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
Here's how the 2 sides currently shape up for small business/self employed people! (10 July 2010)
Gillard's ALP

So far, they've told us "here's what we've done!"

• Started a superannuation clearing house
• Begun a small business online inquiry service
• Established a Small Business Advisory Committee
• New liability contract guidelines for government procurement
• National Business Name Registration
• A new guide for self-employed people
Abbott's Coalition
They've announced the first part of "here's what we're going to do!"

• A dedicated Small Business Minister who will be in Cabinet
• A new Small Business Ombudsman to handle and resolve small business complaints about the federal government
• The extension of consumer unfair contract protections to small business people
• Retention of the current self-employed (PSI) tax laws
• Stop small business red tape on Paid Parental Leave
• Mr Abbott's and Mr Billson's joint press release
What we've been asking for
• The extension of consumer unfair contract protections to small business people

• Retention of the current self-employed (PSI) tax laws. Our letter to the PM (28 May 2010)

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.
We need an answer on tax, please
We've made it quite clear that self-employed (PSI) tax should not be changed.

We've written to the PM for an answer, but we do not yet have a reply.

Tony Abbott has been clear. NO change!
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
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.
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
Dick Davies Writes...
"...the human fabric of the workplace precedes in importance that of technology!"
Dick Davies prods us to think about management, independence and motivation. Click here.
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
... Unquote
The Pessimists' Economic Views
(Posted 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


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]
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.

The darkest clouds of 2010:
A pessimist's perspective!


Most financial commentary currently seems to be referring to 2010 as the year of global economic recovery. The upbeat commentators are issuing soothing words that the worst of the 2008-09 downturn is behind us. In Australia, there's even talk of capacity restraints as growth surges forward. It appears too good to be true!

For the purposes of balance we paint here a darker picture by summarising several quality articles we've sourced. Several of these have been sent to us by ICA members. Like anyone, we can't foresee the economic future and hope it's rosy rather than dark, but realism is only achieved by considering divergent possibilities.

The articles are from: According to these dark pessimists, the recovery 'good news' is too good to be true. If you accept these downbeat analysts, the USA is not addressing its debt problems (merely shifting and masking them), Wall Street has captured the political process to save its own financial neck, and a second-stage US downturn is locked in. This will take one of two forms: either a sudden second crash or a prolonged two-decade Japan-style malaise.

Japan is risk personified, with continuing deflation and economic decline unstoppable. It's only one of many global hotspots that could trigger a second global financial crisis.

The EU is not like Japan, but is rapidly heading there. Greece, Spain, Portugal and many of the old Eastern Bloc countries are all on the verge of sovereign default. If any of them falls, this could trigger a cascade of global sovereign defaults.

The UK is like the US, politically fearful of its debt accumulation and even more fearful that withdrawal of its stimulus package will trigger a Depression-style collapse. The UK, too, is masking its debt problems rather than addressing them.

In seeking to avert global economic calamity, government and central bank coordination has never been so tightly 'as one'. Governments have consumed the private debt of some of the world's largest firms, 'printed' and pumped money into the system and forced down interest rates. The hope seems to be that private-sector consumption would kick in again, generating economic growth which would eventually resolve the debt issue.

Key to this is a belief that China can generate a consumer revolution on a scale capable of dragging the rest of the globe along with it. Australia is a key beneficiary if the China promise proves true.

But the dark analysts say 'no' to all this---as three of the following analyses illustrate.

Simon Johnson, a former chief economist at the International Monetary Fund gave a sobering analysis in May 2009. At that time, the GFC and government reactions to it had been in play for well over a year and, if anything, the subsequent eight months have probably confirmed his analysis. Despite many promises, little of real substance has changed in terms of the way in which US banks are regulated.

Johnson describes the experiences of the IMF in bailing out developing economies from Asia, Eastern Europe and Latin America over the last three decades. Whatever the specifics of individual problems, there is one recurring pattern: 'the powerful elites within them [the countries] overreached in good times and took too many risks'. It's a political problem where elites are so well connected that they can manipulate government so that the elites are saved from their own excesses. This makes the national sickness only worse. Resolution is not achieved until the politics changes, the elites take a hit and underlying economic problems can be addressed.

Ordinarily the US stands above this. But Johnson says the 'US economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets'. He goes on to describe in detail how Wall Street has captured the US political process and the wealth of the country in a way not seen since the early 1900s.

His solutions are politically unpalatable in the current environment. He argues that all banks must be forced to own up to the extent of their losses. Those not viable should be nationalised, broken up, and the smaller entities re-privatised. The larger surviving banks should be broken up as this is the only way to shatter their stranglehold on the political process.

This solution, Johnson surmises, is probably unlikely to occur, which leaves us facing an unpleasant scenario similar to the decade-long Japanese decline. Inevitably, Johnson concludes, 'What we face now could, in fact be worse than the Great Depression'.

This bleak assessment becomes darker still if Japan is factored into considerations. This financial blog commentary draws on an analysis from Ambrose Evans-Pritchard of the London Telegraph that also claims 'we are in the grip of a 21st Century Depression'. The transfer of private debt to the public sector has averted a crisis, but only delayed the inevitable. Japan will not be able to sustain its public debt as its soars above 225 per cent of GDP. Debt costs will tear the Japanese budget to shreds, triggering a bounce-on financial crisis in China, the EU and UK. Surprisingly, the sick US economy will appear comparatively sound once the other economies have dived.

If Evans-Pritchard's predictions for 2010 seem somewhat dire, Reuters reports a more sober consensus from leading American economists. However even these economists report little chance of a sustained US recovery.

But it's China which is supposedly the global saviour. This is the most important factor holding up the Australian economy. China is flush with funds, spending up big on its stimulus package and importing all the commodities it can to feed its growth. Australia is benefiting directly.

Caution is, however, warranted if the following counter-intuitive analysis of China is accurate.

According to this analysis by Pivot Capital, China's capital spending cannot be sustained and will collapse in 2010. Chinese credit expansion has reached a similar level to that which existed in pre-crisis Japan in 1991 and in the USA in 2008. The predicted slowdown will have similar ramifications to those of the US sub-prime collapse.

Contrary to most belief, China's urbanisation and industrialisation process is just about complete. There's no pent-up demand for large amounts of additional housing stock. Road infrastructure is near parity (in terms of size) to the US, but China only has one-sixth the number of cars. Rail transport has room to grow but it's not large enough to counter the pull-back in other areas.

And the Chinese consumer is not capable of powering the new immediate growth which the China bulls assume will occur. Chinese private consumption accounts for about 33 per cent of GDP. Compare that with most developed economies, where the figure is about 70 per cent. Chinese private consumption will grow, but must achieve an incredible 20 to 30 per cent real growth over the next two years for overall real growth in GDP to reach 10 per cent.

Pivot Capital says that this is not possible. Post-war US growth rarely exceeded 10 per cent. Japans' post-war reconstruction, private consumption growth peaked at 12 per cent in 1961. In the decade to 2007, China's private consumption growth averaged 8.2 per cent. This is likely to drop. Unemployment is believed to be at least double that of the officially reported 4.3 per cent and household income (as a ratio of GDP) has declined 20 per cent over the last decade.

The analysis concludes that Chinese overall growth will be around 5-6 per cent for the foreseeable future. In ordinary times, this is impressive. But it's not nearly enough to power the world out of its economic slump.

In summary, these analysts argue that the facts point to a second major financial downturn in 2010. There will either be a significant crash and/or the beginning of a Japanese-style prolonged economic sickness. We'll be able to look back in twelve months and reflect on what actually happened.