PRIME MINISTER Scott Morrison's announcement to allow access to superannuation, for first home buyers to fund a deposit, will undermine the purpose of the superannuation system and could force up to 5.3 million young Australians to decide between owning a home or their retirement savings, the Financial Services Council (FSC) has warned.

FSC CEO Blake Briggs said,  “The FSC is concerned the (Federal) Government’s proposal weakens the sole purpose of superannuation, which is to provide higher standards of living in retirement. 

“The FSC recognises there is a correlation between renting in retirement and poverty amongst older Australians, but Australians should not have to choose between a home and their retirement savings. 

“The government’s own majority report into Housing Affordability and Supply in Australia concluded that superannuation should only ever be used for housing if there were commensurate measures to increase supply. 

“The government’s supply measure only extends downsizing to 1.3 million households, whilst potentially allowing approximately 5.3 million under 35-year-old Australians that do not yet own a home access their superannuation to buy a first home.

“The government has an obligation to do more to boost supply, otherwise unleashing superannuation savings on the housing market risks driving prices higher still.”

The FSC is a peak financial services industry body which sets mandatory standards and develops policy for more than 100 member companies. FSC's  full members  represent Australia’s retail and wholesale funds management businesses, superannuation funds, life insurers and financial advice licensees. Supporting members represent professional services firms such as ICT, consulting, accounting, legal, recruitment, actuarial and research houses in the financial sector.

www.fsc.org.au

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By Leon Gettler, Talking Business >>

THE BIG MISTAKES start-ups make is focusing on their good idea instead of what their customers want and need.

That’s the advice from Russell Martin, the co-founder and chief technology officer (CTO) of digital expense platform DiviPay,

DiviPay, which began in 2017, is an all-one virtual corporate card and expense management platform for small business which allows finance teams to better manage, control and streamline their spending across their organisation.

It is a very easy to use web and mobile application that allows a business to instantly issue corporate cards for employees and pay bills. It automates expense management workflows

Mr Martin  said small business had been neglected in expense management and DiviPay was created to fill that gap. 

DEVELOPMENT CONTEXT

Mr Martin developed the idea that eventually became DiviPay when he worked at the innovation space at Westpac.

“We learned a lot of skills about identifying customer needs, what their jobs to be done are, what problems they were having in their life and how we might be able to build prototypes and viable products around these problems using different types of technology,” Mr Martin told Talking Business.

“I think a trap that a lot of start-ups fall into is being very attached to their idea and thinking their idea is the most important thing but what is important is understanding the problems the customer has in their life, building a small solution around that and then validating whether that solution has called what called ‘product market fit’. That is, do your customers adopt your product, are they willing to pay you for it, and does it have the growth potential to make a successful company?

“We’ve been very focused on making sure the things we build have product market fit.”

He said when DviPay spoke to its customers about expense management workflows, it learned these companies had a number of expense workarounds like employees paying for expenses out of pocket, and being owed by their employer for long periods of time and sharing one or two company cards around the office.

“We have a funny story of a customer who had a photocopy of a credit card in filing cabinet for about 30 different people, and eventually that corporate card was compromised, they couldn’t work out who was spending what,” Mr Martin said.

“Just hearing stories of ways people are trying to solve problems in their life, and then honing in on how can we do that better?

“How can we identify a solution that solves that particular problem for this customer in a new way.”

WIDE-RANGING SOLUTIONS

Mr Martin said DiviPay had customers ranging from companies with one to two employees all the way through to medium sized businesses with 500 to 1000 employees. It covers small to medium sized businesses of all types.

“These expense management workflows are common themes across any type of business, whether you run a trade business, whether you run a digital marketing company, or a consultancy, everyone is looking for ways to optimise and do things more efficiently,” Mr Martin said.

One of the benefits of DiviPay for small business was the speed of onboarding. 

“We onboard customers in under an hour where that customer may have been in the seventh or eighth week of the application process with a big four bank,” Mr Martin said.

“It’s really that lack of access to financial products that a lot of fintechs have set out to solve, where – through new technologies, new compliance and processes –  e can actually serve smaller customers that have been under-served by large institutions.”

www.divipay.com

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://play.acast.com/s/talkingbusiness/talking-business14-interview-with-russell-martin-from-divipa

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THE Real Estate Institute of Queensland (REIQ) is accusing the Queensland Government of "dipping into the piggy bank of property owners yet again" with a new land tax regime which "is a slap in the face to the very sector that is propping up the economy".

The REIQ's reaction has come off the back of the Queensland Government pocketing soaring stamp duty revenue with $5.38bn in transfer revenue this financial year, as announced by State Treasurer Peter Dick. It will increase overall from $16.53bn to $19.93bn over the forward estimates.

REIQ CEO Antonia Mercorella said disappointingly the government had not consulted with relevant property stakeholder groups on this new land tax regime, which was "the wrong move at the wrong time". Under the Treasurer's announcement, interstate property investors with multiple landholdings across different states would have their annual land tax assessment based on the worth of all their land, rather than just the worth of their Queensland property. However, primary places of residence would continue to be exempt. 

“This treatment of property investors as an endless money pit is outrageous – the government is raking in a huge stamp duty windfall, then relying on private investors to provide the lion’s share of housing supply, and now they’re slapping investors yet again with new taxes,” Ms Mercorella said.

“How can the government possibly justify slugging property investors with tax for land they own that isn’t even within our state borders? It’s utter nonsense that there’s a 'loop hole' to close.

“From a practical standpoint, it’s also baffling to understand how on earth they intend to get this data in order to double-tax investors who are already paying this tax elsewhere.”

Ms Mercorella said that property investors were tired of being the ATM for the State and given the flagged second wave of tenancy rental reforms, many could decide to vote with their money.

“There is no other state or territory that takes this approach, and by treating property investors with contempt like this time and time again, investors may very well pull up stumps,” Ms Mercorella said.

“All this is doing is deterring people from investing in Queensland and instead, opting to invest where no multi-jurisdictional land tax applies.

“For those not scared off from investing in Queensland, and current investors brave enough to stick around, this tax will make their holding costs more expensive and the logical consequence of that is that rent goes up.

“In the midst of a rental crisis, it beggars belief that this would be the lever the government pulls. It shows the government lacks the ability to think outside the square and come up with alternative and innovative solutions to find new revenue streams.

“You only have to look at the timing of this bombshell legislative reform to see the government is clearly trying to sneak this in under the radar at a time most people have clocked off for the year.”

www.reiq.com.au

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CONFIDENCE in Australia’s economic outlook has increased over the past six weeks but accountants are still more likely to be worried, according to a new survey by professional accounting body, CPA Australia.

In early October, CPA Australia surveyed 144 accounting professionals as part of a longitudinal survey of economic and business sentiment, coinciding with the implementation of the National COVID-19 Response Plan. CPA Australia's previous survey was conducted in August.

“General economic sentiment has lifted, which is positive, however accountants remain more likely to be pessimistic notwithstanding rising vaccination rates,” CPA Australia chief executive Andrew Hunter said.

“We think this reflects ongoing uncertainty about re-opening requirements and what they’ll mean for businesses, their employees and customers, as well as how future outbreaks will be managed.” 

About 32 percent of respondents are confident in the performance of the Australian economy over the next three months, compared with 20 percent in August, while 42 percent are worried compared with 51 percent in August.

The level of optimism increases as longer outlook periods are considered. About 44 percent expressed confidence in the state of the economy in 12 months time,  up from 30 percent in August.

CONFIDENCE OVER NEXT THREE MONTHS

Respondents were more enthusiastic when it came to their own workplaces. About 68 percent were fairly or extremely confident in the performance of their business over the next three months. Only 14 percent are fairly or extremely worried.

About 31 percent of respondents expect their business’s or employer’s revenue to increase this month, compared with 29 percent in August. Meanwhile, 44 percent expect revenue to decrease, which was the same in August.

In an unexpected result, less than one third of respondents (28.5%) reported that government business supports have had a positive or very positive impact on their business and business clients.

“This surprised me, and I can’t say for certain why respondents feel this way," Mr Hunter said. "But from talking with members and businesses, I’d suggest that it’s a consequence of challenges associated with the design, roll-out and administration of support and grant programs, and the fact that many businesses weren’t eligible despite experiencing difficulties.

“Issues such as these have left a sour taste in the mouth of many accountants. They’ve been the ones trying to make hastily designed and often vague support schemes workable for business. Our members have worked incredibly hard over the past 18 months assisting their clients or employers access this much needed support quickly.

“We encourage governments to consult early, openly and often with professional and industry associations on the design, structure and administration of support schemes before implementation. This will enhance their effectiveness once introduced.”

Respondents working in businesses remain very confident in their employer’s ability to repay any debts over the next three months. This is despite the closure of several grant programs since that time and the impending closure of others. Only 14 percent expect their business to have difficulty in repaying their debts over the next three months.

“The good news is that business solvency isn’t a major factor at this time," Mr Hunter said. "This suggests we don’t need to be overly concerned, at least for now, about an upcoming insolvency cliff after supports roll off. That said, we know many businesses will face very tough trading conditions for some time.”

SHORT TERM EMPLOYMENT OKAY

The short-term employment outlook is also positive. Respondents are now more likely than they were in August to expect their employer to increase employee numbers over the next three months (33% compared with 23%). Respondents were also more likely to forecast an increase in staff hours over the next three months, as well as work outsourced to contractors.

“Businesses in locked-down states are making plans for the return of customers," Mr Hunter said. "This increases the urgency for governments to provide answers about what they can and can’t do when they re-open.”

CPA Australia has previously published 10 questions businesses need answers to before re-opening, and is seeking answers to these from governments.

Although confidence in the economy, business and employment grew over the past two months, there remain numerous short-term challenges for businesses. The number one difficulty continues to be uncertainty around lockdowns, followed by attracting and retaining staff. About 62 percent of respondents also said border closures had a negative, or very negative, impact on their businesses.

“With international travel slated to resume in November under the National Response Plan, albeit slowly, this should alleviate some issues for businesses," Mr Hunter said. "However, relief may be way off yet for businesses in states which have said they may remain closed into the new year.”   

Although awareness of the National COVID-19 Response Plan has increased from CPA's previous survey, respondents were more likely than before to find it unclear, at 46 percent compared with 39 percent in August.

cpaaustralia.com.au

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