This month hasn't gone to plan and so I ran out of time to complete the normal Essential Readings and our monthly blog. I have however substituted two excellent references in the Special Topics segment which I believe are worth a read. They are titled, "The Future of Non-Bank SME Lending" and "Would a conversation work better?"
There are only two brochures this month which are particularly relevant in today's business environment. The first is from RSM about its upcoming course relating to purchase fraud and the second from Credit Matters on understanding that fraudsters can look just like any other person.
As always, there are other opportunities to promote your business, so contact Kim at firstname.lastname@example.org and see what is possible, all at a very affordable price.
“It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.” – Steve Jobs
We have all heard the words before, “A business without cash, is not a business!” One of the most interesting aspects about business today, is how so many businesses treat the protection of their cash with so little respect.
It is the CFO who manages the overall payments subject to cashflow and the wishes of senior management. However, whether cash is always available or management’s wishes are always right, is another thing.
The fact is, the Accounts Payable Manager is the person in charge of ensuring all cash is spent correctly and is not being sent incorrectly, or to the wrong parties such as fraudsters for example. Meanwhile, the Credit Manager and/or the Accounts Receivable Manager are the ones who oversee the granting of credit and the collection of cash from sales.
Interestingly enough, the importance of protecting the business’s cash via these managers is often overlooked by management. Here are a few examples of how management devalues the importance of protecting the businesses cash with one of these three strategies.
One strategy is to employ the cheapest possible managers and employees, or those with little experience, to work in these areas. Management is also likely to deny training which may make these managers and employees more professional or more efficient.
If any employees are absent for holidays or sick leave, management is happy to leave the other employees overworked or the work left undone, in the belief they are saving money.
Another strategy is to seek the best possible managers and employees, providing them with good but not special wages and few resources to operate efficiently. Management is content with their thoughts, that all the managers and employees will be happy because they have a good wage.
Unfortunately, management will also try to overrule their requests for additional resources, suggestions and decisions about when to put customers on stop supply, or pay suppliers early to rectify payment problems.
The third strategy is to outsource both operations to overseas organisations because they believe saving money upfront is better than protecting the business’s cash. As many businesses have found over the years, this strategy has inevitably not saved the business money at all. Rather, it has led to other negative repercussions which included reputations and money lost through increased fraud and operational shortcomings.
Cash is the life blood of the business. Too many businesses lose cash because its value to the business is forgotten as a result of management thinking. One of the key tactics to protect your business’s cash is to employee the best people and respect their suggestions on how best to operate. As Steve jobs says, “It doesn’t make sense to hire smart people and then tell them what to do.”
A current problem for many business owners and managers concerns making meaningful contact with difficult customers. Too often the default method is to send emails. It seems that many people are now afraid to pick up a telephone or visit their difficult customers.
If this situation should reach the stage of insolvency of either your customer, or business, then you will have to deal with an insolvency administrator.
You can often negotiate with a difficult customer and achieve a positive outcome in private. There is often no escaping the questions and embarrassment of dealing with an insolvency administrator in a public creditors meeting. This does not mean all insolvency administrators are nasty or unsympathetic. They have a job to do and that means, they will ask difficult questions, and in public if required.
When answering insolvency administrators’ questions, there will be times when you will come to realise the truth of your actions or inaction. Such truths can be very confronting, just as a number of people found at Australia’s Royal Banking Commission. This was not an insolvency administration, however it was conducted in public. The reactions of some of witnesses when they started answering questions and came to understand the truth of their actions in their answers, was telling. The same thing may happen to you in a public creditors meeting for your business if it becomes insolvent.
I suggest it is always best to confront difficult customers to sort out problems in private, rather than have to answer the questions of insolvency administrators in public.
Today, knowing everything about your customer is essential. After all, it is not just the size of their order which is key to a successful trading relationship. You need also to know whether they will pay you in a timely manner, and the manner in which they conduct their business.
In addition, with the advent of technology and social media, nothing is secret and if you intend to maximise the opportunities to sell, you also need to be aware of your customer’s management team and their attitude to social and environmental issues.
It is no good dealing with a socially aware business which are well respected by their customers, if they don’t pay you. There is also the other side of the coin where they might pay according to arrangements, however their customers hate them.
Due diligence is an indispensable component of the business process now. It should not be viewed just as an expense. Rather, by completing due diligence you are protecting your business’s reputation and building the strong foundations essential for a sound business.
Is the spelling nightime, nighttime, night time, or night-time?
A common issue with spelling is whether two words should be put together without a space (known as a compound word), include a space, or the words hyphenated. Sometimes words evolve over time starting as separated, then hyphenated and finally joined together.
A check of Google for Australian sites ending in .au, returns 1.76 million results for nighttime, 3.88 million results for night time (which includes night-time) and 101,000 for nightime.
Nightime should be considered a spelling error, but it is used for Codral Nightime Cold and Flu tablets, where misspelling a word is common in branding and marketing situations.
The compound word nighttime is a US spelling. In Australia the spelling is not listed in either the Macquarie dictionary or the Australian Oxford dictionary, so nighttime should be considered a spelling error in Australia.
The Macquarie dictionary lists night-time as a noun, with no reference to night time. The Australian Oxford dictionary also only lists night-time, again with no reference to night time.
I have to say I didn’t see that coming. The correct spelling for Australian usage is night-time with the hyphen.
A quick review of the first 100 sites for “night-time” shows only 30% of sites use the correct spelling, many using both night time and night-time in the one article which is considered an error. Given the number of people using the spelling nighttime, nightime and night time, it is conceivable that 80% or more of writers are using the incorrect spelling for Australia, according to the Macquarie and Australian Oxford dictionaries.
With Microsoft Word, if you enter nighttime Microsoft Word will mark nighttime as an error, but suggest both night time and night-time, which could easily lead writers to use the wrong spelling for Australia, depending on what they mean to write.
Updates courtesy of www.asic.gov.au
30 September 2019
ASIC is seeking the public’s view of school banking programs as part of its ongoing review of their use and impact in primary schools (refer 18-313MR).
Through this review into school banking, ASIC is seeking to better understand:
•how these programs are implemented
•how they are marketed to school communities
•how students are engaging with these programs, and
•the type of accounts established through these programs while they are at school and in later years.
Members of the public and organisations interested in the issue are encouraged to respond to questions posed in the Consultation Paper 323, Review of school banking programs.
Community opinions will help inform the development of high-level principles on the implementation of school banking programs.
ASIC Commissioner Sean Hughes said, ‘Young people are engaging with money every day and they need to understand financial concepts and develop the skills to identify financial services that are right for them. Financial literacy is embedded in the Australian Curriculum, and needs to be – and there is a long history of school banking programs in Australian schools.
’It is important for ASIC to understand the range and extent of impacts that school banking programs can have on students, parents and school communities, as part of our responsibility to ensure the financial sector is delivering for all Australians, and especially for future generations of financial consumers.’
ASIC has already consulted with a diverse range of stakeholders including primary school principals, parents, present and past students and organisations from the education and consumer advocacy sectors, as well as the authorised deposit-taking institutions offering the programs.
It is expected the review will be completed in early 2020.
01 October 2019
ASIC has released a consultation paper on a proposal to use its product intervention power to reform the sale of add-on financial products by car yards.
ASIC is taking this action to address ongoing concerns about consumer harms from the sale of add-on insurance and warranty products by car yards.
Consultation Paper 324 Product intervention: The sale of add-on financial products through caryard intermediaries (CP 324) seeks views on the following proposals:
•Introducing a deferred sales model—applying a deferred sales model to sales of add-on insurance products and warranties by caryards, other than comprehensive or compulsory third party (CTP) insurance, and manufacturers’ warranties provided with new cars. This would apply to all sales where finance is arranged for motor vehicles, including by car dealers, finance brokers and salary packaging firms.
•Complementing the deferred sales model with additional obligations—this would include other requirements such as: ◦the use of ‘knock out’ questions to prohibit sales where the product has low or no value; and
◦prohibiting the sale of warranties that provide low levels of cover (where the maximum amount that can be claimed is $2000 or less).
•Monitoring the impact of these proposals—If we make an intervention order we propose to collect data from insurers and warranty providers, so that we can monitor whether the interventions are operating as intended.
The product intervention power allows ASIC to intervene where financial products have resulted in or are likely to result in, significant consumer detriment. It allows ASIC to directly confront, and respond to, business models that cause, or create a risk of consumer detriment, in the financial sector.
Announcing the consultation ASIC Commissioner Sean Hughes said, ‘There has been a history of unfair conduct and poor results for consumers in the add-on insurance market. We have seen policies sold to consumers when they have been ineligible to claim under them. ASIC has secured over $130 million in refunds to compensate consumers for their losses from these practices.
As well as compensation for past conduct we are proposing changes to improve consumer outcomes in the future. We welcome submissions from all interested parties.’
ASIC seeks the public’s input on the proposed intervention order by Tuesday 12 November 2019. Submissions should be sent to: email@example.com.
02 October 2019
In a report released today, ASIC urges companies to apply a greater focus and sense of urgency to the oversight and management of non-financial risk.
Launching the Director and officer oversight of non-financial risk report, ASIC Chair James Shipton said the boards ASIC reviewed were challenged by important elements of non-financial risk management and their oversight of these risks was less mature than required.
‘Boards cannot afford to ignore the oversight of non-financial risks. As we have seen, all risk can have financial consequences. If not well managed, non-financial risks carry very real financial implications for companies, their investors and customers,’ said Shipton. Read the full speech.
Focusing primarily on the oversight and management of compliance risk, ASIC’s review found:
•All too often, management was operating outside of board-approved risk appetites for non-financial risks, particularly compliance risk. Boards need to actively hold management accountable for operating within stated risk appetites.
•Reporting of risk against appetite often did not effectively communicate the company’s risk position. Boards need to take ownership of the form and content of information they are receiving so that they can adequately oversee the management of material risks.
•Material information about non-financial risk was often buried in dense, voluminous board packs. It was difficult to identify key non-financial risk issues in information presented to the board. Boards should require reporting from management that has a clear hierarchy and prioritisation of non-financial risks.
•The effectiveness of board risk committees (BRCs) could be improved. BRCs should meet more regularly, devote enough time and be actively engaged to oversee material risks in a timely and effective manner.
‘While there is no “one size fits all” solution to these findings, boards need to proactively identify and assess their own characteristics and processes,’ Mr Shipton said. ‘Though the review examined companies in the financial services industry, many of the lessons learned can be applied to most public companies in other sectors of the economy.’
‘Our report concludes with a series of questions that all public companies might ask themselves. Not all will be relevant to every company, but many will be,’ Mr Shipton said. ‘We urge boards of all large listed companies to read this report and review their governance practices and accountability structures with reference to our findings.’
We acknowledge that there are no ‘easy fixes’ to some of these issues. However effective oversight and management of non-financial risk is not novel or impossible. Companies have managed some of these risks well in the past and continue to do so today. We hope this review provides boards with a useful roadmap to achieve this.’
10 October 2019
Mr Stephen O’Neill of Port Melbourne, Victoria and Mr John Narramore, of Main Beach Queensland have both pleaded guilty in the Brisbane District Court to one charge for dealing in the proceeds of crime.
An ASIC investigation found that in October 2014 Mr Richard Ludwig, a former director of Cap Coast Telecoms Pty Ltd (Cap Coast Telecoms) sought pre-insolvency advice from O’Neill and Narramore of SME’s R Us following a dispute his company was having with a creditor. They advised Ludwig about an asset protection strategy that would involve the illegal removal of company assets so as to prevent creditors having access to those assets.
Between October 2014 and January 2015, O’Neill and Narramore issued fictitious invoices from companies under their control to Cap Coast Telecoms for purported services that were never provided. Ludwig dishonestly transferred a total of $743,050 from the bank account of Cap Coast Telecoms Pty Ltd to the bank accounts of the companies under O’Neill and Narramore control. O’Neill and Narramore subsequently transferred the funds to Ludwig or his associates. Once the funds were transferred, Cap Coast Telecoms was wound up in liquidation on 19 January 2015.
At the time of when Cap Coast Telecoms was wound up, it owed creditors a total of $2,955,138.
The matter was referred to ASIC through an unfunded supplementary report by the liquidator of Cap Coast Telecoms, Mr Mark Hutchins of Cor Cordis.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.
18 October 2019
Sydney-based Australian financial services (AFS) licensee, Lime FS Pty Ltd (Lime FS), has voluntarily shut down two digital advice tools following concerns raised by ASIC.
Digital advice, also known as robo-advice, is the provision of automated financial product advice using algorithms and technology, without the direct involvement of a human adviser.
Lime FS’ corporate authorised representatives, Plenty Wealth Pty Ltd (Plenty Wealth) and Lime Wealth Pty Ltd (Lime Wealth), are digital advice providers authorised to provide personal financial advice to consumers.
Plenty Wealth provided advice via an online tool about budgeting analysis, life insurance reviews, tax, investment and superannuation recommendations. Lime Wealth provided advice via an online tool about the establishment of self-managed super funds (SMSFs), purchasing property with superannuation, commencing and ceasing pensions, and contributions into superannuation.
After reviewing a sample of advice files from Plenty Wealth and Lime Wealth, ASIC raised concerns with Lime FS about the quality of advice being generated by the online tools and Lime FS’ ability to monitor the advice.
ASIC was concerned that the level of inquires made by the online tools about client objectives, financial situation and needs, were inadequate. In some instances, the recommendations generated by the tools were in conflict with client goals or with other recommendations also generated by the tools.
Lime FS decided to close down both online tools for the foreseeable future as a result of ASIC’s concerns
24 September 2019
AUSTRAC has ordered the appointment of an external auditor to examine ongoing concerns in regard to PayPal Australia’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act).
These concerns relate to PayPal Australia’s compliance with its International Funds Transfer Instruction reporting obligations, which require regulated entities to report the transfer of funds or property to or from Australia.
International Funds Transfer Instructions reported by the financial services sector provide AUSTRAC with vital intelligence that enables AUSTRAC and its partners to combat serious crimes such as child sex exploitation.
AUSTRAC Chief Executive Officer, Nicole Rose PSM said the AML/CTF regime is in place to protect businesses, the financial system and the Australian community from criminal threats.
“Regulated businesses like PayPal Australia, who facilitate payments and transactions for millions of Australian customers every year, play a critical role in helping AUSTRAC and our law enforcement partners stop the movement of money to criminals and terrorists,” Ms Rose said.
“PayPal is an important partner in the fight against crime. However, when we suspect non-compliance AUSTRAC will take action to protect the Australian community.”
The external auditor must report to AUSTRAC within 120 days of being appointed and will examine PayPal Australia’s compliance with its:
•AML/CTF Program obligations
•International Funds Transfer Instruction (IFTI) reporting obligations
•Record keeping obligations.
The outcomes of the audit will assist PayPal with its compliance, but also inform AUSTRAC whether any further regulatory action is required.
“We will continue to work closely with PayPal during this process to address any compliance concerns,” Ms Rose said.
The extent of the auditor’s examination is determined by AUSTRAC and will be at PayPal Australia’s expense.
AUSTRAC’s enforcement powers
AUSTRAC has a range of enforcement powers available, which include:
•issuing infringement notices
•issuing remedial directions, which require a reporting entity to take specified action to ensure compliance
•accepting enforceable undertakings detailing the specific actions a reporting entity will commence or cease in order to comply with the AML/CTF Act
•seeking injunctions and/or civil penalty orders in the Federal Court
•referring a matter to the Commonwealth Director of Public Prosecution for possible criminal prosecution.
14 October 2019
In late August, AUSTRAC launched a community-based campaign targeted at unregistered money transfer dealers, also known as unregistered remittance dealers.
Across Australia, many communities rely on the services of money transfer businesses to send and receive money from overseas, which supports friends and family living on opposite side of the world.
However, unregistered money transfer dealers don’t have the level of protections in place required by a business that is registered with AUSTRAC. This makes them an attractive target for criminals who might use them to launder money from a range of serious crimes, from child exploitation, illegal firearms sales and drug trafficking, through to tax evasion or phone and email fraud.
This is why AUSTRAC is speaking directly to communities to educate them on the risks of using unregistered money transfer dealers and, importantly, what actions they can take to protect themselves and their community.
23 September 2019
AUSTRAC has developed new products for pubs and clubs, highlighting money laundering and financial crime risks faced by Electronic Gaming Machine (EGM) venues.
We encourage pubs and clubs to share these products with gaming floor and compliance staff to help protect their business from criminal exploitation and keep their communities safe.
The new posters are:
•Staff awareness: This poster has been developed for staff working on the gaming floor, helping them to identify and report suspicious customer behaviour.
•Pubs and clubs - myths vs facts: This poster is a resource for compliance officers and can also be used to train staff. It addresses common misconceptions about money laundering and financial crime risks faced by EGM venues.
It’s essential that any suspicious behaviour is reported to AUSTRAC by submitting a suspicious matter report.
Additional resources for pubs and clubs:
•Video animation on the value of suspicious matter reports
•Anti-money laundering and counter-terrorism financing resources for pubs and clubs
15 October 2019
AUSTRAC has released proposed amendments to Chapter 11 of the AML/CTF Rules for public consultation.
The proposed amendments remove references to the 2018 reporting and lodgment periods and sets those periods for 2019 and each successive year. The amendments also make minor drafting changes to simplify the expression of the circumstances in which registered remittance affiliates are exempted from the compliance reporting obligations.
The consultation period for these amendments is open from 15 October 2019 to 12 November 2019
Proposed amendment to Chapter 11 of the AML/CTF Rules (Compliance Report – reporting and lodgement periods)
25 October 2019
IBAC's report Managing corruption risks associated with conflicts of interest in the Victorian public sector highlights organisational functions and activities in the public sector at heightened risk of conflicts of interest. This resource highlights common myths and misconceptions around conflicts of interest to improve public officers' understanding and management of conflicts, and to strengthen public agencies' controls around conflicts of interest.
Conflicts of interest can be actual, potential or perceived:
•An actual conflict of interest occurs when a public officer’s duties actually do conflict with their private interests.
•A potential conflict arises when a public officer’s duties could conflict with their private interests. A public officer can anticipate potential conflicts by thinking about how their private interests and associations might influence their public duties.
•Perceived conflicts stem from the reasonable view of the public or a third party that a public officer’s private interests could improperly influence their decisions or actions, or the actions or decisions of their organisation. The perception is that a public officer may not be objective in their dealings as a result of the conflict.
Each of these forms of conflict must be properly addressed.
Corruption can be facilitated if public officers and public sector agencies fail to properly identify, declare and manage a conflict in the public interest. This can undermine the community’s trust in public sector decisions and actions, increase the cost to the community of goods and services, and can expose agencies to significant corruption risk and reputational damage.
Sometimes public officers wilfully disregard their organisation’s requirements around handling conflicts of interest to pursue personal benefits for themselves or associates. However, public officers do not always clearly understand what constitutes a conflict of interest or how to declare and manage conflicts.
Common myths and misconceptions about conflicts of interest include:
1A public sector officer with a conflict of interest is corrupt.
2It's more important that I get the job done quickly.
3Conflicts of interest can always be avoided.
4There is no conflict because I can act fairly and without bias.
5I told my manager about the conflict of interest, that’s all I need to do.
6My interests are private and are not relevant to my role.
View the information sheet
View the research report
25 October 2019
Most public sector officers will experience a conflict of interest at some point in their careers. While conflicts should be avoided wherever possible, the existence of a conflict of interest in itself is not necessarily a problem nor inherently corrupt. However, the risk of corruption occurs when individuals and their organisations fail to properly and actively identify, declare and manage a conflict in the public interest. This report outlines opportunities to strengthen the identification, disclosure and management of conflicts of interest across the public sector. Some good practice is also highlighted.
This report explores how certain organisational functions and activities in the public sector are at heightened risk of conﬂicts of interest, and how conﬂicts of interest can facilitate corrupt conduct if they are not properly identiﬁed, managed and declared.
Since becoming fully operational in 2013, the Independent Broad-based Anti-corruption Commission (IBAC) has identiﬁed conﬂicts of interest as a recurring corruption risk. Failing to declare or manage conﬂicts of interest, either deliberately or because of a lack of understanding of obligations, leaves public sector agencies vulnerable to corrupt conduct. It also contributes to the wasting of resources, loss of staff morale and reputational damage when decisions are not made in the public interest. Mismanaged conﬂicts of interest are corrosive, potentially adversely impacting the decisions or actions connected with the conﬂict. They also undermine the integrity of the organisation and public trust in the broader public sector.
Risks associated with poorly identiﬁed and managed conﬂicts of interest can be mitigated through strong ethical culture and leadership. This includes leaders clearly communicating how employees are expected to handle conﬂicts of interest, as well as ensuring robust systems and controls are in place, such as clear and accessible policies and procedures, and regular training. These are the critical foundations for public ofﬁcers to enable them to identify, declare and manage a conﬂict.
View the report
View the information sheet
30 September 2019
Local councils need to consider the way they manage procurement to reduce risks of corruption, according to IBAC, the state’s anti-corruption commission.
IBAC has tabled a special report to Parliament today that warns there are corruptions risks and vulnerabilities in local government procurement practices.
"Allegations of corruption associated with council procurement practices and processes are a recurring theme in the complaints received and investigated by IBAC," IBAC Commissioner The Honourable Robert Redlich QC said.
"This report highlights a range of procurement-related corruption risks and vulnerabilities which, while they were found in two councils, are likely to be faced by most if not all councils in Victoria," Commissioner Redlich said.
"There is an opportunity now for all Victorian councils to consider these findings and assess how robust their own processes and controls are."
This special report focuses on two IBAC investigations, Operations Dorset and Royston, which concerned allegations that council employees subverted procurement processes for their own benefit and the benefit of associates.
In Operation Dorset, IBAC concluded a former project manager at the Darebin City Council had assisted an associate’s company to win more than $16 million in contracts. These contracts were awarded in circumstances where the project manager was receiving cash, gifts and other benefits from the company.
In Operation Royston, IBAC concluded a former manager at the City of Ballarat Council had enabled associates and family to win contracts, in exchange for financial 'kickbacks'. In 2017, the manager was convicted of a range of offences and sentenced to three years’ jail and ordered to repay $31,200. Three other people, including his wife, pleaded guilty to other charges.
Victorian councils provide important public services and programs and maintain significant public infrastructure, collectively managing approximately $84 billion in public assets and spending around $7 billion on providing services each year.
"Considerable power is vested in council employees to source suppliers, manage contracts and authorise payment for goods, services and works – spending millions of dollars of public money," Commissioner Redlich said.
"Public sector corruption it is not a victimless crime. It wastes taxes and rates that should be used to operate and maintain Victoria's schools, hospitals, roads and other vital public services and projects. And it damages the reputation of organisations and undermines community's confidence in the public sector."
IBAC has specifically recommended that Darebin City Council and City of Ballarat Council review and strengthen their procurement policies, systems and practices to address the identified vulnerabilities.
IBAC has also recommended Local Government Victoria consider developing a code of conduct for local government suppliers, which would outline the standards expected of suppliers including in relation to reporting suspected misconduct or corrupt conduct on the part of council employees and other suppliers.
10 October 2019
former member of the Wesley Hill Public Hall Committee of Management in Castlemaine was recently found guilty of obtaining property by deception and sentenced to a 24 month community correction order following an investigation by Victoria's anti-corruption commission, IBAC.
IBAC's Operation Esk substantiated allegations of mismanagement of funds by the Wesley Hill Public Hall Committee of Management, which is responsible for running the Wesley Hill Public Hall in Castlemaine.
The former Committee of Management member entered a guilty plea in the Melbourne Magistrates’ Court to one charge of obtaining property by deception over a 19 month period between 2014 and 2016.
The Magistrate ordered the former committee member to pay $39,785.42 in compensation and to undertake 100 hours of unpaid community work, along with conditions of supervision, treatment and rehabilitation.
The matter was referred to IBAC by the Department of Environment, Land, Water and Planning. Heads of departments and council CEOs must notify IBAC when they have reasonable grounds to suspect corruption is occurring or has occurred in their organisation.
IBAC is Victoria's independent anti-corruption commission, which exposes, investigates and prevents public sector corruption and police misconduct. To report public sector corruption or police misconduct now, visit www.ibac.vic.gov.au/report or call 1300 735 135.
05 September 2019
Draft report for consultation
In September 2019, the ACCC released its draft report for the customer loyalty schemes review. The draft report details the ACCC’s findings and recommendations following its research and targeted consultation.
Submissions in response to the draft report closed on 3 October 2019.
The final report will be published in late 2019.
30 September 2019
The Port of Newcastle is at risk of becoming a monopolist without constraint, said ACCC Chair Rod Sims.
Mr Sims was speaking at the Australasian Transport Research Forum on the ACCC’s perspectives on a number of transport issues.
Mr Sims noted the NCC’s recent recommendation to revoke the declaration of the shipping channel service at the Port of Newcastle, which has now occurred.
“A monopolist that controls this type of bottleneck infrastructure, operating without any regulation, has a clear incentive to maximise profits by raising prices even if this means reduced volumes or less use of their service,” ACCC Chair, Rod Sims said.
“It is bad for the economy when bottleneck infrastructure, at the end of a crucial value chain, is in the hands of a company with unfettered market power.”
“How is it that Australia, much more so than other countries we compare ourselves to, allows this?”
“We are deeply concerned about what this means for users of the service, as it will cause companies to limit investment in related markets as a result. In contrast, a declaration would constrain monopoly pricing and promote investment by providing a credible threat of arbitration,” Mr Sims said.
“Just as under the Part IIIA access regime the test for vertically integrated monopolies is one
of harm to upstream or downstream competition, for non-vertically integrated infrastructure we may need a “market power” test.”
“The ACCC has been considering the need for such a “Part IIIB” provision for some time. The reasonable alternative is bespoke regulation as we have for electricity networks and gas pipelines, both of which are not vertically integrated. Either can work. Why regulate energy monopolies but not transport monopolies?”
“Just as we do not want vertically integrated monopolies denying access to their competitors, we do not want non vertically integrated infrastructure exercising their market power to raise prices to users and so damage the economy,” Mr Sims said.
Mr Sims’ speech covered a range of transport issues including the reform of roads funding, protection of shipping lines coordinating their behaviour, high profile transport mergers that raise competition issues, and monopoly airport charges.
14 October 2019
The ACCC will consider whether Australians are able to access basic broadband plans at fair and affordable prices, as part of an inquiry into NBN wholesale charges launched today.
The inquiry will examine wholesale prices paid by retail service providers (RSPs), which use the NBN to supply residential-grade broadband services.
The ACCC’s inquiry will focus on prices for basic speed broadband products offering 12/1 Mbps, and will consider whether regulation is needed to ensure a smooth transition for consumers to the NBN from legacy services such as ADSL.
“We have concerns that NBN Co’s wholesale pricing has resulted in unfair outcomes for those consumers who have no need for, or do not want, higher speed plans,” ACCC Chair Rod Sims said.
“Most consumers have no choice but to migrate to the NBN if they want to keep their home service active, but are at risk of not being able to obtain a comparable NBN service at a similar price to their ADSL service.”
The inquiry will assess whether NBN Co's most recent pricing offers (in particular, NBN Co’s recent changes to its Entry Level Bundle) will allow RSPs to offer attractive retail NBN plans at ADSL-like prices.
The ACCC first raised these concerns publicly in April 2019, after NBN Co’s wholesale pricing changes in late 2018 led to the withdrawal of many basic speed retail plans.
The ACCC is also concerned about NBN Co’s continued use of discounts to adjust access prices.
NBN Co can withdraw these discounts ahead of a notice period that it sets itself. The ACCC is concerned that these arrangements may not be providing enough certainty for RSPs as they develop and promote their retail offers
15 October 2019
The ACCC is proposing to reject an application for authorisation by the Australian National Kennel Council Limited (ANKC) to amend its code of ethics to require members to register all of their dogs with the local ANKC member body or certain overseas canine organisations.
The ACCC’s draft determination notes ANKC member bodies are Australia’s largest purebred canine pedigree registration service providers. ANKC and its member bodies aim to promote breeding and ownership, dog showing and other related activities for purebred dogs.
Currently, the ANKC code of ethics only permits breeding from purebred dogs of the same breed that are registered on the ANKC’s ‘main register’; and requires members to register all the resulting, purebred, puppies, without specifying the registration body.
Under the proposed amendment to the code, members must register all dogs bred or owned by them with an ANKC member body or certain overseas body, and not just the dogs in ANKC’s main purebred categories.
17 October 2019
The ACCC is calling on irrigators and other water market participants to share their views on the operation of water markets in the Murray-Darling Basin.
An issues paper released today outlines the key issues the ACCC will consider in its Murray-Darling Basin water markets inquiry. In addition, the ACCC has announced a series of public forums to be held across the Basin during November. The forums will provide an opportunity to provide information and make submissions to the ACCC inquiry in person.
The ACCC will also be using its compulsory information gathering powers to obtain a very detailed picture of trading activity in water markets since 2012.
“This inquiry follows a period of significant change in water markets and in irrigated agriculture in the Murray-Darling Basin. It also comes at a time of drought, water shortages and significant increases in water prices,” ACCC Deputy Chair Mick Keogh said.
“We understand how important the effective operation of these markets is for the economic health of communities across the Basin, and for the Australian economy more broadly. We are also aware there are a range of concerns about these markets.”
The ACCC’s inquiry will focus on:
•The factors driving changes in water markets and water prices,
•How market participants (including irrigators, investors, water brokers, water exchanges, water registries and others) use market information; and whether water markets are sufficiently transparent,
•How market regulation, regulatory agencies and policy differences between states and trading zones have affected water markets,
•How the practices and behaviours of different market participants and interested parties impact water markets, and
•The extent to which the objectives of water markets have been achieved, and how overall market competition and efficiency have changed over time.
The ACCC will hold public forums throughout November.
The first topic is from The Bank Doctor - The Future of Non-Bank SME Lending. What needs to happen for the Non-Bank sector to become the force SMEs need it to be? https://mailchi.mp/6e646f37ab98/the-future-of-non-bank-sme-lending-part-4-what-needs-to-happen-for-the-non-bank-sector-to-become-the-force-smes-need-it-to-be?e=77b432f927
Peter Maguire from Ridgeline HR has put forward the proposition - Would a conversation work better?
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