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

A contract on the Rudd government


14 June 2010

It's been well covered by Robert Gottliebsen how Assistant Treasurer Nick Sherry is handing the small business constituency to Tony Abbott on a plate.

Sherry's blunder has been to endorse a Board of Taxation recommendation to massively change tax arrangements that determine micro-business access to business tax treatment. Sherry passed the recommendations on the Personal Services Income (PSI) tax law to the Henry Review.

The update on this is that Henry's recommendation number 10 states: "Consideration should be given to a revised regime to prevent the alienation of personal services income that would extend to all entities earning a significant proportion of their business income from the personal services of their owner-managers, whether in employee-like or non-employee-like cases. This regime may also apply an arm's length rule to deductions arising from payments to associates to ensure deductions reflect the value of services provided."

Would somebody kindly explain what this Treasury double-speak actually means! Certainly to anyone in small business, what the government intends to do with their tax status is now a mystery. The government hasn't rejected recommendation 10 or given a view. So my organisation, Independent Contractors Australia, has written to the Prime Minister asking him to provide clarity. One thing small business hates is confusion and uncertainty.

It hasn't taken long for the Abbott coalition to make their position clear. They have called for the government to keep the current laws.

What's odd in the Rudd government's moves, is that the PSI laws seem to be doing their job. The intent of the laws is to allow small and micro business people to genuinely access business tax treatment. But the laws are also intended to stop people from turning their personal income into business income and illegitimately obtaining business deductions. It's a balancing act.

The Australian Taxation Office just recently, again won a case against a contractor who was in this category. The Administrative Appeals Tribunal ruled that the IT contractor's alleged business income was in fact his personal income and should be taxed accordingly. We've explained the case here.

What's been strange is that the Board of Taxation, Sherry and Henry all seemed to have ignored the ATO's string of successful prosecutions under PSI. The recommendations for change are not supported by a solid analysis of the current application of the laws. Instead, as Robert Gottliebsen has argued, the government would create a complex and discriminatory anti-small business tax environment if it implemented the recommendations.

It's ironic, that as Australia is looking to harm micro-business people on tax ,the new UK government is moving in a positive direction.

Few people realise how damaged the UK Labour government was over its small business tax approach. It had a neat little tax ruling called IR35 that made business tax treatment for micro business people hugely complex. The ruling spawned a large, grass roots contractor organisation, the Professional Contractors Group which has campaigned against IR35 since 1999. IR35 pushed a lot of highly skilled professional contractors out of the UK.

IR35 was a bit like the mess Australia had before the PSI laws but not as bad as the new Sherry/Henry endorsed recommendations.

Over time in the UK both the Conservative Party and Liberal Democrats moved into this constituency space. Now, as the coalition government, they have made the following undertaking. To, "Review IR35 as part of a wholesale review of all small business taxation, and seek to replace it with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility."

IR35 had heavy impact on highly skilled information technology specialist in the UK. Anyone anywhere near this labour market knows that it's globally mobile and competitive. People with the skills shop globally and their tax treatment is important to where they choose to work.

Two years ago the Rudd government brought a UK labour specialist out to Australia who recommended the government substantially dump the use of IT contractors and force them to become public service employees.

The Gershon Report, which has been implemented, claimed the government could buy these IT technical skills cheaper by turning contractors into public servants.

My sources in the IT sector tell me there's currently a significant IT specialist shortage in Australia.

Maybe there's a lesson for government. When a labour market becomes a genuine 'market', government manipulation either of tax or labour choices always has consequences, sometimes economic, sometimes political.


From the Business Spectator, June 2010.

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