This pitch is not specific and applies generally to any business (or family) in the economy. There’s no ‘joining of the dots’ between the pitch and the lives of the self-employed, small and family businesses.

Again, it’s strange that Morrison has totally missed his small business target. The Coalition in fact has a substantial history of not only spouting the small business mantra, but of having substance to support the mantra as well. Take some examples.

John Howard created the Independent Contractors Act to protect the status of the self-employed. Tony Abbott committed to the introduction of a Federal Small and Family Business Ombudsman and put the wheels in motion for unfair contract laws for small business. The Abbott-era commitments were finalised and delivered under the Turnbull coalition government.

Self-employed, small business people profile strongly on the measure of informed and swinging voters. They are extensive seekers of information. This again is why Morrison’s dead flat small business pitch seems so strange at this election.

At the 2019 election Morrison promised to introduce security of payment laws for small business. He’s done this. And it’s good. It’s strange that he’s not pitching it.

He also promised to ‘beef up’ unfair contract protections for small business people. The Bill was ready to go. But strangely this major pro-small business Bill was deserted immediately before the election was called. Did the ‘big end of town’ get to Morrison to pull the Bill?

Then there is the elephant in the room. The Australian Taxation Office has been crucifying small business. The ATO has destroyed small businesses in the research and development space—claiming dodgy use of grants—but the ATO subsequently admitted that it was wrong.

The ATO has been attacking small and family business trusts, forcing trust beneficiaries to pay tax when (even the ATO admits) the beneficiaries have not received any income. The ATO has also sought to change trust distribution rules retrospectively, thereby creating tax debts in the past where, under then-existing ATO rules, no tax debt existed.

In the 2021 Budget the Morrison government declared in Parliament that “We are backing small business in over the ATO. No longer will the ATO be able to garnishee and takeaway (alleged tax debt) while the dispute is in train”. But this promise turned out to be false. The implemented policy only enables small business people to ‘apply’ to have a disputed debt ‘paused’ until appeals have been heard.

Morrison’s pitch to create large numbers of small businesses falls dead flat if those new (and existing) small businesses find themselves under unfair attack from the ATO without the protections afforded by a rule of law regime.

To win and retain the small business vote the Coalition has historically made a policy of substance that it then delivers when in government. This time Morrison is not selling what he’s done and not promising anything new for small business.

It’s almost as if Morrison has abandoned the small business vote. How odd!

Albanese plan to smash Australia’s 2 million self-employed

May 5, 2022 by Self-Employed Australia

There’s now clarity on what Albanese’s Labor intends to do to self-employed small business people if elected. Labor intends to attack us.

The ALP Secure Jobs Plan says:

“Labor will extend the powers of the Fair Work Commission to include ‘employee-like’ forms of work…” Labor intends to attack “…new forms of work such as gig work.”

Last Monday (2 May) this was further made clear at an Albanese street-walk rally in Brisbane. The Australian Financial Review reports from the rally that Labor will legislate to invent new law that says that self-employed people are a ‘little bit’ an employee, like being ‘a little bit pregnant’. It’s clear that the policy is directed at giving unions control over gig workers and any other self-employed person they choose to target. Hairdressers, for example!

The policy is a direct lift from the Californian law called AB5, introduced in early 2020. It was a job killer which hit the most vulnerable self-employed people. Think of single mums running their own transcription business from home! Closed down! There are thousands of examples.

The United Kingdom has an old 1986 ‘little bit pregnant/employee’ independent contractor law. This was used by the UK transport union in 2021 to attack gig ride-sharing. It’s thrown commercial contracts into chaos in the UK.

Albanese’s Labor says it wants to do ‘nice’ things such as giving ‘little-bit-employee’ self-employed people access to collective bargaining, superannuation and the minimum wage. But this is a beat-up.

Self-employed people (us) already have easy access to collective bargaining authorised under competition laws. Superannuation is clearly required when an individual, self-employed persons (not structured as a P/L company) works for a business. The Independent Contractors Act requires that independent contractors should not be paid less than employees.

The truth is that self-employed people are protected under commercial law regulations. Think of the unfair contract laws. Albanese’s Labor wants to drag us into the mess of union-controlled industrial relations law. Forget it!

And quite recently the Australian High Court reaffirmed that self-employed people operate under commercial law. The Court also stated that UK-type (little-bit-employee) laws are not part of Australian law.

Further, the International Labour Organisation, a United Nations body, declared in 2006 that national laws should not interfere in the commercial relationships of independent contractors.

The Albanese plan defies international labour rulings and secure (High Court-determined) contract law. It is a repeat of the disastrous Road Safety Remuneration Tribunal introduced by the 2012 Gillard Labor government. This ‘protection’ invention was about to destroy the businesses of 50,000 self-employed truckies before the Turnbull government abolished the Tribunal.

The obsession Labor has with the ‘evil’ gig economy is silly. Only 0.19 per cent of the Australian workforce earned their full-time income through gig work. But Labor is using a near-hysterical, anti-gig campaign as an excuse to attack self-employed people.

It’s clear that if Labor wins government, we (self-employed people) will have a big fight on our hands to retain our right to be self-employed. It’s about our right to decide how we want to earn our living and to control our working lives. Labor wants to attack that right.

Closing the construction watchdog will harm self-employed tradies

April 24, 2022 by Self-Employed Australia

Unfair contract laws

In March we praised the Morrison government for moving to ‘beef up’ the unfair contract laws for small business people. Albanese’s Labor also supports this, which is great. Unfortunately, the Bill did not pass through Parliament before the election was called.

Integrity Commission – ATO

Labor has made a big noise about Morrison failing to establish a Federal Integrity (anti-corruption) Commission. Here’s our assessment of the issues and politics of this. Morrison has a model, but Labor wants one based on the NSW Commission. The NSW Commission is, however, accused of being a kangaroo court that the High Court found breached the law. The Morrison model would, for the first time, make the ATO accountable to an external body. That’s a policy we strongly support.

Industrial relations

Last week Morrison announced he would move on some industrial relations reform. Labor attacked and Morrison quickly reversed his stance. Here’s our assessment of the politics around this issue. Essentially, we say that the ‘big end of town’ wants changes to suit themselves. But we reckon that the ‘big end of towners’ are incompetent in managing their workplace relations.

Construction Industry Watchdog

If there’s one Labor commitment that stands out, it’s that an Albanese Labor government will close down the Australian Building and Construction Commission (ABCC). We see this as highly negative for self-employed people in the construction sector. We strongly oppose this Labor policy.

Here’s our longer assessment, but in summary:

The ABCC has brought some discipline to the mafia-like behaviour of construction unions. Over the last two years the ABCC has had the courts impose fines totalling some $5.7 million for illegal (thuggish) behaviour.
What’s extremely important is that the ABCC operates a Security of Payments system in the construction sector. It’s a vital service. All construction firms within the ABCC’s jurisdiction are required to pay their subcontractors within payment terms. If they are late, they must report this to the ABCC. Subcontractors can lodge complaints with the ABCC over late payment.
If contractors do not pay on time, they risk sanctions that ultimately include being banned from all Commonwealth-funded work. Over around the last 5 years the ABCC has recovered some $10.7 million in outstanding payments owed to subcontractors. Some major contractors have been disciplined.
An external review of the ABCC reports a “reduction in the number of delayed payments” and “greater efforts being made to pay subcontractors on time.” This is critically important.

There’s no doubt that should Anthony Albanese’s Labor win the election, one of its highest priorities will be the elimination of the ABCC. The outcome would be renewed, unrestrained thuggery on construction sites. Further, small business tradie subcontractors would again carry the risk of not being paid. A bad outcome for all except for the thugs.

(Disclosure: Ken Phillips is a member of the ABCC Security of Payments Working Group along with representatives from the ACTU and Building Industry Associations.)

We’ll produce more election assessments on issues for self-employed people over the coming weeks.