30 November 2009

Commonwealth Bank CCIQ Pulse Survey of Business Conditions

Business confidence in the Australian economy is soaring however the outlook for Queensland's economic recovery is less optimistic according to the latest results from Queensland's most comprehensive survey of business confidence, the Commonwealth Bank CCIQ Pulse Survey of Business Conditions.

The latest Pulse Survey results revealed:

• A continuation of the trend of businesses believing the national economy will significantly out perform the Queensland economy over the coming twelve months;
• Businesses remain cognisant that the global financial crisis has not completely ended. There is concern that the winding back of the Government's stimulus measures, coupled together with interest rate rises, may lead to a second dip in economic activity;
• Concern that unemployment will continue to increase, undermining consumer confidence and any recovery in the economy;
• 41% of respondents reported stronger sales and revenue, however 37% of Queensland businesses reported weaker profits;
• Most businesses reported stable or reduced capital expenditure;
• The level of demand/economic activity remains the number one constraint on business growth. Interest rates and labour recruitment and retention have re-emerged as major constraints.

Expectations for the December quarter are encouraging although relatively subdued compared to previous December quarterly expectations.

• Commonwealth Bank CCIQ Pulse Survey of Business Conditions September Quarter 2009

Unemployment edges up in October

October employment figures revealed further deterioration in labour market conditions. The unemployment rate rose to 6.1 per cent (from 6.0%) and while employment increased by 1,900 persons it was not sufficient to cater for the additional 3,100 people seeking work.

Queensland was the only State to record a monthly increase in the unemployment rate and now has the highest rate of any state.

Federal Treasurer delivers Mid-Year Economic and Fiscal Outlook

The Federal Treasurer Wayne Swan has released the Mid-Year Economic and Fiscal Outlook (MYEFO) which provides an update of the Budget forecasts. Given the better than expected economic performance since May, the forecasts for growth and unemployment rates are subject to considerable improvement.

Key figures in the outlook included:

• A modest growth of 1.5 per cent in 2009-10, revised up 2 percentage points from a contraction of –0.5 per cent at Budget;
• Revised down expectations for medium-term growth from 4.5 per cent to 4 per cent;
• Unemployment rate reaching 6.75 per cent in the June quarter of 2010, a lower and earlier peak relative to the Budget forecast for an 8.5 per cent peak in the June quarter of 2011;
• Employment growth in 2009-10 is expected to be much stronger relative to Budget but still weak at just 0.25 per cent before accelerating to 1.5 per cent in 2010-11;
• The budget deficit forecast for 2009-10 was little changed at $57.7bn, or 4.7 per cent of GDP;
• The budget is still not expected to return to surplus until 2015-16.

There was no change in the government's fiscal strategy for returning the budget to surplus which relies principally upon the operation of automatic stabilisers and a real 2 per cent spending growth cap.

Henry Review of Australia's Tax System

While the Henry Tax Review is due to report to Government by the end of December, it appears it won't be made public until well after the New Year, with Government expected to release the recommendations "with an initial response in early 2010".

Reporting in the media has suggested that "early 2010" may mean as late as March but as yet the Treasurer is still to announce a definite time-frame for the public release of the Henry Review's recommendations.

CCIQ included several hot topic questions in this quarters Pulse Survey of Business Conditions analysing business reaction to taxation reform. Initial results reveal strong opposition to the removal of the payroll tax exemption threshold as being mooted in the Henry Review; mixed response to the centralisation of payroll tax administration; opposition to increasing the GST rate and removing the GST exemptions to fund State taxation reform; emphasis to instead be placed on finding savings within Government. These results have been forwarded to Ken Henry for his consideration.

Hot Topic survey results

1. What level of impact would the removal of the payroll tax exemption have on your business?

2. How should state taxation reform be funded?

Premier explores population decentralisation incentives

The Queensland Government is investigating incentives and policies to encourage Queenslanders to settle outside of the South-East Queensland area.

The Premier has announced the State Government will investigate boosting the first home-owner's grant to encourage first-time home owners to head north into Queensland's regional centres.

A South East Queensland Growth Summit is also being planned for early 2010, bringing together experts in planning, development, infrastructure and sustainability with the community to discuss growth, liveability and sustainability.

• CCIQ welcomes State Government efforts to decentralise state

Award Modernisation update

On 25 September, a further 29 exposure drafts from State IV were released and included the model transitional provisions. The final date for making modern awards is 4 December.

Recently, ACCI became aware of an exposure draft, called the Employment Services Industry Award 2010 within Stage IV, which may impact on those who operate or have an interest in group training schemes.

ACCI appeared before the AIRC Full Bench in Sydney last month, in support of its reply submission to the AIRC on the Miscellaneous Award 2010 exposure draft, the AIRC's further exposure draft on the National Training Wage Schedule and cross-award matters. The AIRC's exposure draft award has the potential to significantly expand award coverage into areas that have traditionally been award-free (including senior, managerial and professional occupations).

ACCI's submission reiterates that such an award should only cover employees who previously had award coverage, and not more widely, consistent with its earlier stage IV written submission and employers' draft.

All modern awards will commence on 1 January 2010.

• Modern Awards - How will they affect your business?

State IR Bill passed by parliament

On 27 October, the Queensland Minister for Industrial Relations, the Hon. Cameron Dick MP, introduced the Fair Work (Commonwealth Powers) and Other Provisions Bill into the Queensland Parliament, which was subsequently passed on the 12 November. Minister Dick has outlined that there were a number of conditions sought on the referral that included:

• The Queensland Government having the power to apply to Fair Work Australia to end industrial action in government owned corporations in specified circumstances;
• Preservation of Queensland's unique and beneficial conditions for apprentices and trainees until Fair Work Australia reviews national conditions in this area;
• Protection of certain state entitlements of employees transferring to the national system, as outlined in clauses 30 to 44 of the bill;
• Preservation of certain award wage rates arising from Queensland Industrial Relations Commission decisions affecting the community and disability services sector;
• A high degree of control and input by Queensland over changes to law and policy in the national system.

These conditions are to be embodied in Commonwealth transitional legislation relating to the referral.

• CCIQ applauds new legislation to reduce workplace relations red tape

State Government Procurement

CCIQ has written to the Minister for Public Works and Information and Communication Technology, the Hon. Robert Schwarten MP, in response to his letter advising of the Queensland Government’s decision to abolish the State Procurement Advisory Council.

In the absence of this Council, CCIQ has urged the State Government to be rigorous in its application of the State Procurement Policy and, in the interests of the state economy, when all things being equal, give preference to local Queensland businesses.

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