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We welcome you to our November e-Bulletin
In this issue ...
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Australia has recently signed a number of free trade agreements (FTAs) and has another in the pipeline with India. The landmark deal with China and the largest free trade agreement, the Trans-Pacific Partnership (TPP) between 12 Asia-Pacific nations, including the United States will have a significant impact on all Australians.
As tariff barriers fall like dominoes, we can all profit from a greater understanding of the potential benefits, and pitfalls, for local businesses, consumers and investors.
The potential upsides
An FTA is an international treaty which removes barriers to trade. They can link two economies or cover entire regions with multiple participants.
Under the Australia-China FTA, for example, 95 per cent of Australian goods exported will be tariff free when the agreement is fully implemented. In Japan, high tariffs on Australian beef exports have been cut. Many of our agricultural exports can now enter Japan duty free, including prawns, lobsters, asparagus, cherries, grapes, macadamia nuts and almonds.
And it’s not just all about food and minerals. In a world where service industries are increasingly central, free trade agreements often cover areas such as government procurement, intellectual property rights and competition policy.
The potential downsides
Australian governments have been enthusiastic about FTAs, having agreed to nine since 1990. But a recent Productivity Commission report was less enthusiastic, arguing that preferential trade agreements add to the complexity and cost of international trade for businesses, grant legal rights to foreign investors not available to Australians and expose Governments to potentially large legal costs in disputes with foreign corporations and other investors.i
Other potential pitfalls are the ability of powerful countries to tilt the economic playing field in their favour and the risk that large trading blocs will create global economic instability.
Organisations such as consumer advocacy group Choice worry that the TPP may benefit foreign businesses at the expense of Australian consumers. In particular, there’s concern the agreement may allow the Australian government to be sued by companies for making laws in the public interest.ii
There are also fears the TPP may lock in laws that result in Australians paying higher prices than people elsewhere in the world for a wide range of goods from cars to computers and cosmetics.
Unprecedented opportunity
While the TPP will be significant, all FTAs that have been signed, sealed and delivered will be affecting Australian business people and consumers in the immediate future.
The government argues the completed FTAs will help to increase Australia’s productivity and contribute to higher economic growth. They will achieve this by allowing businesses access to cheaper inputs, introducing new technologies, and fostering competition and innovation.
For consumers, increased competition should translate into a wider range of products and services at cheaper prices.
So what should I be investing in?
The new FTA with China will benefit Australian agribusiness, particularly dairy and meat producers. Australian service businesses, such as educational institutions, are also expected to do well out of increased access to Chinese markets.
Conversely, lower tariffs on Chinese imports – of which 94 per cent are manufactured goodsiii – will benefit Australian consumers in the form of lower prices for products such as clothes, but they won’t do our manufacturing sector any favours.
The FTA with Japan provides access to their markets for a range of Australian service suppliers, including financial, legal, education and telecommunications services. It also benefits consumers, with cheaper import prices on goods such as cars, white goods and electronics.
Australia’s tighter embrace of the global economy will have winners and losers, with the biggest winners likely to be local businesses in a position to boost exports and crack new international markets.
If you would like to discuss how Australia’s FTAs could impact on your investment portfolio, please give us a call.
i http://www.macrobusiness.com.au/2015/06/productivity-commission-slams-tpp-trade-deal/
ii http://www.abc.net.au/news/2015-03-18/tpp-could-force-government-to-spend-millions-subsiding-medicines/6328132
iii http://dfat.gov.au/trade/agreements/Pages/benefits-of-ftas.aspx
Colin Wright, Principal and Rural Advisory Division Team Leader
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Most of us are good at talking but when it comes to listening, our skills can usually do with a bit more polish.
Whether we are at work, at home, or out with friends, we tend to be more interested in what we are saying or want to say next, than in hearing what others have to say to us.
Being an effective listener can make you a better boss, employee, parent, partner and friend, but it isn’t as easy as it sounds. It is something we all have to work hard at, a skill that has to be learnt and improved.
Learning good habits
Two distinguished educationalists suggested this list of behaviours to make us better listeners:
- Concentrate harder on what others are saying. Your brain works much faster than the other person’s mouth, so pay attention and don’t be distracted by your own stray thoughts.
- Let your body language show you are listening. Non-verbal messages can be three times as powerful as verbal messages, so maintain eye contact with the speaker, nod your head to show understanding, and don’t look around or fidget.
- Don’t become defensive. You don’t have to agree with everything that the other person is saying, but you should try and listen to them. Interrupting with counter arguments before someone finishes stating their case is a sure sign you have stopped listening.
- Learn to paraphrase. Paraphrasing, and reflecting the speaker’s message back in your own words, gives the speaker proof you listened to and understood what they said. (‘So what you are telling me is ...’)
- Listen to feelings, not just to words. The speaker’s body language — the way he or she is standing, their tone of voice, volume and inflection — are all part of the message they are sending.
- Ask questions. Use questions to clarify points, obtain additional information or move the conversation along, but never use them to disguise a counter argument.
Losing bad habits
While these six tips can improve your listening skills, you might also need to consider some strategies to avoid two of the biggest barriers to active listening — knowing the answer and trying to be helpful.ii
When you know the answer, you know what the speaker wants to say even before they finish saying it! Typically you come across as an impatient listener, cutting others off or trying to complete their sentences.
By interrupting the speaker before they have finished, you’re essentially showing that you don’t value what they are saying. If you have a tendency to interrupt because you already ‘know the answer’, a simple strategy is to wait for a few seconds after the speaker finishes and then begin your response.
The second barrier comes from trying to be helpful, often by sharing your wisdom and experience. At first glance it may seem beneficial, but it interferes with listening because you are thinking about how to solve what you perceive to be the speaker’s problem, and it is likely you will interrupt the speaker before they can fully explain themselves.
A good rule is to avoid telling the speaker how you handled a similar situation unless they specifically ask for your advice. Alternatively, let the speaker finish talking and politely ask if you may offer what you see as a possible solution. Remember, they may not want your advice but just an opportunity to be heard.
There they are — six tips and two strategies that will make you a better listener. Most of them are simple techniques, though be prepared to review and change any negative, ingrained habits. The good news is that you should see an almost immediate improvement in your listening skills, and find out lots of things you may have been missing out on!
i Prof. Tom Lewis & Prof. Gerald Graham, writing in Internal Auditor, 08.08
ii Eight barriers to effective listening by Michael Webb,http://sklatch.net/
Glenn Ingram, Principal and Chartered Accountant
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5 tips for a successful Christmas Party
A word from David Bates, our specialist employee relations partner.
Amazing as it may seem, it’s now time to once again begin planning your end-of-year company party. But beware, things can go very wrong, very quickly! The team here at Workforce Guardian is kept very busy every January dealing with the fall-out from Christmas party disasters – we see everything from minor mishaps to serious complains of bullying and sexual harassment.
This month we’d like to provide you with some simple hints and tips on how to make sure your Christmas party goes off without a hitch.
Tip 1: Make Sure Someone Responsible is Made Responsible
The most effective thing you can do to avoid Christmas-party disasters is actually very simple: make someone accountable for what happens. Assign responsibility for the event to a responsible, senior member of your team who is happy either not to drink or to keep their drinking to a minimum. It’s up to this person to oversee the event and keep things on track.
Keep in mind though that under Australia’s new Workplace Health and Safety laws, most senior employees are considered ‘Officers’ who have a Duty of Due Diligence that cannot be delegated to another employee. This ultimately means that everyone shares some degree of responsibility for what happens at your company party.
Tip 2: Clearly Set Out Your Expectations
Your company Christmas Party is exactly that: a company event. This means all of your usual employer-related legal obligations such as your duty of care towards your employees - as well all your usual workplace policies and procedures - will apply for the duration of the event, regardless of where it takes place.
It’s therefore essential that you take pro-active steps to ensure everyone knows how they’re expected to behave, and what will happen if their conduct doesn’t measure up. This reminder of expectations should be in writing and distributed to all employees well in advance of the event. It’s also a good idea to make an announcement at the beginning of the party gently reminding attendees of the company’s expectations.
It’s worth noting that a recent decision handed down by the employment tribunal has established you’ll be held responsible for alcohol-related incidents if you supply unlimited alcohol to your employees. We recommend you accordingly limit the number of drinks served to employees over the course of the event.
Tip 3: Choose Your Venue Carefully
Having your Christmas party at a co-worker’s house or a family-friendly restaurant is a much safer option than having it at an adult-themed venue! You may think this goes without saying, but you’d be surprised just how many employers don’t carefully consider the impact venues will have on setting the tone of their event.
Make sure you select a venue that is safe, work-appropriate and easy to access for all your employees. If you decide to use a relatively public space – such as a bar or even a BBQ area at a park – make sure you reserve a dedicated area that will remain within your control throughout the event. This will stop unwanted people joining in and will help ensure your people don’t wander off!
Tip 4: Set a Clear Start and Finish Time
Make sure everyone knows when your party officially starts and ends. In other words, make the distinction between the end of your company-sanctioned Christmas party and the start of unrelated shenanigans as clear as possible. You want to make it clear to everyone that, at a certain point, the event is no longer regarded as being run by your company.
One of the clearest signals you can give to your staff that the event is over is to physically close down the venue at the scheduled end time. Booking a private function room and making sure everyone leaves that space at the designated end-time can be very effective in making everyone aware that the work party is over.
Tip 5: Communicate Options Early and Clearly
Be sure to let your staff know your Christmas party plans as soon as possible. In a small business this can easily be done informally during a staff meeting, or even on a one-to-one basis with each of your employees.
Letting your team members know about the event early ensures they have more than enough time to investigate transport options, check dietary requirements/options and raise any questions or concerns they may have with you well in advance.
By following all of the above hints and tips we believe you can quickly, easily and effectively minimise the risk of your company Christmas party turning into a not-so-merry mess.
Thanks and have a great month,
David.
David Bates, Managing Director, Workforce Guardian
To find out more about Workforce Guardian, jump onto their website - Workforce Guardian offers subscriptions to access expert advice and resources: http://www.workforceguardian.com.au/services?partner=PHILLIPSONS
Disclaimer: This article is intended to provide commentary and general information only. It should not be relied upon as legal advice. Formal legal advice may be necessary in a particular transaction or on matters of interest arising from this article. Workforce Guardian Pty Ltd is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission contained within this article.
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Disruptive Visionary - Elon Musk
“When something is important enough, you do it even if the odds are not in your favour” - Elon Musk
The public first met Elon Reeve Musk in 1984 as a twelve-year-old. The South African publication PC and Office Technology published the source code to a video game Musk had designed. Called “Blastar”, the science-fiction-inspired game required 167 lines of instructions to run. This was back in the day when early computer users were required to type out commands to make their machines do much of anything. Its coverage netted the twelve-year old Musk five hundred dollars.
Born in 1971 to a South African father and a Canadian mother, Elon Musk grew up in Pretoria, a large city in the north-eastern part of South Africa, less than an hour’s drive from Johannesburg. Elon’s dad, Errol, worked as a mechanical and electrical engineer, and Maye, his mother, was a model and finalist for Miss South Africa.
At age 17, in 1989, he moved to Canada to attend Queen’s University, but he left in 1992 to study business and physics at the University of Pennsylvania. He graduated with an undergraduate degree in economics and stayed for a second bachelor’s degree in physics. After leaving Penn, Elon Musk headed to Stanford University in California to pursue a Ph.D in energy physics.
However, his move was timed perfectly with the Internet boom, and he dropped out of Stanford after just two days to become a part of it. He founded Zip2, a company that provided maps and business directories to online newspapers. That first venture ended up a big, quick hit. Compaq bought Zip2 in 1999 for $307 million. Musk made $22 million from the deal and poured almost all of it into his next venture, X.com, a start-up that would morph into PayPal. Musk was the largest shareholder with a 12%-holding when eBay acquired PayPal for $1.5 billion in 2002. (Elon Musk was against selling PayPal at that stage but was overruled by the other shareholders; time proved him right as Paypal’s current value is about $50 billion).
Out of the PayPal sale proceeds, Musk started SpaceX with $100 million, Tesla with $70 million and invested $10 million into SolarCity. These companies of Elon Musk would make things from scratch and try and rethink much that the aero-space, automotive, and solar industries had accepted as convention.
Click here to read more about Elon Musk's ventures SpaceX, Tesla, SolarCity and Hyperloop.
Fred Strauss CA CFA Director, Waterways Capital Pty Ltd
If you would like to get more of Fred's insights, contact our financial advisors on 03 5144 5207 or FP@phillipsons.com.au
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