What do Australian CAs need to look out for in 2017?
A new year always arrives with fresh challenges and opportunities. Thanks to several recent international events, 2017 looks as if it is going to be a thrill ride.
We spoke with ICAS community leaders from Australia to find out what surprises might be lurking in the local business world in the coming 12 months.
It’s early days in terms of the potential effects of the UK’s upcoming split from the EU and Australian businesses will undoubtedly feel its effects.
“In today’s business environment things are always changing, and Brexit is just another driver of change,” ICAS Melbourne community leader Ken Weldin CA, Partner at PKF Melbourne, says. “It’s important not to over-react, but it is equally important to be prepared, to measure the range of potential outcomes in a considered manner based on fact, not emotion, and to be ready to jump in if you see any opportunities presenting themselves.”
Consider, for example, anecdotal evidence that some British university professors have recently been courted by Australian universities since the Brexit decision was handed down. People who previously had not wished to move from their current employment may now be of a different opinion. Change creates new opportunity throughout the business world.
Even if you don’t believe events in Europe will have any material effect on your own business, someone in your environment (supplier, customer, competitor either directly or indirectly) will likely be impacted by it, Ken says.
“A lot could change, whether it’s a supplier’s business practices, changes to fuel or power prices, or the availability of skilled labour,” Ken says. “But once again, this is the way the business world works, Brexit or not. Those who are prepared for change should be fine.”
2. Trump Presidency
Expect significant and swift change once President-elect Trump steps into the role, says ICAS Sydney community leader and KPMG Partner, Jonathan Dunlop CA.
“I suspect we will see a period of volatility in capital markets around the world and in Australia until there is a little more clarity on that particular issue,” Jonathan says.
“We have begun to see markets winding back the initial rally that happened the day after he was voted in. In Australia, there have been a number of IPO transactions withdrawn from the market as a consequence because the vendors and promoters are uncertain about what's going to happen in the near term.”
For the first time in a long time the Republicans are controlling both houses in the US parliament, Jonathan says, and this should make a major difference to the speed at which Trump can execute plans.
3. Tax reform (or lack of…)
In Australia, it appears there will be little tax reform over the next 12 months, Jonathan says. “That's important and it's a pity,” he says.
“We are more and more out of step with global markets and we’re becoming uncompetitive. It is also playing against our ability to really create a good environment in which investment can occur and productivity can improve.”
4. Difficult SME business funding environment
Many SMEs continue to experience difficulty finding finance on reasonable terms, Ken says.
“Many SMEs would feel that they weren’t the ones that caused the GFC and brought the system down,” Ken says. “But through no fault of their own they now feel they are paying the price for that disruption.”
In order to remain competitive, SME owners are now having to work harder when searching for sources of financing that offer greater leeway and options than the Big Four are currently proposing.
5. Ineffective politics
There were high expectations when Malcom Turnbull took power, but things appear to have somewhat ‘fizzled’ out since then, Ken says. This means the stakes are even higher for the coalition’s second term.
Whilst not advocating the bluntness of certain Trump positions, there are big decisions to be made around such issues as infrastructure, trade partnerships and productivity as well as the perennials of education, health care, defence and tax reform, Ken believes. Will we see real progress in these areas and a knock-on impact on business sentiment and the economy?
Jonathan agrees. “If there is going to be a resurgence, or otherwise, in any part of our economy, it’s highly unlikely that it’s going to be caused by decisions made by politicians in Australia,” he says. “It will be much more likely to be caused by decisions made in other parts of the world. I think that's a sorry state for us to be in.”
“Most people in Australia are perplexed by the state of politics. We seem to be in an environment where a party can’t make anything happen because it cannot get control of the senate. The result seems to most of us to be that politicians operate in a culture of managing their own risk rather than making decisions and changes for the betterment of the country.”
6. Potential corporate capital investment
If we are moving into a rising interest rate environment globally, Jonathan says, pressure should begin to come off Australian corporates to deliver yield. This could have beneficial effects.
“It would be very good to see Australian boards being more bold around capital investment and starting to make decisions around growing their businesses either organically or inorganically,” Jonathan says.
7. The Australian cricket team will continue to lose
The team’s demise has been rapid and deep, Ken says, and it looks like it could be a long summer leading into 2017.
About the author
Chris Sheedy is one of Australia’s busiest and most successful freelance writers. He has been published regularly in the Sydney Morning Herald, Virgin Australia Voyeur, The Australian Magazine, GQ, In The Black, Cadillac, Management Today, Men’s Fitness and countless other big-brand publications. He is frequently commissioned to carry out copywriting and corporate writing projects for organisations, including banks, universities, television networks, restaurant chains and major charities, through his business The Hard Word.