Australian Regulatory Compliance Review

Budget details for business

The Budget details have been released. The thrust of the Budget is delivery of election announcements; the Budget reveals the conditions and costings.

Worth noting from the Treasurer's speech:

Supporting business

Mr Speaker, the Government supports the aspirations of Australian business, including small business, for a simpler tax system and less regulation.

Our nation has the potential to be a financial services hub in the Asia Pacific Region - the fastest growing region in the world. To support this ambition, the Budget begins the process of significantly reducing the withholding tax, by reducing the current interim rate of 30 per cent to a final rate of 7.5 per cent for most non resident investors.

This Budget confirms our commitment to a comprehensive agenda of regulation reform - cutting red tape and making it easier for business, particularly small business, to deal with government.

To improve innovation and productivity, the Government will invest $251 million over five years to establish Enterprise Connect Innovation Centres....

COAG Reform Fund

Where funds are used to finance capital projects with the States, they will be distributed to the States from the three new funds I have just announced through a new Council of Australian Governments (COAG) Reform Fund.

The COAG Reform Fund will also distribute funding provided in future budgets to the States for recurrent expenditure in areas of COAG national reforms, through new National Partnership payments.

In 2008 09, the States will receive $78.6 billion in total payments, an increase of 4.8 per cent. And new financial arrangements will allow all levels of government to work together to improve outcomes and reduce costs...

Australia's future tax system

Tonight, I confirm the most comprehensive review of Australia’s tax system since World War 2. The Australia’s Future Tax System (AFTS) review will be reporting progressively from this July through to the end of 2009.

Treasury details

Revenue details are in Budget Paper 2 starting with Treasury's delivery of the Government's election commitments including the income tax cuts from 1 July 2008:

                                                                                                                                                                                                                                                                                                                   

Current			From 1 July 2008			From 1 July 2009			From 1 July 2010
Taxable income       ($)	Rate       (%)		Taxable income       ($)	Rate       (%)		Taxable income       ($)	Rate       (%)		Taxable income       ($)	Rate       (%)
0 - 6000	0		0 - 6000	0		0 - 6000	0		0 - 6000	0
6,001 - 30,000	15		6,001 - 34,000	15		6,001 - 35,0000	15		6,001 - 37,000	15
30,001 - 75,000	30		34,001 - 80,000	30		35,001 - 80,000	30		37,001 - 80,000	30
75,001 - 150,000	40		80,001 - 180,000	40		80,001 - 180,000	38		80,001 - 180,000	37
150,001 +	45		180,001 +	45		180,001 +	45		180,001 +	45

Other Treasury -related announcements can be found here including:

• Family trusts
• Political donations — removing tax deductibility
• Capital gains tax — extend small business concessions
• Depreciation of computer software
• Employee share schemes — election requirements
• FBT refinements
• GST and the sale of real property
• Increasing the Luxury Car Tax
• Managed funds — changes to the eligible investment rules
• Taxation of Financial Arrangements

And here are the details of the Superannuation Clearing House Facility and First Home Saver Accounts.

Australian Government Budget 2008-09

The 2008-09 Budget Papers will be available after 7:30 pm, Tuesday 13 May 2008 from www.budget.gov.au and from Department of Finance and Deregulation, Australian Taxation Office, australia.gov.au and Parliament of Australia.

Treasurer Wayne Swan's interview with Laurie Oakes yesterday foreshadowed the following announcements:

• the tax on luxury cars will increase from 25 per cent to 33 per cent;
• a comprehensive review of our tax system. "We'll look at personal taxation. We'll look at the transfer payment system. We'll look at how that affects individuals, how is affects families, how it affects retirees. We'll look at the company tax system, and we'll also look at all of the implications, say, of an emissions trading system for taxation as well...Federal, local government taxes and state government taxes – a comprehensive review of  the relationship between all of those...we have ruled out any broadening of that base of the GST  or any increase in the GST rate...we've  ruled out any change to tax-free super "
• an increase in the threshold at which the Medicare levy commences.

Productivity Commission Report on Consumer Policy: consumer protection law and product safety

The Minister for Competition Policy and Consumer Affairs, Chris Bowen MP, has released the Productivity Commission's final report of the Review of Australia's Consumer Policy Framework.

The Productivity Commission's key recommendations include:

• a single national generic consumer law, based on the Trade Practices Act 1974 (TPA), which would apply in all States and Territories;
• identifying unnecessary or costly consumer regulation that only applies in a few States and Territories, or to one industry, and either removing them or, if justified, introducing nationally consistent rules;
• transferring regulation of credit providers and finance brokers to the Australian Government, with the Australian Securities and Investments Commission (ASIC) as the regulator;
• national laws to tackle unfair terms in consumer contracts;
• a national approach to product safety laws and enforcement; and
• new redress and enforcement powers for consumer regulators, including the ability to seek redress for non-parties, civil pecuniary penalties, banning orders and substantiation notices.

The Commission also recommended an enhanced role for the Australian Government in consumer policy.

The Government will consider the recommendations and, as agreed by the Council of Australian Governments (CoAG), respond formally at the end of October 2008.

National Rental Affordability Scheme - technical paper released

The National Rental Affordability Scheme is due to commence on 1 July 2008. The Government has released a Technical Discussion Paper on the planned operation of the National Rental Affordability Scheme (NRAS).

The Technical Paper outlines the key features of the Scheme including tenant eligibility, roles for all levels of Government and potential participants in the Scheme and the assessment criteria for tenders.

The Scheme will provide incentives to institutional investors to build 50,000 affordable rental properties by 2012. If market demand remains strong the Government will deliver a further 50,000 incentives from 2012 onwards.

The National Rental Affordability Scheme offers annual incentives for a period of ten years. The two key elements are:

• A Commonwealth incentive of $6,000 per year refundable tax offset or grant; and
• A State or Territory incentive of $2,000 per year in direct or in kind financial support.

Submissions close on 31 May 2008.

April 2008 podcast

In this month's podcast (click here to listen) I discuss 2 topics:

1. Directors' duties in times of economic uncertainty (see also section 180(2) Corporations Act)
2. Nikolich's case and the effect of HR policies

The podcast goes for 9 mins, 23 seconds and is 8.62mb.

Legislation to remove same-sex discrimination

The Attorney-General Robert McClelland has announced that the government will introduce legislation to remove same-sex discrimination from a wide range of Commonwealth laws .

This reform follows the 2007 report of HREOC, Same-Sex: Same Entitlements, which focussed on financial and work-related legislation.  On coming to office, the Rudd Government commissioned an audit of Commonwealth laws, which identified other areas of discrimination.

Areas where discrimination will be removed include tax, superannuation, social security, health, aged care, veterans’ entitlements, workers’ compensation, employment entitlements, and other areas of Commonwealth administration.

The Rudd Government will begin introducing legislation in the Winter Sittings of Parliament. Most reforms will commence soon after the legislation is passed. In some areas (such as social security, tax and veterans’ affairs), the reforms will be phased-in to allow time for couples to adjust their finances, and for administrative arrangements to be implemented. All of the changes are expected to be implemented by mid-2009.

The changes will not alter marriage laws.

Annual Review of Regulatory Burdens on Business – Manufacturing & Distributive Trades

The Productivity Commission has published an issues paper to assist those preparing submissions to its review of regulatory burdens on manufacturing and the distributive trades.

Schedule B lists the areas of concern in its last review. These include:

• Food
• Therapeutic products and medical devices
• Pharmacy
• Plastics and chemicals
• Superannuation
• OHS
• Workers compensation
• Skills mobility and licensing
• Immigration
• Employment reporting
• Taxation
• Environment

Change to foreign investment policy for the development of commercial land

The Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, Chris Bowen MP, has announced that the Rudd Government will change the foreign investment policy to extend the timeframe for the development of vacant commercial land from 12 months to 5 years.

At present foreign investors can purchase vacant commercial and residential land.  However, under existing policy it is a condition of approval that foreign investors commence continuous substantial construction on any vacant land acquisitions they make within 12 months of receiving purchase approval.

Foreign Investment Review Board guidelines

Australia 2020 and regulation

The first priority from the Economy stream at the Australia 2020 summit was:

This stream advocated a fundamental commitment to creating a seamless national economy and single national markets in major areas of economic activity (for example, labour, energy, water, transport and communications). The goal should be to minimise overlaps and bottlenecks and improve competitiveness. They will require clarification of roles, responsibilities and accountabilities between different levels of government. At present, however, Australia’s economy in major markets is highly fragmented: the COAG national reform process has identified more than 25 areas in which Australia has eight sets of different State and Territory regulations. In addition, we have multiple education and accreditation systems. A country of Australia’s size cannot afford this.

Regulation of private equity in Australia

The Minister for Superannuation & Corporate Law has given a speech outlining the Government’s views on  balancing the key objectives of investor protection, prudential integrity and high quality domestic markets, while maintaining and promoting Australia as an attractive investment destination for private equity and hedge funds.

In respect of private equity, he referred to the The Council of Financial Regulators 2007 report on private equity which assessed that existing Australian regulatory frameworks were sufficiently well established to manage each of the identified issues.

The Government considers that the Council presented a balanced review of the economic contribution of private equity and its risks. However, regardless of the recent decline in new buyout activity, we will closely monitor the corporate developments as a way of validating those assessments.  We will also continue to develop our policy approach to private equity...

On the whole, the reviews have concluded that the industry is adequately regulated and contributes to the economies in which it operates.

See also Senate Standing Committee on Economics report

RBA Review

Register of Lobbyists

Cabinet Secretary, Senator John Faulkner, has released an exposure draft of the Lobbying Code of Conduct. The Code will underpin the operation of the Register of Lobbyists.

The proposed Register will allow Ministers and other Government representatives who are approached by lobbyists to establish whose interests the lobbyist represents so informed judgments can be made about the outcome they are seeking to achieve.

This will be the first  formal lobbyists register ever adopted by a Federal Government.

Comments on the exposure draft are requested by 16 April 2008.

The Government intends that registration will commence after Cabinet approval of the Code following consideration of comments received.

Time will be allowed for provision of the required details for the Register. From the commencement date, lobbyists who represent third party clients will need to be on the Register or they will not be able to lobby Government representatives. It will not, however, confer a right to access by lobbyists to Ministers and other Government representatives.

The Register will be administered by the Secretary of the Department of the Prime Minister and Cabinet and will be hosted on the Department’s web site.

Standing Committee of Attorneys‑General Decisions - March 2008

The Standing Committee of Attorneys‑General has agreed to give priority to nationally consistent regulation and co-operation in the following areas:

• Interstate Enforcement of Fines
• Workplace Privacy
• Personal Property Securities Law Reform
• Tort Law – Proportionate Liability
• Accession to Hague Convention on Service Abroad
• Sterilisation of Intellectually Disabled Minors
• Surrogacy
• Harmonisation
• National Electronic Conveyancing System
• Trustee Companies
• Jury Selection
• Indigenous Justice
• Model Criminal Code
• Uniform Spent Convictions
• Litigation FundingVictims of Crime
• Harmonisation of anti-discrimination laws
• National Directory of Alcohol and Drug Treatment Services
• Legal aid funding
• Suppression orders
• Trans-Tasman court proceedings and regulatory enforcement
• Disabilities Convention
• National Legal Profession Model Laws
• Missing Persons

The next next SCAG meeting will be in July 2008.

High Court decides in favour of internet and interstate trade

In Betfair Pty Limited v Western Australia [2008] HCA 11 the High Court decided that Western Australian legislation outlawing the operation of betting exchanges was unconstitutional because it imposed protectionist burdens on interstate trade and therefore contravened section 92 of the Constitution.

Befair held a licence under Tasmanian law to operate a betting exchange, by which bets may be laid on a horse or a team losing as well as winning. Customers from all over Australia can place bets by telephone or internet.

But provisions of WA’s Betting and Racing Legislation Amendment Act, which came into effect on 29 January 2007, made betting with a betting exchange an offence.

The High Court held that section 24(1aa) was invalid to the extent that it applied to a person who made or accepted offers to bet through the use of Betfair’s betting exchange by telephone or internet between WA and Betfair’s Hobart premises. Section 27D(1) was invalid to the extent that it would apply to Betfair’s publishing or making available WA race fields by telephone or internet between Tasmania and another State.

AWB Class Action update

AWB Ltd has announced that the class action filed on behalf of US wheat growers against the company has been dismissed by the US District Court for the Southern District of New York.

ABC News reports that the Judge dismissed the action because ""Plaintiffs ... cannot show that AWB's conduct in Iraq was a 'proximate cause' of their injury, a required element of antitrust standing..".

AWB Index

COAG Regulatory Reform Agenda

The Council of Australian Governments (COAG) meeting in Adelaide on 26 March 2008 focussed on health, water, regulatory reform and the broader productivity agenda.

COAG has agreed to an accelerated business regulation reform agenda across 27 areas of regulatory reform, to enhance productivity and workforce mobility by cutting the costs of regulation.

The 27 areas are listed in the COAG Communique and include:

· national harmonisation of occupational health and safety (OH&S) laws with model legislation to be developed and submitted to the Workplace Relations Ministers’ Council by September 2009;

· early action and progress in 2008 on a further 12 areas, including existing hotspots and new areas of reform, covering: environmental assessment and approvals bilaterals; payroll tax administration; trade licences; the Health Workforce Intergovernmental Agreement; national trade measurement; rail safety regulation reform; the consumer policy framework; product safety; trustee companies; mortgage credit and advice; margin lending; and, non-deposit taking institutions;

· significant progress to be made in accelerating the five remaining COAG hotspots - development assessment; building regulation; chemicals and plastics regulatory reform; Australian Business Number and business names registration; and Personal Property Securities reform;

· nine new areas to be added to COAG’s regulation work program, covering standard business reporting; food regulation; a national mine safety framework; electronic conveyancing; upstream petroleum (oil and gas) regulation; maritime safety; wine labelling; directors' liabilities; and financial service delivery; and

· COAG also agreed that the Working Group report back to COAG by the end of 2008 on new areas of competition reform including:

· appropriate models for future regulation of national markets such as for water trading, the energy market, consumer policy and regulation affecting national workforce mobility;

· unfinished National Competition Policy business; and

· other new competition reforms.

The productivity agenda focussed on reform of early childhood development, schooling and vocational education and training and enhancing productivity and workforce mobility in areas of shared Commonwealth and State responsibility.

COAG also agreed to the introduction of a national registration and accreditation system for health professionals.

Parliament in recess until Budget

Commonwealth Parliament is in recess and will resume on Tuesday 13 May for the Budget.

Clarke and Dawe explain the economy

According to satirists Clarke and Dawe, there's no case for more regulation to deal with the current problems. Watch the video.

PS On a more serious note academics Christine Brown and Kevin Davis analyse the effect of the sub-prime epidemic on Australia in this article in Business Spectator.

Workplace Relations Amendment (Transition to Forward with Fairness) Act passed

The Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 was passed by Parliament on 19 March. Date of Assent: 20 March 2008. (consolidated Workplace Relations Act  available here).

The Senate Education, Employment and Workplace Relations Committee delivered its report on the Bill on 17 March.

The Act, once it receives Assent (possibly on 27 March), will prohibit new Australian Workplace Agreements.

Any Workplace Agreements in force as at 1 December 2007 can be replaced by Individual Transitional Employment Agreements which will be effective until 1 January 2010.

Employers can continue to make collective agreements with employees provided they satisfy the "no disadvantage" test.

The process of modernising awards will commence (although there is doubt about the length of time this will take).

Pattern bargaining will be outlawed.

What will the Act not change?

The law dealing with unfair dismissals will not change until 1 January 2010.

The Act will not change anti-strike laws.

The Act will not change the right of employees who earn more than $100,000 to make individual common law agreements.

Pay equity for women will not be covered.

Developing HR Policies

I gave a presentation on HR policies at a seminar in Sydney last week.

Essentially the talk was a case study on the Full Court of the Federal Court decision In Goldman Sachs JBWere Services Pty Limited v Nikolich [2007] FCAFC 120 which upheld the original decision that Goldman Sachs J B Were Services Pty Ltd pay $515,869 in damages to a former employee, Peter Nikolich, for breach of contract as a result of Goldman Sachs not complying with certain of its policies.

The case prompted interesting debate about the purpose of HR policies, whether they are intended to be contractual, whether they are binding on employers as well as employees and how they are created, monitored and managed.

In Nikolich's case, it appeared that Goldman Sachs' 119 page policy document had developed over many years (and a merger with JBWere) without a clear understanding of its role in the organisation's policy framework.

Treasury Secretary speaks about regulation and COAG reform

Secretary to the Treasury, Dr Ken Henry's Ian Little Memorial Lecture pays tribute to the former Secretary of the Victorian Department for Treasury and Finance for a number of reasons including his involvement with the National Competition Policy which lead to a new National Reform Agenda that embraces competition, regulatory reform and human capital streams.

Dr Henry 's speech discusses the 3 streams of the National Reform Agenda and their results to date in detail:

In the regulation stream, COAG committed to addressing ten priority cross-jurisdictional regulation ‘hotspots’: rail safety regulation; occupational health and safety; national trade measurement; chemicals and plastics; development assessment arrangements; building regulation; environmental assessment and approvals processes; business name, Australian Business Number and related business registration processes; personal property securities; and product safety. In these areas (and many others), jurisdictions apply quite different regulatory regimes. As a consequence, businesses operating across state borders must comply with multiple regulations...

The NRA competition stream promises further reforms in the areas of energy, transport, infrastructure regulation and planning and climate change innovation and mitigation strategies.

The area of the NRA with the greatest potential benefits for the Australian economy, and the one that Ian Little pressed the hardest, is the human capital stream. In February 2006, COAG agreed a comprehensive framework of objectives for the human capital agenda, focused on improving health, education and training outcomes and encouraging and supporting work...

The failure of the NRA to achieve more meaningful reform in the human capital stream and the disappointing pace of implementation of the substantial and worthwhile reforms endorsed two years ago in the competition and regulatory reform streams can be attributed, in large part, to funding issues.
The absence of financial incentives and effective sanctions for failing to meet agreed timeframes and milestones probably explains most of the disappointing implementation progress to date. The aversion to the logic of markets to which I referred earlier can be managed only by financial flows.

Today, however, there is cause for optimism.

Less than a month after the November 2007 federal election, the Council of Australian Governments met here in Melbourne to reinvigorate the National Reform Agenda.

Heads of government recognised they had a unique opportunity to put behind them the tensions of the past, and deliver a substantial national reform effort.

At that meeting, COAG identified seven areas for its 2008 work program: health and ageing; education and training; climate change and water; infrastructure; business regulation and competition; housing; and indigenous reform. A set of working groups, headed by Commonwealth ministers, has been established to identify reforms for COAG’s consideration, and to drive their delivery.

National Rental Affordability Scheme

The Prime Minister has announced the National Rental Affordability Scheme which is designed to create a new ‘asset class’ of affordable rental properties.

Under the Scheme, the Commonwealth will provide private investors with tax credits of $6,000 a year for ten years for new properties that are rented at 20 per cent below the prevailing market level.

States and Territories have agreed to provide $2,000 per home either through cash payments or in kind, such as via the provision of cut price land or concessions on stamp duty.

The initiative would mean, for example, that rent on a new average three bedroom unit would fall for $350 a week to $280 a week – a $70 saving.

Employment Seminar: Workplace Relations under Labor

On Thursday 13 March 2008 in Sydney, a seminar will be held at which Ron McCallum, Professor of Law at Sydney University, former Dean of Sydney Law School and leading authority on employment law, will guide you through and provide an overview of the important parts of the new Workplace Relations legislation.

I'll be presenting on drafting HR policies.

The seminar topics are:

• Are the changes to be made really significant or are they going to be “WorkChoices Light”?

• Is the end of AWAs going to be a big issue for you, and how are Collective Agreements changing?

• Is the dismissal of an unsatisfactory employee going to become a major (and costly) difficulty under the new employment law regime?

• What is the practical effect of some recent court cases on how you should be organising your HR procedures?

Contact Narelle Ryan at nryan@langes.com.au or (02) 9299 7577 by 11 March 2008 to register.

Review of Australia's national innovation system

The Minister for Innovation, Industry, Science and Research, Senator Kim Carr, has announced a review of Australia's national innovation system.

The Review Panel will identify gaps and weaknesses in the innovation system and develop proposals to address them. In particular, it will:

• Identify a set of principles to underpin the role and participation of the public sector in innovation.
• Develop a set of national innovation priorities to complement the national research priorities, ensuring the objectives of research programs and other innovation initiatives are complementary.
• Identify regulatory and other barriers to innovation and recommend ways to minimise these.
• Examine the scope for simplifying and reducing program duplication and ensuring that any support provided is well-targeted and easy to access.
• Consider the appropriateness, effectiveness and efficiency of the Research and Development (R&D) Tax Concession Scheme in promoting innovation and make recommendations to improve innovation outcomes.
• Consider ways to improve the governance of the national innovation system to support higher expectations of government agencies and industry.
• Assess the appropriateness, effectiveness and efficiency of the Cooperative Research Centres (CRC) Program and make recommendations to improve innovation outcomes.

National Health and Hospitals Reform Commission established

Federal Cabinet has formally approved the establishment of the National Health and Hospitals Reform Commission.

The Commission will provide an interim report on a long-term health reform plan to the Commonwealth Government by the end of 2008, and a final plan in mid 2009.

Issues for the Commission include:

• The rapidly increasing burden of chronic disease;
• The ageing of the population;
• Rising health costs; and
• Inefficiencies exacerbated by cost shifting and the blame game.

The Commission will focus on health financing, maximising a productive relationship between public and private sectors, and improving rural health.

Legal professional privilege claim rejected: Cadbury v Amcor and Visy

In Cadbury Schweppes Pty Ltd (ACN 004 551 473) v Amcor Limited (ACN 000 017 372)[2008] FCA 88 the Federal Court rejected the ACCC's claim for legal professional privilege and public interest immunity privilege in relation to 111 witness statements drafted by ACCC investigators in connection with the ACCC proceedings against Visy .

Cadbury sued Amcor following the judgment in ACCC v Visy (and Amcor joined Visy) but the ACCC sought to prevent Amcor and Visy from producing those documents to Cadbury on discovery. Its claim failed.

However, Visy’s implied undertaking, an obligation distinct from legal professional privilege, to use the documents only for a purpose relating to the ACCC proceedings may or may not still prevent production of those documents to Cadbury in these proceedings.

Privilege was upheld in respect of Amcor witness statements held by Amcor's external solicitors.

The Council for the Australian Federation

The Council for the Australian Federation has been created by the Premiers and Chief Ministers of all States and Territories as a means of working together to improve the way that the States and Territories deliver key services.

The Council met on 21 February 2008 in Adelaide. Professor Ross Garnaut briefed Council members on the interim findings from his climate change review.

The communique (pdf) also announced that the Premiers and  Chief Ministers reaffirmed their commitment to co-operative Federalism and that they agreed to:
· harmonise State and Territory approaches to driver licencing and registration schemes and senior travel concessions;
· an improved approach to urban water planning; and
· improve vehicle safety standards.

Internet filtering

The Australian Communications and Media Authority's (ACMA) has published its first report on international developments in internet filtering technologies and other safety initiatives.

The report, Developments in internet filtering technologies and other measures for promoting online safety (pdf), draws together current key trends and makes observations about content, communication and e-security risks online.

Schedule B has a useful summary of existing online content regulation.

Workplace relations update

The Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 has been referred by the Senate to the Employment, Education and Workplace Relations Committee. Its report is due by 28 April 2008.

UPDATE 21 February: The Age is reporting that the Senate committee inquiry into Labor's proposed new laws has agreed to fast-track its report for completion by March 17.

Productivity Commission inquiry into paid maternity leave and parental leave

The Australian Government has announced that the Productivity Commission will undertake an inquiry into paid maternity, paternity and parental leave.

The Productivity Commission will identify the economic, productivity and social costs and benefits of providing paid maternity, paternity and parental leave.

The Commission has been asked to report by February 2009.

The Human Rights and Equal Opportunity Commission (HREOC) recommends as a minimum a government-funded 14 week paid maternity leave scheme paid with two weeks paid paternity leave, at the level of the federal minimum wage.

Principles guiding approval of foreign government related investment in Australia

The Treasurer has published the principles guiding his consideration of foreign government related investment in Australia.

Significant foreign investment proposals must be notified to the Australian Government and examined by the Foreign Investment Review Board (FIRB).

The principles set out the main factors that are considered in determining, on a case‑by‑case basis, whether particular investments by foreign governments and their agencies are consistent with Australia's national interest.

The principles set out the additional factors that need to be considered in relation to investment proposals by foreign governments and their agencies over and above those that apply to normal private sector proposals.

The 6 principles are:

1. An investor's operations are independent from the relevant foreign government.

2.  An investor is subject to and adheres to the law and observes common standards of business behaviour.

3.  An investment may hinder competition or lead to undue concentration or control in the industry or sectors concerned.

4.  An investment may impact on Australian Government revenue or other policies.

5.  An investment may impact on Australia's national security.

6. An investment may impact on the operations and directions of an Australian business, as well as its contribution to the Australian economy and broader community.

Discussion paper on National Employment Standards

The Australian Government has released an exposure draft of its proposed ten National Employment Standards (NES), together with a discussion paper calling for public feedback by 4 April 2008.

The NES will cover the key minimum entitlements for all Australian employees, to apply from 1 January 2010.  These entitlements will be guaranteed in legislation so that they cannot be excluded or modified in a way that undermines the safety net.

The NES are:

1. Maximum weekly hours of work
2. Requests by parents for flexible working arrangements
3. Parental leave (and related entitlements)
4. Annual leave
5. Personal/carer’s leave and compassionate leave
6. Community service leave
7. Long service leave
8. Public holidays
9. Notice of termination and redundancy
10. Fair Work Information Statement

Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008

The Treasurer has introduced the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008 to implement the tax changes promised in the election.

The changes will take effect in three stages: from 1 July 2008, 1 July 2009 and 1 July 2010.

From 1 July 2008:

the lower limit of the 30 per cent threshold will rise from $30,001 to $34,001; and

the low income tax offset will increase from $750 to $1,200. The low income tax offset will continue to phase out from $30,000 at a rate of 4 cents in the dollar for every dollar of income over $30,000.

From 1 July 2009:

the lower limit of the 30 per cent threshold will rise from $34,001 to $35,001;

the low income tax offset will increase from $1,200 to $1,350; and

the 40 per cent tax rate will be reduced to 38 per cent.

From 1 July 2010:

the lower limit of the 30 per cent threshold will rise from $35,001 to $37,001;

the low income tax offset will increase from $1,350 to $1,500; and

the 38 per cent tax rate will be reduced to 37 per cent.

Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008

The Government has introduced the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008.

It is based on the principles announced in Labor's election campaign here.

Proposed 2008 Commonwealth legislation

The Government has released a list of proposed legislation to be introduced in its first sittings in Autumn 2008.

In particular, the list specifies both introduction and passage in the Autumn sittings of the Workplace Relations Amendment (Transition to Forward with Fairness) Bill to introduce transitional arrangements for workplace agreements pending the introduction of a new workplace relations system in 2010 and allow the process of award modernisation to commence.

Chiefs of State and Cabinet Members of Foreign Governments

CIA's World Leaders publication contains an online directory of Chiefs of State and Cabinet Members of Foreign Governments which is updated regularly. The list also includes the head of the central bank for each country and Ambassadors to the United States and Permanent Representatives to the UN, New York.

Will market regulation be discussed at the 2020 Summit?

Regulation doesn't get a specific session at Australia 2020 summit but long-term market observers must be wondering whether there is something that can be done to stop the de-regulation/re-regulation cycle.

Queensland Freedom of Information Review

The Freedom of Information Independent  Review Panel has released a discussion paper reviewing Queensland's Freedom of Information (FOI) laws.

The discussion paper is intended to raise the major issues that will be considered by the Panel in recommending ways to improve and modernise Queensland’s Freedom of Information Act 1992.

According to the Panel, "The discussion paper challenges core legislative presumptions and current paradigms in the administration of FOI to shake out what matters most and what resonates best in the problemsolving puzzle."

Public submissions close on 7 March 2008.

The Panel will jointly host a FOI Public Seminar with the Australian Law Reform Commission on 6 March 2008.

The panel is scheduled to submit its final report and recommendations for cabinet consideration by the end of May.

The government intends to introduce proposed changes to the state's FOI laws before the end of the year.

Risk issues for 2008

Although we are starting the year with market uncertainty and credit tightening because of the sub-prime mortgage crisis, the larger issue is business judgment. How good are the risk management and decision-making processes of organisations which cannot calculate or understand the risks of the transactions they enter? And how do you know if a key customer or supplier is affected? In this note I identify 3 of the risks you need to manage.

The flow-on effects of the US sub-prime mortgage crisis for the Australian stock market and financial system were unforeseen, it seems, because of ambiguous or misleading disclosure to the market.

So the first risk issue businesses need to consider is how good are your disclosure procedures and those of the businesses you deal with. If you are listed you need to review your continuous disclosure obligations. Even if your company is not listed, if you are a director or manager, are you satisfied you have identified key contracts and risks and understand them? Importantly, are you managing your liquidity risk? Have you reviewed your outsourcing arrangements?

The second risk is privacy and data security. Whether your data is electronically or physically stored, is it secure?

Could the UK Norwich Union Life fraud happen to you?

Do you have a data management and document retention system?

The third risk is errors from complex product packaging: whether you produce or sell consumer goods or financial products do you understand your products and market them accurately? The risk of misleading or deceptive advertising (no matter how innocent) or incorrect calculations or pricing is ongoing.

If you don't have a risk management system in place how do you know whether these risks are  high or low risks for you?

Equine Influenza Inquiry

The inquiry into the outbreak of equine influenza in Australia in August of 2007 has been in progress since October 2007.

Hearings are expected to be completed in late February 2008. The report is to be provided to the government no later than 25 April 2008.

NSW Government report on National Industrial Relations System

The NSW Government has released Working Together: Inquiry into Options for a New National Industrial Relations System (pdf) by Professor George Williams.

The report is the result of an Inquiry to develop options for a national system for the regulation of industrial matters that was based on greater harmonisation between the States and Territories and cooperative federalism.

Contact details for MP's

A list of contact details for Members of the House of Representatives in the 42nd Parliament is here (pdf).

Garnaut Climate Change Review

Although the new government has ratified the Kyoto Protocol, it had deferred any commitment on specific short-term climate change targets until receipt of the draft Garnaut report.

The Garnaut Climate Change Review will examine the impacts of climate change on the Australian economy, and recommend medium to long-term policies and policy frameworks to improve the prospects for sustainable prosperity.

The Review's final report is due on 30 September 2008, with a draft by 30 June 2008.

Liquidity risk

As it appears that the growing problem for Australian businesses is liquidity risk rather than asset quality (eg Centro Properties Group), it is worthwhile looking at the UK Financial Services Authority's Discussion Paper (DP) reviewing liquidity requirements for banks and building societies.

The FSA defines liquidity risk as "the risk that a firm, although solvent in balance sheet terms, does not have, or cannot generate, enough cash to meet its payment obligations in full as they fall due."

The DP re-emphasises the primary responsibility of firms' boards and management for maintaining adequate liquidity and managing their liquidity risk.

The Australian Financial Review reports that APRA is working on a similar review of liquidity rules.

Key Issues for the 42nd Parliament

The Parliamentary Library Briefing Book (pdf) is a tool to understand the new government's expected significant program of policy development and legislative work.

After reviewing the election results, it identifies the lapsed bills (28 government, 84 private members and senators)and House inquiries.

The Briefing book (html) analyses the issues relating to the government's stated key priorities including:
• industrial relations—for example, the repeal of WorkChoices and the abolition of  Australian Workplace Agreements
• climate change—the ratification of the Kyoto Protocol and the introduction of measures such as a National Emissions Trading Scheme
• defence—the phased withdrawal of combat troops from Iraq
• housing affordability—the establishment of a National Housing Affordability Fund and implementation of tax incentives for investment in low-income and middle-income rental properties
• education—entitlements for early learning contact hours, a national curriculum, the establishment of trade training centres in secondary schools, and the reduction of university fees for certain courses
• health—the establishment of a National Health and Hospital Reform Commission to address duplication in the national health system and the augmentation of general practice clinic services.

Can you keep legal advice private?: Rich v Harrington

You obtain legal advice about a claim by another person and tell the other person that you have obtained legal advice. When can another party suing you obtain a copy of that legal advice?

In Rich v Harrington [2007] FCA 1987 the Federal Court of Australia dealt with the right of Ms Rich to obtain copies of legal advice received by the management of PricewaterhouseCoopers (PwC) in relation to an action Ms Rich (a former PwC partner) instituted against past and present partners of PwC under s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) alleging conduct in breach of that Act and the Sex Discrimination Act 1984 (Cth) following complaints of discrimination she made.

Judge Branson allowed Ms Rich access to 2 types of documents which PwC claimed were privileged:

1. In a letter to her, PwC rather than just saying PwC had taken legal advice and had acted with the benefit of it, it disclosed the substance or conclusion of the external advice received by PwC in an effort to bolster its position. The judge found that PwC had waived its privilege over the advice.

2. Ms Rich also challenged PwC’s claim for client legal privilege in respect of the legal advice provided by persons comprising its Office of General Counsel (OGC) on the basis that the relationship between PwC and its OGC was not such as to give rise to the privilege.

The judge concluded that the relationship between OGC and PwC in the particular circumstances was not such as to secure the advice of OGC concerning Ms Rich’s allegations the objectively independent character necessary to support PwC’s claim of client legal privilege.  OGC was not in a position to give professionally detached advice to the respondents concerning allegations of the character of those made by Ms Rich.

What is a charitable institution?

In Commissioner of Taxation v Word Investments Limited [2007] FCAFC 171 the Full Court of the Federal Court of Australia dismissed an appeal by the Taxation Commissioner against the Federal Court's decision that Word Investments is a "charitable institution" within the meaning of item 1.1 of the table in s 50-5 of the Income Tax Assessment Act 1997 (Cth).

Whilst Word carried out charitable and religious objects overseas, it also carried out financial activities including financial services and a funeral business in Australia.

Judge Allsop said:

Here, on the proper understanding of the memorandum of association, the purpose of all activities was, and could only be, the religious (and charitable) purposes of Word.  The evidence of the subjective motives of the directors conformed with and bolstered those constitutive purposes.  On the basis of the authorities to which I have referred, the commercial nature of the activities did not necessarily destroy the capacity of Word to be characterised as a charitable institution.

The Commissioner intends to appeal to the High Court.

See TR 2005/22 for the current approach of the Tax Off