Charter of Contractual Fairness
On 1 July we launched our Charter of Contractual Fairness

We have heavily drawn the principles of contract fairness from the new consumer unfair contract protections laws. If it's fair for consumers, it's fair for small business people - the self-employed and independent contractors.

We are currently writing to Australian corporations asking them to commit to contract fairness in their dealings with small business people.
Election Face-off 2010
The federal election was held on on 21 August 2010. ICA was active in assessing the policies of the ALP and the Coalition. Here's our comparative summary of the parties' policies just before the election.
Tax burden: UK versus Australia
Just as the UK is moving toward more sensible small business (contractor) tax laws, in Australia we're having to defend the progress we've made.
Laughing lawyers
You'll be amazed by the 'slips' that some lawyers make in court.
Failure to fix unfair business contracts
ICA says "extend unfair contract protections for consumers to small business".

New laws:
Legislation #1 (March 2010)
Legislation #2 (June 2010)

Here's our summary of the situation.
How the legislation defines unfair contract terms.
Why small business people should have TPA protections from unfair contracts.
Industry/Retail super funds must come out
The Cooper Review into superannuation says the big funds are not disclosing enough and must be forced to do so. This is vital. See Chapter 4.

Here's why workers' money is at risk if disclosure is not enforced.
Look after your retirement
The Cooper Review of superannuation says Self Managed Super Funds are good and need little change to existing arrangements. This is welcome. See Chapter 8.

The Report also seems to have stopped the attack against SMSF's.
Stand Up for Your (Contract) Rights!
We're monitoring contracts in general and promoting good contracts in particular. For example:
Another bad contract (Jun 2010)
One of the worst contracts we've seen (Jan 2010)
'Tom' versus DEEWR (Nov 2009)
But a positive development from government
Ken Phillips comments
And some interesting discussions
Problems with Phoenix companies
Two ICA members' tell their stories
ATO information on reporting suspect activity.

Govt's attempts to do something:
ICA comment

Newspaper comment:
The Australian
The Age/Sydney Morning Herald
Business Spectator

What 'Tom' thinks
What 'Jim' thinks
Stop Sham Contracts!
ICA supports the prevention of sham contracts. We monitor what's happening with them:
One person's story
Successful FWO prosecution (Dec 2009)
Info from Fair Work Ombudsman (July 2009)
First sham contract prosecution: ICA summary
Make a complaint to FWO
Business Spectator article
Read the debate
Watching Global Economies
Watching the USA
The US economy appears to be in recession. At the very least, we're getting very mixed signals about what's happening. Click here for a rundown on some of the best links we've found.
Watching China
China has just passed Japan as the world's second largest economy. It could become the largest global economy by 2030. We're maintaining a watching brief on the Chinese economy here.
Watching Goldman Sachs
Rolling Stone magazine has blown the lid on Goldman Sachs:
Article 1 [July 2009]
Article 2 [April 2010]
Article 3 [May 2010]
Central Banks on Debt
Since mid-May, central banks have been worried about sovereign debt. Click here for a list of useful links and summaries.
What the Pessimists said (January 2010)
We've brought together some pessimistic views about economics and likely economic trends in 2010:
US toxic loans
'US as sick as Greece'
Ken Phillips's summary
An 'IMF' perspective
Predicting 2010
Government debt a giant ponzi scheme?


Click to enlarge.

Ken Phillips on the debt equation

Understanding "Us": Self-employed People
ICA is committed to quality research to understand self-employed people.

6 July 2010: We released a unique research report made possible by an unusual collaborative effort. The report shatters many preconceived beliefs about 'us'; small and micro-business people. We believe it has global implications.

Main points and commentary
Summary
Full report.

20 July 2010: Here's further research from Flying Solo:
Report Summary; Full report and from Kelly Services: Report. And here's a comparative chart of our own.

Australian military aircraft (JSF). Bad deal?
Australia's decision to buy the Joint Strike Fighter (JSF) as the backbone of our air defence is under attack. Is this a bad procurement and contract management stuff-up? We've summarised the arguments and included some useful videos.

We Oppose Workplace Bullying
ICA opposes attempts by construction unions to bully their way on to work sites. Here are the issues from 2010:
Overview
Union violence on Westgate
Unions make threats

Australian military aircraft (JSF):
A bad deal?

23 July 2010
A little while ago, several self-employed military specialist contractors sent us details of the new Joint Strike Fighter (JSF) aircraft on order by Australia. Current likely cost is to exceed $A20 billion.

The specialists at Air Power Australia say that the aircraft's a lemon and we shouldn't buy it. They have a large number of assessment articles for the technically minded. Robert Gottliebsen (Business Spectator) also says to drop the JSF.

It seems there are lots of concerns about the JSF programme. On 24 July, the Ottawa Citizen ran a critical commentary by the former Canadian defence procurement bureaucrat who signed the original US-Canadian memorandum committing Canada to the JSF development. It seems the JSF is under attack on several fronts.

The reason the military specialists contacted us is because of our campaign over fair contracts. Our interest is good contract management---and this contract is shaping up as bad and set to cost Australian taxpayers billions of dollars.

If the arguments against the JSF are accurate, it raises big questions about procurement and contract management capability inside the Department of Defence.

What is the Joint Strike Fighter (JSF)?

It's billed as the 21st Century multi-capable fighter aircraft. It's built by Lockheed Martin, the giant US air defence manufacturer. It has stealth and vertical take-off capability.

[Click to enlarge]


Here are some promotional videos of the JSF:
http://www.youtube.com/watch?v=kQoxidTMqW4
http://www.youtube.com/watch?v=xTSRbXTh-_A

We're told that it's a concept plane still in design and development. Development will continue for some years. It's some seven years (at least) behind schedule, however production has already commenced with planes coming off the production line and being sold to the US government currently at around $US240 million each. No planes are in combat roles, as full testing is continuing and training of US pilots is in preparation. It seems odd indeed that a plane still in development and not fully tested is in production. Do aviation authorities allow that to occur with commercial aircraft?

In March 2010, top US military brass assured Congress that the JSF is on schedule.

In June 2010, a Pentagon presentation to Congress recommended continuing with the JSF development but at the same time detailed serious flaws in the management of the programme. However, the Pentagon claimed that the flaws are being addressed." See below for a summary and click here for the Pentagon document.

The Australian Purchase

In 2002, Australia made a decision to purchase 100 JSFs, with the first to be delivered in 2011. This will not occur. A final decision to purchase has to be made in 2012.

Anticipated cost of each aircraft was $A75 million but is now looking like $A172 million each, plus about $A4 billion in support facilities. Total cost was budgeted at $A7.5 billion, but is now looking closer to $A21 billion. Including the cost of the 24 'interim solution' Super Hornets that have been purchased, total cost could reach $A30 billion.

In considering and deciding on the JSF, the pre-2002 evaluation team looked at about eight possible aircraft with four of those being US-made. After the 2002 JSF purchase decision, the evaluation team has been disbanded, even though the JSF is still in development and is as yet unproven.

What's Wrong with the JSF?

According to Air Power Australia and others, the design specifications of the JSF make it technically inferior to other aircraft likely to be operating in Australia's military spheres of interest. The JSF is, for example, inferior in key performance areas to a new Russian aircraft being supplied to India, China and Indonesia.

Quite simply, in combat against other comparable aircraft the JSF will be shot down. This is because the JSF design means it is comparatively:
  • Too slow
  • Has inferior agility (that is, ability to change direction quickly)
  • Has insufficient weapons carrying capacity
  • Has insufficient altitude reaching capacity.
It's supposed to have good integrated systems support (eg) radar, infra-red detection systems, etc., but this is not supported by the physical capacity of the aircraft itself.

In summary, the JSF specifications mean it can't out-run, out-climb, out-turn or reach higher altitudes than competing aircraft in the region. It will be shot down in combat.

What the Pentagon Says

In June 2010 the Pentagon wrote to the US Congress certifying that the JSF programme should proceed, but in doing so made some extraordinary observations.

The Pentagon document has a three-page letter to Congress with a key three-page supporting assessment. The letter from the Under-Secretary of Defence says that the JSF should proceed because it is "essential to national security" even though major problems have been identified.

Quoting from the letter:
    The JSF program's estimated average procurement unit cost has increased significantly over the past eight years,

    The JSF test program continues to encounter difficulties and has fallen behind the level of performance projected ....
On alternative aircraft the Pentagon says:
    The F-22 is the strongest alternative in terms of survivability and lethality in the air-to-air arena, but it lacks the sensors and weapons to meet required lethality against ground targets.
But it is the key supporting document (the three-pager titled "Root Cause Analysis and Assessment") that reveals the true extent of the problems. It says that the JSF programme had
  • ... flawed programmatic and technological assumptions at inception;
  • Moreover, excessive optimism at MSB about the weight estimate and weight control led directly to a major redesign.
Further
  • Given that the JSF entered System Design and Development with flawed technological, estimating, and programmatic assumptions, the program was on a path to uncover significant problems.
  • Finally, there was a general reluctance to accept unfavorable information. This slowed down the ability of the contractor and government to recognize and respond to problems.
  • Specific areas of uncertainty in the immediate future include the ability of the contractor to develop and integrate the mission systems on a schedule that supports testing and production, to overcome inevitable problems revealed during testing ....

An Assessment from a Layperson's Perspective

The Pentagon displays a near blind faith in the 'vision' of the JSF. But it openly admits that the programme has been plagued with difficulties. Summarised, the 'difficulties' seem to suggest that, from the JSF's inception, the JSF has suffered from technological constraints which prevent it from performing to the 'vision' created for it. Further, the Pentagon admits that the JSF development is a management mess, but says the management mess is being addressed. The 'blind faith' stems from a hope/prayer (?) that continuing redesign and development will lift the JSF capability to that of the vision. Even with this gap between capability vision and reality, production has begun. The question is: what sort of aircraft is actually being built?

It is one thing for the USA to 'blind faith' chase its JSF vision. It's another situation for Australia. The USA has many thousands of multiple fighter aircraft in service. In combat situations, the US presumably has a capacity to mix and match different aircraft for different situations. Australia has no such capacity.

Our 100 aircraft will be charged with doing 'everything'. One would think that the key requirement would be an ability to win in air-to-air combat. The key criticism of the JSF is that its comparative design limitations predetermine that the JSF will be shot down when confronted by other aircraft being purchased in our region.

Contract Management

What this suggests is that the contract management processes of the Australian Department of Defence are highly questionable. Why would the evaluation team be closed down when the JSF is still being developed? It doesn't make sense. Is there ongoing monitoring or is there just blind faith in the US Defence Department? Is there a constant and open questioning of the JSF development? Is there a culture within the Australian Department of Defence of suppressing criticism just as the Pentagon has identified in the development program?

Have the arguments in this article and this article been taken into consideration for example?

It needs to be remembered that the Australian Defence Department has had major purchase stuff-ups in the past---for example, the Seasprite. Have the lessons been learnt?

Another Lemon

Problems with defence procurement in Australia are not without precedent. The saga of the Seasprite helicopter is a case in point. Originally contracted in 1997, Australia took delivery of 11 of the helicopters (late, of course) only to find that a raft of problems severely restricted their operational capacity. The entire squadron was grounded in 2006 and the contract with the manufacturer terminated in 2008. The cost: close to $1 billion. For further details, see Ben Eltham's article in New Matilda.