Australian Politics

Unemployment rising as small businesses struggle under increased costs

More than 900,000 Australians are relying on jobless welfare support payments, as new research reveals one in three small businesses is reporting severe financial hardship and struggling to pay their power bills.

Amid new Reserve Bank warnings of a 14th rate hike and concerns over inflation and labour market outlooks, Department of Social Services data shows the number of JobSeeker and Youth Allowance (Other) recipients has spiked by almost 75,000 since hitting post-pandemic lows in September.

For the first time in 12-months, JobSeeker and Youth Allowance recipients at the end of April soared above 900,000 as the unemployment rate rose to 4.1 per cent last month. The largest trend increases are among younger Australians and those on JobSeeker for less than a year.

With Telstra on Tuesday announcing it would cut up to 2800 jobs, more mining companies mothballing operations and employers reducing hours, the upwards trajectory of Australians relying on welfare support is expected to surge across the year.

RBA board minutes released on Tuesday revealed the central bank had considered the case for a 14th rate hike before ultimately deciding to keep the cash rate on hold at 4.35 per cent.

At its May 7 meeting, held before last week’s budget, board members agreed it was “difficult either to rule in or rule out future changes in the cash rate target” and cautioned that returning inflation to the RBA’s 2-3 per cent target band was “unlikely to be smooth”.

“A higher cash rate might also be required, even with ongoing weakness in aggregate demand, if other factors slowed the pace of disinflation,” the minutes said.

They acknowledged that RBA forecasts released on May 1, which were more pessimistic than Treasury’s assumption that inflation could return to target band by December, did not factor in upcoming federal and state budget measures.

Amid Treasury forecasts that the labour market will continue weakening due to high interest rates and sticky inflation, a new survey to be released in Port Adelaide on Wednesday warns that small businesses are under more financial and energy hardship strain than during the pandemic.

Research commissioned by Energy Consumers Australia and the Council of Small Business Organisations Australia, involving interviews with more than 400 small business operators, reveals smaller employers are being hammered by high energy bills.

Jim Chalmers’ $3.5bn energy bill relief budget package included a $325 rebate for about one million eligible small businesses whose power consumption does not exceed caps that vary across states and territories.

After criticising the budget for failing to provide more support for 2.5 million small-to-medium businesses, COSBOA chief executive Luke Achterstraat said: “Small business is getting smashed by rising energy costs, with financial strain higher now than during the Covid shutdowns.

“Cost-of-living pressures and other compounding factors like high interest rates are causing huge financial stress to the small business sector. The time for action to help small business is now.”

Mr Achterstraat said that if small businesses – the largest private employers in Australia sustaining roles for 5 million people – were fragile then the job market was “inevitably fragile too”.

The new analysis – focused on small business transition to net zero emissions – found more than one in three small to medium enterprises (SME) had experienced energy hardship in the past 12 months (34 per cent), which was more than under the impact of post-Covid lockdowns.

“SMEs operating within a shopping centre or embedded network are most at risk (62 per cent experiencing energy hardship),” the analysis said.

“Overall 51 per cent of SMEs report a negative financial impact over the last 12 months. Rising energy costs is the number one factor which has impacted businesses’ financial situation in the last 12 months (55 per cent impacted by rising energy costs). One in five SMEs (32 per cent) report difficulty paying their energy bills on time and in full over the last 12 months.”

As the Albanese government scrambles to fast-track Australia’s trajectory to net zero emissions by 2050, the report says most SMEs have not yet taken any steps towards the energy transition.

“This is higher for micro SMEs with one to four employees (66 per cent),” it says. “The steps most reported to be doing is installing solar panels (21 per cent) and implementing energy-efficiency practices (21 per cent). There is limited knowledge about what’s required for businesses to transition to renewable energy, with 36 per cent reporting low knowledge and 52 per cent medium level of knowledge. Only 12 per cent report having high knowledge. There is high interest in resources, advice and support that would help SMEs in the energy transition.”

Mr Achterstraat said small business was the backbone of the economy, “so it’s vital they are given support to deal with energy hardship and the challenges associated with energy transition”.

“With ASIC reporting in February the worst insolvency figures in a decade, many small businesses are enduring a perfect storm of costs and complexity,” he said. “Energy costs are undermining productivity and growth.”

https://www.theaustralian.com.au/nation/politics/jobless-welfare-surges-as-small-firms-shocked/news-story/5a0a3719297bfedc215bc18d641ccf40

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Super pain as ALP faces another franking credits disaster

When the government announced it would impose a 30 per cent tax on superannuation members with balances of more than $3m, it looked like a tax that could be sold to voters on the basis of fairness.

But the unfairness in the detail is now exploding, and increasingly it has the appearance of a re-run of the 2019 election franking credits disaster.

In the lead up to the 2019 election, the ALP was ahead in the opinion polls, but it announced what seemed a simple franking credit tax, but the unfairness in the detail created a total nightmare.

I dubbed it “the retirement and pensioner tax” and the mess was a big part of Scott Morrison’s “miracle victory” in the 2019 election.

The House of Representatives this month is expected to pass what we might call the “no profits tax” bill, but last week the government lost the parliamentary debate, and you could see worried looks among ALP ranks.

Because the industry superannuation funds, have ancient bookkeeping systems, they could not determine members who had balances over $3m in all their funds and could not provide the taxation information for a simple tax. Self-managed funds can provide that information.

To enable industry funds to comply, the government proposed tax on unrealised capital gains, which has sent chilling blows to wide sections of the community and is now starting to raise alarm bells among those not immediately affected but set to be smashed later.

Below are seven groups that will be hit from July 2025 or have every reason to expect future blows:

* Some 17,000 small farmers have their farms in the family superannuation fund and if the value of their farm rises many will have to pay tax on that increased value by selling other assets or borrowing. States with many small farms, like Tasmania, will be the hardest hit. The ALP should not expect to win more seats in Tasmania, and may lose a couple.

* Small businesses, including farmers, have $88bn in direct investment commercial real estate. Usually it is the real estate used by their business. Like the farmers, if the value of their property rises, the family must find the cash to pay the tax on the unrealised gain. Selling the property is not an option unless they want to go out of business. The unindexed tax is a sword at the neck of large areas of small business.

* Three years ago, there were 80,000 Australians with superannuation balances above $3m. That figure has now risen to around 100,000 – an annual growth rate of about 6 or 7 per cent. About 60,000 are in self-managed funds, with the balance scattered between industry and public servant funds. Over a decade, that number will explode.

* Retired public servants in defined benefit funds suddenly have a new tax using a calculation definition that is designed to be impossible to understand. They are extremely angry and that anger is spreading through the corridors of power in Canberra.

One of the independents who will decide whether the legislation is passed is ACT independent David Pocock, who must decide whether to listen to retired public servants.

Meanwhile, there are some seven members of the cabinet who have large superannuation defined benefit entitlements because they have been in parliament for a long time.

Unlike other Australians who must pay tax on unrealised gains, the cabinet ministers carefully framed legislation so they would not pay tax until they retired, and their gains were realised – the reverse of other Australians.

One rule for government politicians on defined benefits and another for everybody else, although Peter Dutton also benefits from the politician protection clauses.

* As I pointed out last month, venture capital and small enterprises need start up funds which carry high risk and are not liquid. Many self-managed funds allocate a portion of their capital to this market, enabling many successful enterprises to be developed. Under the proposed rules, any rise in the value of these high risk businesses will be taxed, which makes investing in such ventures via superannuation totally uneconomic. The government is bragging about fostering made in Australia but is confining that to government and big company backed projects. This is bad policy.

* Because the $3m superannuation trigger point is not indexed, among those girding for future blows are the 225,000 Australians with superannuation balances above $1m. The combination of no indexation and market growth will see most hit $3mn within the next 10 years or so. Those families set to be impacted are now becoming very twitchy. In the parliamentary debate, the Teals appeared set to move an amendment to index $3m. They don’t have the numbers.

* Superannuation is just the first step in the looming dangers for Australians once the principle of taxing unindexed unrealised capital gains is firmly established.

Treasury will be pressing to use the precedent to tax unrealised capital gains on investment houses over a certain unindexed value. From there it’s a small step to the family home.

Taxing unrealised gains has never been part of the tax system of any major developed country. Others know exactly what will happen if they took such a silly step.

In the lower house, the government has the numbers to defeat both the Teals motion to end indexation and the Coalition policy of abandoning the whole tax. In the Senate, the Greens will support the bill if the $3m limit reduced to $2mn and the deferred borrowing rights in superannuation funds is abolished

To pass the bill in the Senate, the government needs the support of the Greens plus two of the independents. It is highly likely that will get that support, but there can be no certainty.

Dutton might have his fingers crossed because if the bill goes through, the chances of a “Dutton miracle victory” are greatly enhanced.

https://www.theaustralian.com.au/business/super-pain-as-alp-faces-another-franking-credits-disaster/news-story/509ad2450e306881c32be88e0c7629da

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Labor party Immigration Minister Andrew Giles was central in ordering the release of an immigration detainee and domestic violence perpetrator who then went on to allegedly murder a man on Mother’s Day.

Sudan-born Emmanuel Saki, 29, has been charged with murder over the stabbing death of 22-year-old Bosco Minyurano on May 12. The incident took place just weeks after he was freed from immigration detention after the Administrative Appeals Tribunal overturned a 2019 decision to strip him of his visa.

The reasons handed down by AAT deputy president Stephen Boyle to explain his decision found that “considerable” weight needed to be given to the fact that Saki had been living in Australia during and since his formative years. Saki had arrived in Australia in 2006, when he was 12 years old.

The provision requiring decision-makers to show a higher level of tolerance for criminal conduct by non-citizens who have lived in Australia from a very young age was introduced under Mr Giles’ Direction 99, which came into effect on 23 January last year.

The provisions offering greater protection for criminal non-citizens who had resided in Australia since their childhoods were introduced shortly before a visit to Australia by New Zealand’s then-prime minister Chris Hipkins in early February 2023.

His predecessor Jacinda Ardern had long been critical of Australia’s preparedness to deport back to New Zealand offenders who had spent the bulk of their lives in Australia, and the new provision was seen among those in the immigration space as a measure designed to address those concerns.

In his decision revoking the cancellation of Saki’s visa, Mr Boyle said the strength, nature and duration of the man’s ties to Australia was a key consideration that helped outweigh arguments in favour of the cancellation.

“The Minister accepted … that considerable weight should be given to the fact that the Applicant has been ordinarily resident in Australia during and since his formative years and accepted that this primary consideration weighs in the Applicant’s favour,” Mr Boyle wrote.

“I agree that that is the case.”

That decision came despite a “trend of increasing seriousness” in Saki’s “clearly frequent” offending leading up to his detention. Saki, Mr Boyle noted, had committed over 40 offences as an adult and one as a 17-year-old between 2012 and 2018.

The worst of those included a series of violent acts committed against his partner and the mother of his youngest child in the ACT in August 2018 that saw him convicted of choke person render insensible, choke suffocate, strangle another, assault occasioning actual bodily harm, and common assault.

The sentencing magistrate in that matter found that Saki had held his partner by the neck and applied force to her neck on a number of occasions, with the offending occurring in front of their infant daughter. Saki’s conduct described his “indifference” to the potential consequences of his actions.

That offending came less than a year after Saki was convicted of reckless threat to kill and common assault over an unprovoked incident in which he approached two men, pulled a knife and told them he was going to kill them. He had also been convicted of using a motor vehicle to cause impact with another person.

The latest saga involving serious offending by a recently released immigration detainee has raised questions around both Mr Giles’ Direction 99 and his decision not to use his ministerial powers to overturn the AAT’s decision.

Those ministerial powers are understood to have been used dozens of times under the previous government to reverse similar decisions.

Mr Giles was approached for comment.

Opposition immigration spokesman Dan Tehan said Mr Giles needed to explain his decisions around Direction 99 and their implications in the Saki matter.

“Andrew Giles has some very serious questions to answer as a result of the alleged murder,” he said.

“Should he have made a decision to personally revoke the visa of this individual on character grounds?

“If he made the decision not to, why? Was it influenced by the change he made to migration law by issuing ministerial direction 99?

“And will he now rescind ministerial direction 99?”

https://www.theaustralian.com.au/nation/andrew-giless-soft-touch-for-noncitizen-criminals-helped-release-alleged-killer-from-detention/news-story/28f37878930fc28b57f693802ed8acb4

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Justice is now in full retreat in the Left-run ACT

“Only in the ACT” is becoming an unfortunate phenomenon in this country. Weird things happen in the Labor-Greens run territory. Only in the ACT would a corruption commission investigate not the chief prosecutor whose misconduct has now been confirmed by two judges in separate forums but the man who uncovered the wrongdoing.

Only in the ACT would one encounter more institutional silence over yet another major debacle. This week’s news that the office of the Director of Public Prosecutions stuffed up another major criminal case – this time involving convicted child sex offender Stephen Mitchell – should be the last straw for those concerned with the administration of the justice system in the ACT.

As The Australian reported on Tuesday, two of the most senior prosecutors within the DPP office have admitted to a terrible stuff-up over a plea deal put to Mitchell’s victims and the sex offender’s ultimate sentencing.

Prosecutors told three child victims that Mitchell faced a maximum prison sentence of 25 years, and that if they accepted the plea deal then he would spend a very long time in prison for the crimes he committed against them as children. In fact, the victims should have been told that Mitchell faced a seven-year maximum sentence – the law at the time of offending.

Had two of these women – Sophie Vivian and Odette Visser – known the truth, they would not have walked away from insisting Mitchell be prosecuted for the most serious charges of sexual penetration.

As Vivian told The Australian: “There was a lot of pressure placed on us by the prosecutors to accept those plea deals. The way it was sold to us was, this is really great, it’s a really serious charge … don’t worry, it’s a really big sentence, he’s f..ked – those were the words we were given.”

While the ODPP was busy dealing with rape allegations by Brittany Higgins against Bruce Lehrmann, prosecutors failed to properly prosecute the man facing charges of multiple sex crimes against several children.

Senior prosecutors in the ODPP have blamed overworked staff, a lack of training and a drafting issue. Another case of “only in the ACT”.

Prosecutors knew about the correct application of the sentencing laws in May 2022. They negotiated the plea deal with Mitchell in November 2002. This six-month period between May and November 2022 fell squarely within the chaos of the Lehrmann trial. As Visser told The Australian, “It doesn’t take a genius to figure out what they were more distracted with. And six child victims were put on the backburner again.”

Vivian is equally forthright: “The problem was an utterly dysfunctional office led by a distracted – and now disgraced – director.”

As one senior criminal prosecutor told The Australian, “these women have been let down on a number of levels by the office of the DPP but also by the criminal justice system more broadly.”

Both acting director Anthony Williamson and new director Victoria Engel admitted the shocking mistakes made by ACT prosecutors. But Vivian and Visser want Engel to find out what went wrong by asking those in charge at the time. That includes former DPP Shane Drumgold.

This scandalous child sex crime screw-up warrants a full inquiry. Not an internal review. The spectre hanging over the ODPP has not budged an inch since Drumgold’s resignation following the public board of inquiry report.

Given the seriousness of Drumgold’s misconduct, ACT citizens – and everyone forced to endure this spectacle – deserve to know whether one prosecutor went rogue, undermining the fair trial of Lehrmann. Or is it bigger?

In other words, is there a deeper cultural problem with the prosecuting arm of the ACT criminal justice system? If so, what are they? Incompetence? An overzealousness to pursue cases that should not reach a courtroom that in turn distracts from serious cases?

Drumgold’s disastrous time at the ODPP has left too many unanswered questions. Was the chief prosecutor driven by politics when he made unhinged claims against former defence minister Linda Reynolds? Did the interests of child sex victims run second to an internal political agenda? Is the ODPP expected to mirror the politics of the ACT Labor-Green government, making the prosecutorial arm of the criminal justice system a primarily political body rather than a key legal institution? Why was Williamson, acting director after Drumgold resigned, hauled into Attorney-General Shane Rattenbury’s office to explain why he was discontinuing meritless cases?

The background to these unanswered questions includes judges in NSW hearing applications by acquitted defendants to be reimbursed for their legal costs.

Several of them have expressed concerns that prosecutors are wrecking the lives of innocent people by prosecuting cases that should never reach court. In another case of only in the ACT, there is no costs jurisdiction for judges in similar cases to expose what’s happening in the territory.

In any case, ACT Chief Minister Andrew Barr, the Attorney-General and ACT Integrity Commissioner Michael Adams need not strain their necks to look over the border. They need only look under their noses. Senior prosecutors say there is a pipeline of highly suspect cases in the ODPP, taking resources from matters that should be investigated, prosecuted and tried. It takes years for a sex case to reach court – and meanwhile lives are wrecked.

One prosecutor told The Australian last week that prosecutors inevitably – consciously or subconsciously – try to synch themself with the attitude and the disposition of the director of the day.

That means if “the director of the day has an appetite to weed out matters that are not supported by evidence, then prosecutors will feel empowered to say to the director (who has power to discontinue cases) that in the interests of justice the case should be dropped. But if they think that the director is a run-them-at-all-costs type of director, they’ll be too scared to do that. They’ll decide that they’re just not going to raise it with the director.”

Now another shocking debacle sits right under the noses of those in power, this time involving a man guilty of multiple child sex crimes who may walk out of prison years earlier because of mistakes first made by the ODPP. The botched plea deal happened at the same time as the Lehrmann prosecution. Why did Drumgold take carriage of the prosecution of Lehrmann but not a multiple child sex offender? In what circumstances should a director run a case given that it necessarily means their focus on other cases may be compromised?

What more does it take for the ACT government – even a Labor-Greens one – to take these fundamental issues about the proper administration of justice seriously?

The ACT Integrity Commission doesn’t have to sit around waiting for a referral. It has proactive powers to initiate an investigation. The definition of corruption and systemic corruption in the ACT Integrity Commission Act is wide enough to cover not only the misconduct of Drumgold as confirmed now by two inquiries but also the possibility that Drumgold presided over systemic corruption.

Other questions need to be asked about the response of the ACT government to the failures exposed by the Sofronoff inquiry and the review by Justice Stephen Kaye. For example, section 62 of the act requires mandatory notification by public service heads of matters reasonably suspected to involve serious corrupt conduct or systemic corrupt conduct. Has any such notification been made? If not, why not? Failure to notify under section 62 is an offence under section 65.

So where is the ACT Integrity Commission? Oh, that’s right. It is busy going after the bloke who exposed Drumgold’s misbehaviour. Only in the ACT.

https://www.theaustralian.com.au/commentary/only-in-the-act-justice-is-now-in-full-retreat-at-dpp/news-story/c59b55a72c27aabe1db49952e27930f4