THE House of Representatives Standing Committee on Infrastructure, Transport and Cities will today table its report, Harnessing Value, Delivering Infrastructure, which was released last December.

The report is expected to be tabled today, at approximately 4.15pm (following the MPI), by Committee Chair Mr John Alexander MP

The report advocates urban renewal and decentralisation, facilitated by strategic planning of transport infrastructure—especially high speed rail—funded by value capture.

Mr Alexander says vision and innovation are needed to rebalance our settlement, rebuild our cities and develop infrastructure funded by the wealth it creates.

“Investing in this infrastructure will liberate our regions’ potential as locations for housing and business through ready access to the economies of our major cities,” Mr Alexander says. “This is the central purpose of high speed rail. This plan of urban renewal and decentralisation, facilitated by strategic planning of infrastructure, will deliver an abundant affordable housing supply for generations to come.”

The Committee has recommended developing value capture mechanisms to fund new transport infrastructure and the development of high speed rail to facilitate new patterns of settlement in Australia.

The Committee has also recommended:

• developing a framework for the specification and evaluation of proposals for the development of a High Speed Rail Network in Eastern Australia
• investigating options for private funding of High Speed Rail through value capture
• the monitoring and investigation of other technological innovations for transport connectivity
• recognising the potential of value capture to contribute to the costs of new transport infrastructure
• developing a system for coordinating the planning and funding of major infrastructure projects across all levels of government
• coordinated procurement of vehicles and rolling stock for transport infrastructure
• establishing value capture mechanisms for individual transport infrastructure projects as a condition of federal funding
• developing a toolkit of value capture mechanisms that can be applied by all levels of government
• continued roll-out of City Deal-type agreements with the various state, territory and local governments
• developing a consistent and coordinated approach to the application of value-capture to major infrastructure projects, with the Australian Government acting as the single-point for the collection of value capture revenues.

A copy of the report can be obtained from the Committee’s website or from the secretariat on (02) 6277 2352.

Interested members of the public may wish to track the committee via the website.

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THE Credit and Investments Ombudsman (CIO) has rejected a recommendation that CIO and the Financial Ombudsman Service (FOS) should be replaced by a single ombudsman scheme, in its response to the Interim Report into Australia’s three financial sector Ombudsman schemes by a panel led by Professor Ian Ramsay.

According to CIO’s Ombudsman and Chief Executive, Raj Venga, the proposed single ombudsman scheme would be "far less accountable and transparent to its stakeholders than a statutory scheme. A statutory scheme is subject to important checks and balances and, in the absence of these, the only check on the broad discretions and powers of a non-statutory scheme is the existence of two ombudsman schemes operating in the same sector and benchmarking their performance against each other."

Mr Venga noted the irony that "the Interim Report failed to explain how the proposed single ombudsman scheme would deal with major banking and insurance scandals of the kind which invited the scrutiny of numerous parliamentary inquiries, prompted calls for a Royal Commission, and which spurred the Government to commission the review in the first place."

Mr Venga was also critical of the lack of economic analysis undertaken by the review.

"For example, the recommendation for a single scheme was only supported by anecdotal evidence from some consumer advocacy organisations – organisations which represent less than five per cent of consumers lodging complaints with CIO and FOS," said Mr Venga.

Given this lack of economic evidence, CIO commissioned its own independent economic analysis of the Interim Report’s recommendation. According to ACIL Allen Consulting:

• The proposal to introduce a single ombudsman scheme is not supported by economic analysis, sound argument or evidence. The Report does not demonstrate any cost benefits to replacing CIO and FOS with a single scheme.
   
• None of the perceived problems identified in the Report would be addressed by introducing a single scheme. In fact, a single scheme would create problems that do not currently exist.
   
• A single scheme would see the loss of the benefits the existing two schemes currently provide: price competition, service quality comparison, pressure to keep costs down, and innovate with better processes and services.
   
• A monopoly not-for-profit organisation, such as the single ombudsman scheme being proposed, can cause the same amount of economic damage as a monopoly for-profit organisation, by charging more and spending the proceeds on bloated staff numbers, excessive executive compensation, lavish offices and other wasteful spending – as well as providing poor service.

Mr Venga reiterated his concerns that "small businesses would not be better off under a single ombudsman scheme because it would lack the appropriate powers and expertise to deal effectively with their complaints. The Ramsay review ignored the weight of evidence that small businesses would be better served by their own limited scope statutory tribunal for disputes outside the existing remit of CIO and FOS."

Mr Venga noted that it was ironic that the major banks were the big winners of a review specifically commissioned to address the scandals attributed to them.

"The major banks, who are members of FOS, would be the main beneficiaries of the proposed single ombudsman monopoly because their ombudsman costs will be subsidised by the influx of more than 23,000 smaller financial firms (who are presently members of CIO) being forced to join a single scheme.

"Equally, smaller and more innovative financial firms, including fintech disrupters, operating on thinner margins and not having the benefits of scale and incumbency, would be least able to absorb or pass on any increased cost that may result from an inefficient single scheme monopoly," said Mr Venga.

Significantly, Mr Venga noted that "it was disappointing that the Interim Report placed little or no weight on submissions made by a number of industry bodies in support of the retention of the two ombudsman scheme model. Their members represent about 97% of the entire financial services industry and are a crucial source of competition to the major banks."

Mr Venga further commented that "the Report is also silent on how the creation of a single scheme would lead to lower costs, greater efficiencies and better outcomes. Almost all the submissions made by industry to the Review expressed concern that a single scheme monopoly would lead to higher costs, inefficiencies and poorer outcomes – advice which was totally ignored by the Review Panel."

Mr Venga reiterated his previous view that recommendations of the review panel were "a solution looking for a problem", and implored the Review to focus on enhancing the current competitive market for dispute resolution, rather than making change for the sake of change.

The Credit and Investments Ombudsman

The Credit and Investments Ombudsman (CIO) is an alternative dispute resolution scheme approved by the Australian Securities and Investments Commission to provide consumers with an alternative to legal proceedings for resolving disputes with financial services providers who are members of CIO. These include finance brokers, non-bank lenders, building societies, mutual banks, credit unions, financial planners, finance companies, debt purchasers, small amount short term lenders and mortgage managers.

www.cio.org.au

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THE Institute of Public Accountants (IPA) has used its 2017/18 pre-Budget submission to urge the Government to carry out its commitment for a promised tax white paper.

“Australia desperately needs large scale tax reform if it is to address the current fiscal issues we face,” said IPA chief executive officer, Andrew Conway.

“There have been too many stop-starts when it comes to much needed reform.

“We believe the terms of reference for the white paper should be broad and include the GST as part of the mix; true reform will not be achieved if the total tax mix is not considered.

“The tax reform white paper needs to draw on all of the existing work already undertaken including the Henry Tax review and the 2011 Tax Forum under the former government in formulating a blueprint to prepare for the challenges ahead.

“The current political environment has made ‘big bang’ tax reform extremely difficult for the major political parties.  As a way forward, consideration should be given to establishing an independent tax reform commission to support tax policy decision-making,” said Mr Conway.

IPA's pre-Budget submission: http://bit.ly/2jxoU7L

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 35,000 members and students in over 80 countries.  The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants.  The IPA was recognised in 2012 as Australia’s most innovative accounting organisation and listed in the top 20 in the 2012 BRW Most Innovative Companies List. 

publicaccountants.org.au

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THE Australian Retailers Association (ARA) believes the December 2016 retail trade figures released today by the Australian Bureau of Statistics (ABS) illustrate a positive Christmas performance for retailers with a 3 percent growth year-on-year (seasonally adjusted).

ARA Executive Director, Russell Zimmerman, said this steady growth compliments the 3 percent year-on year growth in November 2016 as many families across Australia started purchasing their Christmas gifts early.

“This moderate growth in December sales is a positive sign for the industry and we remain hopeful that the ARA and Roy Morgan predicted pre-Christmas sales figure of $48.1 billion will be achieved once we finalise the numbers,” Mr Zimmerman said.

Although December 2016 sales showed no increase over November 2016 trade figures, Mr Zimmerman said the industry’s annual Christmas performance remains stable and the uplift in discretionary spend is exactly what the industry would expect.

As always, a number of categories saw a significant surge over the Christmas period. Clothing, Footwear and Personal Accessory Retailing lead the categories growing at 7.32 percent year-on-year, followed closely by Pharmaceutical, Cosmetic and Toiletry Goods (5.33% year-on-year).

“Even Newspaper and Book Retailing has shown a positive uplift from -6 percent during November 2016 trading, to an optimistic 0.91 percent growth due to many shoppers filling their Christmas stockings with popular book titles last year”, Mr Zimmerman said.

“We’ve seen a slight decrease in takeaway food services, which usually demonstrates strong growth, though we’ve also seen cafés and restaurants up 2.4 percent as more shoppers spent their holidays out and about enjoying their time with families and friends.”

The official closure of Masters during December took its toll on the Hardware category (1.76% year-on-year) down from 10.15 percent in November 2016 figures.

“We have seen an expected decrease in hardware figures temporarily, but now with reduced discounting and strong home price growth we can expect positive figures moving forward,” Mr Zimmerman said.

Though Department Store figures are still negative (-2.94% year-on-year), they are showing signs of marginal improvement. The category is making a gradual recovery from a downturn attributed to the recent restructure of a number of prominent department store retailers.

The states showing a healthy year-on-year growth include Tasmania (4.40%), South Australia (3.92%), New South Wales (3.37%) and Queensland (3.42%). While Victoria (2.96%), Australian Capital Territory (2.83%), Northern Territory (1.49%) and Western Australia (0.85%) aren’t leading the pack, they still demonstrated a positive growth over the December trading period.

In terms of online spend for December, the NAB Online Retail Sales Index indicates that e-commerce sales increased 10.4 percent year-on-year, with takeaway food and taking the lion’s share of growth on a category basis at 5.5 percent year-on-year.

“With online retail making up 7 percent of all retail sales, it’s double digit growth year-on-year is not surprising as e-commerce retailing is a key contributor to the retail industry as a whole,” Mr Zimmerman said.

MONTHLY RETAIL GROWTH (November 2016 – December 2016 seasonally adjusted)

Household goods retailing (-2.3%), Other retailing (-0.2%), Food retailing (0.5%), Clothing, footwear and personal accessory retailing (1.4%), Cafes, restaurants and takeaway food services (0.2%) and Department stores (0.3%). Total sales (-0.1%). 

Northern Territory (1.1%), South Australia (1.2%), Australian Capital Territory (-0.7%), Victoria (-0.4%), Tasmania (0.5%), Western Australia (0.6%), New South Wales (-0.3%) and Queensland (0.0%).

YEAR-ON-YEAR RETAIL GROWTH (December 2015 – December 2016 seasonally adjusted)

Household goods retailing (0.94%), Cafes, restaurants and takeaway food services (5.15%), Food retailing (2.89%), Clothing, footwear and personal accessory retailing (7.32%), Other retailing (4.27%) and Department stores (-2.94%). Total sales (3.02%).

New South Wales (3.37%), South Australia (3.93%), Tasmania (4.40%), Victoria (2.96%), Australian Capital Territory (2.83%), Western Australia (0.86%), Queensland (3.42%) and Northern Territory (1.50%).

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $300 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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