Davidson Accountants

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Occasionally we hear a story where we feel compelled to do all we can to try to assist. These occasions call for us to go above and beyond the call of duty and take time out of our busy day to help another person. We recently had one of those occasions. A long standing valued client advised her step father was having difficulty with Newcastle City Council. A council ranger told her that her step father’s backyard needed to be cleaned up or he will face a penalty and possibly legal action. The issue is that the step father is a 76 year old pensioner suffering from prostate cancer, as well as other illnesses. He lives week to week and has no physical or financial capacity to do what was being asked. The family has also fallen on hard times and lacks the financial and physical capacity to assist. Well, we called Council thinking there would be some form of pensioner relief or assistance. Surprise, surprise our calls fell on deaf ears. We considered this an injustice and therefore wrote to all Newcastle Councillors explaining the position and seeking their support to secure assistance. In summary we thought there should be some qualified assistance, for disadvantaged citizens. Eleven emails were forwarded to the Councillors: eight read the email (read receipt); two replied saying they would pass the matter onto council staff for comment. Council has not called despite the matter again being referred to them by the 2 Councillors. However, one Councillor went above and beyond. Cr Allan Robinson (Robbo) – a Wallsend Independent, responded and also offered his personal support. At no cost Robbo visited the site and then arranged for his staff to do the job. We offered to raise this matter publicly however, he declined. His view was that he was doing a job that needed to be done and simply wanted to help a person in need. We could not let this great deed go unnoticed and therefore we thought we would share this story. It is a real shame Newcastle Council with between 800-900 staff, does not have a safety net for the disadvantaged. We thought the Council was there for the community and therefore this type of assistance would be available. The above circumstances challenges ones view on what a Council does and what it stands for, especially when their mandate is to supposedly to look after the community. Cr Robinson, Robbo, you have set a wonderful example of what it means to care and lend a helping hand. We are very fortunate to have you as a Councillor on Newcastle City Council.

Sam Dastyari - Slayed Crusader or Devious Politician

http://us11.campaign-archive2.com/?u=ccb2670872448dc71747a48fc&id=a46e8e1032&e=1c0e95f394

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Have you been watching the recent political manoeuvres in regard to the banks and their ethical practices? Have you thought about whether we should have a Royal Commission or should ASIC keep the banks honest? Whilst we have never been involved in a Royal Commission or an ASIC review, our areas of influence suggest if ASIC is focused, then they are the cheapest and more effective to take on the role. This is especially true if the banks fund the process. If you follow these type of activities you would have to agree a “Royal Commission” is a public examination, however we rarely see penalties imposed. It really is a public shame game however when it boils down to it, where can the public go – there really is only 4 of them and the smaller merchant type banks are owned by the 4. A second issue with a Royal Commission is the “terms of reference”. That is, they can only deal with matters if they are in the “term of reference” and this means the author has to think of all possibilities, so they are covered. An ASIC investigation will use the rules of evidence (so it will be done once), and their investigation should allow a broadening focus once bad behaviour is discovered. It will also be an investigation rather than a costly public exhibition and should allow the little guy to participate. Oh you say too positive a view for us–we agree with the Govt’s direction? Right on!!! We need something. The question is simple, in that, can you “trust” the banks to honour their code of practice; well no, and therefore there needs to be a flexible investigation with the ability to apply penalties. So go for it ASIC! Nothing is simple when matters like these are introduced and therefore there will always be issues that need to be discussed and resolved. So there are questions with the ASIC direction in that, will the banks pass on the ASIC cost to their customers and will ASIC be independent, especially when the banks are the ones funding the review? On the 1st matter a meeting (21st April) occurred with the Prime Minister, Treasurer and Assistant Treasurer and the bank chiefs – Brian Hartzer (Westpac), Ken Henry (NAB) Ian Narev (CBA) and Graham Hodges (ANZ). In that meeting the bank chief’s agreed not to pass on to customers the $127 million ASIC review funding package. Can we trust them? Well you should ask Ms Leith Williamson (please read http://www.abc.net.au/news/2016-04-25/brisbane-woman-takes-on-banking-giant-nab-in-supreme-court/7342848 ). If you always punctually meet your bank obligations, why is it that your relationship manager can increase your margin, quoting cost of funds increases (despite the press advising the alternative) or saying your risk is higher. Indeed you can be hit with significant penalties if you are in a joint investment with another unrelated party and they fall fowl of, or have difficulties in meeting their financial obligations. In an objection to this position the response we received from the bank was “because we can” . The responder showed great empathy(yeah right) and we think enjoyed the power the circumstances provided. From our point of view and based on past experience we consider, despite economic conditions or recovery issues, bank profit margin remains intact. Remember the Labour Government looked to applying a super profits tax to banks, similar to the resources tax, however this did not proceed. At the time, inside sources advised this was because it would simply be passed on and therefore introducing the tax would be politically disastrous. Based on the above and their recent activities, we think the banks will find a subtle way to pass on the ASIC costs. Will the bank unduly influence ASIC? Hard to say, however this is probably better answered by reviewing current organisations that manage bank complaints- the Financial Ombudsman Services (FOS) or the Office of the Australian Information Commissioner (OAIC). Our experience shows the complainer needs to be careful because;- 1. FOS is funded by the banks and they have a much closer relationship with them than with the complaining individual or company. Additionally FOS state that if you are a company, you are not entitled to Privacy however you are entitled to confidentiality. Confidentiality does not cover things such as stress or anxiety because a company is unable to suffer human traits such as stress or anxiety. So essentially, if a bank were to mistakenly reveal your company’s financial details to an unauthorised person, FOS is not going to strongly support you. The best they will do is present your breach argument to the bank and the bank will most likely offer minimal compensation with a whole lot of motherhood statements. Incidentally $3k is the limit FOS proposes on these matters. 2. OAIC is funded by the government and covers more areas than just banks. OAIC therefore gives the complainant a better hearing, however it also argues a company does not have privacy rights. Whilst the bank may be negligent in possibly allowing unauthorised parties access to information, as a company, privacy does not provide you any legal cover. Having said this, if they feel there has been some bank negligence, they will assist in arriving at a settlement. The FOS and OAIC staff are great however can do little if their hands are tied. We wonder who wrote the organisations “terms of reference” ? History shows the complainer’s resources are limited however the bank has the muscle and resources to effectively and aggressively deal with those that complain. We acknowledge large organisations are dependent upon individuals (staff) to deliver their value proposition. However, and in times of trouble, when you are there you generally deal with a bank specialist and they consider themselves beyond reproach. We don’t know whether it is because the complainant has limited funds or whether it’s the system or simply an evolved process. Regardless there is a common tread, in that the banks believe if they continue the dispute long and aggressively enough then the complainer with accept what is offered. We have found some specialists bankers fight from an indefensible position, hide behind the terms of reference or cop it and use motherhood statements so the issue passes. Perhaps John Hewson was correct when he recently stated that the issue with the banks is their reward systems. That is, the commissions they pay and how those commissions are arrived at. Such a reward model does not set the tone for ethical behaviour, rather it engenders a culture of dishonesty & bullying to achieve their own goal. Australians need a powerful watch dog to oversee the banks because the cards are stacked in the bank’s favour and recent evidence shows what they will do in the name of profit. The ASIC mandate is the best alternative however it should be flexible/low cost because the little guy needs a platform where he can openly discuss matters and resolve issues. In our experience no one party is completely wrong and therefore there needs to be a cost effective independent platform available to all. We say again, go for it ASIC. In conjunction with the ASIC action why not open up the Australian market to more competition, so we the customers can really vote with our feet. This can be achieved by either encouraging others to operate in Australia or allowing our Building Societies to expand their offerings. Personally we favour assisting the building societies so they can become real competition to the banks. In closing can we repeat our advice to clients, that they need to de-risk themselves from the clutches of one financier and look to supporting alternatives i.e. spread the risk. Remember this is an industry that rewards its new customers with rate discounts, concessions and no interest credit cards however, they do little for those who are loyal customers. PS if you need help with refinancing then give us a call. Have a great week.

ABC iview : Four Corners - Money For Nothing

ETHICS AND THE INSURANCE INDUSTRY As you are aware, I have previously written about what I consider to be a lack of ethics in regard to the banking industry. Over the last 10 years, or so, we have seen this sector continue to pay large performance based bonuses to CEO’s and other high ranking employees, yet customers experience a decline in services and an increase in questionable activities. The CBA has borne the brunt of the published material, initially with investment advisors and now with the insurance industry. Having said this, it would seem this is a sector issue rather than a specific sector participant. In regard to the insurance industry, I encourage you to view Monday’s (7th March 2016) 4 Corners Program where the CommInsure previously employed Chief Medical Officer, suggested medical reports were deleted if they did not assist them to deny a claim. The program is riveting viewing and seems to support a profit focused culture, at all costs. This is the link to the program http://iview.abc.net.au/programs/four-corners/NC1604H006S00 There were follow up articles in the Sydney Morning Herald (SMH) Tuesday which are also worth reading, including their analysis on the CommInsure activities. This is the link to the article http://www.smh.com.au/business/banking-and-finance/comminsure-when-is-enough-enough-20160308-gnds35.html It should be noted the Four Corners program was based on a joint investigation by Fairfax Media and the 4 Corners Program. The reason I raise the above is out of our concern for our clients, your and our staff. The program indicated whilst CommInsure are the TPD (Total Permanent and Disability) and Death insurers in their own right, they also provide these services to a number of Industry Super Funds. In the Sally Rose SMH article (published Wednesday 10 March 2016) she advises CommInsure provides coverage to 3 million Australians including those provided to Prime Super, NGS Super, CareSuper, HESTA, Vision Super as well as non-profit funds such as QIEC Super, Club Super,RBT Tasmania, TWU Super and AustSafe. The 4 Corners interviewer, Adele Ferguson (SMH Reporter) also published an opinion piece in Wednesday’s Business Day section that is well worth a read. We all do not want to overpay for a service, however when it comes to insurance, we want/need the policy to come through in our hour of need. After all, this is the reason we take insurance out. As an employer the last thing you need is for an employee, who has insured against a risk, to be subject to a “cute” decision to avoid or deny a claim. Insurance is an industry where ethical behavour is paramount, a foundation of doing business. We, as a firm, have experience client claim difficulty with CommInsure and therefore we have seen first-hand the emotional effect of these type of decisions. Can I encourage you to :- a. Review your policies to determine who the underwriter is. b. Seek a reference on their activity from your broker and APRA (Australian Prudential Regulation Authority) or the Insurance Council Of Australia. c. Encourage your staff to also do steps (a) and (b). We live in difficult times and therefore we need to secure services from ethical providers, who will support us in our time of need. Sorry, however another ½ glass empty post!

Credit Card Surcharge Fee Crackdown On Monday new laws passed the Federal Parliament cracking down on excessive credit card surcharge fees. Businesses can now be fined up to $108 000 if caught overcharging customers for using their credit card, under new powers given to the Australian Competition and Consumer Commission (ACCC) The surcharge must be limited to the ‘reasonable cost of acceptance’ which is generally the service fee charged by financial institutions (banks) for use of the card. This is generally between 1% to 2% of the amount of the purchase (i.e.. for a purchase of $2 000, the surcharge fee would generally be between $20 to $40). For the many businesses that accept credit cards as a means of payment, you may need to review your credit card surcharge fees in light of these new laws.

The Government Needs to adopt simple Business Principals Firstly Happy New Year and may 2016 bring your family the very best in both family time and financial rewards. I thought I would send this short note to comment on the recent tax debate currently gripping our news. There is no doubt business has been experiencing challenging conditions, not only economically but also the ever increasing government grab (at all levels). In these times business has been forced to work smarter to achieve efficiency gains, if they want to maintain or increase market share. Imports are cheaper and the big end of town is getting bigger and therefore becoming more of a threat. That is, we see business reacting, refocusing and reengineering themselves: introducing measurable key performance indicators so they can move forward. We take our hat off to those in business today because we share their passion and know what they are going through, given we are generally the 1st to be called if there is trouble on the horizons. Anyway the main question I ask is, would you, as a business, be allowed to increase your price by 50% and then secure the support of your piers? No- well then how is it that the Federal Government, with the State’s support, is allowed to continue on the path of increasing the GST? I acknowledge the tax debate is about all aspects of the system and therefore it should not simply involve the GST. Having said this, isn’t the real issue our deficit and therefore shouldn’t Government, at all levels, be looking at how they operate and question both sides (income & expenditure) of the budget. Surely another part of the equation is how Governments work with each other and whether this process is completed in the most cost efficient way. One thing I know is, when a business needs to address a problem, all parts of the cause are on the table for review – not just revenue raising. In recent times it seems Governments are making decisions based on political capital rather than what is in the best interest of the country. A provocative statement, however one shared by many. I don’t know about you, however I thought the principal of government was to work to achieve a better Australia for all - that is “one team one goal”. If they are all working towards a better Australia why is it that we continue to hear arguments about cost shifting and responsibility transfer; Local government does not have the money, because the State has not committed. State government does not have the money, because the Feds have not provided the funds Not our area of responsibility you had better see/call someone else. Sometimes we waste resources on power plays and really, do we need duplicated responsibilities for the same service (State & Federal control of Education and Health) , why can’t we just have one so we understand who is responsible? Interestingly, when you consider the economic budget reporting, you would think Government financially manages it budget based on the reverse principals of a “not for profit raffle”. A not for profit raffle is where you sell $X in tickets and therefore I can only spend $X on the prise. Well government seems to say they are committed to spend $Y and therefore the country needs to raise $Y. I agree, a very simplistic view; however I can’t help but think the fringe adjustments of recent Governments have done little to deal with the underlining problem. These changes have failed to incentivise business. Big business is happy because our tax system seems to allow them to make a discretionary contribution (their choice) toward our country. A matter at the forefront of our current Federal Government and at least one item where Government has acted. Watch this space, maybe the taxpayer may gain some relief from these actions. We can discuss budget specifics however the whole platform and how we are governed needs to be on the table because you, me and all taxpayers pay these people to manage our country, and I am not sure we are getting value for money. We need a meaningful debate on the costs, income and how Governments deal with each other. Remember we are widely considered to be over governed and therefore, by inference, there is a lot of wasted expenditure/resources. Like business, Governments need to find efficiency gains and reduced costs. Government needs to start to adopt business principals i.e: One team one goal – let all levels of government work together to achieving outcomes because I am sick of hearing as a first response “we can’t do this because of someone/something else”. Bring measurability and accountability for services to one master. Why not have the States wholly responsible for education and Federal Government wholly responsible for health. It’s a start to removing duplicated services. We, as citizens, need to vote for the person who will make decisions for the right reasons. We need to be governed by people who have life experiences/achievers not people who gain their life experience from a text book or within the current government systems. I guess that's it, from the glass half empty guy who really wants to be the glass half full guy.