AIEA - Business Acumen
'Interim Managers, Australia's untapped resource'
Mal Walker, the Chairman of AIEA, is interviewed by Mile Sullivan, the Editor of Business Acumen Magazine
Busting myths about baby boomer burdens
Date: January 4, 2015 Kaye Fallick
My mum Betty is frail. She needs to use a walking frame to get from her bed to her bathroom, a few short metres away. She is 87 and now resides in an aged care facility in Croydon where she depends on the physical and practical support of myriad health care and nursing personnel. But she is not a net drain on the federal budget or the economy. At 87 she remains a strong contributor, one among many such older Australians.
It's high time we reframed our perceptions and prejudices about our older citizens and recognised how very much they have given – and continue to give – to our society. Here are just three myth busters worth considering when you next hear a federal government minister tell you the "age of entitlement" is over and older Australians need to pay up.
Spending per capita on the aged
Australia is one of the meanest nations when it comes to older people. The HelpAge International Global AgeWatch Index ranks OECD statistics on spending on pensions as a percentage of GDP. Our report card in the 2014 index was mixed, except on income security where we performed particularly poorly.
The index reported that "Australia has the lowest ranking (61) in its region for the income security domain, and the highest old age poverty rate in the region (35.5 per cent). It also has below average pension income coverage (83per cent) and relative welfare rates (65per cent) compared to other countries in this region." In fact, Australia spends an average of 3.5 per cent of its GDP on age-related spending against an OECD average of 7.8 per cent, as reported by think tank Per Capita.
Challenging the dependency ratio
Dr Katharine Betts, from the Swinburne University of Technology, has analysed the population spike related to baby boomers and the related fluctuating dependency ratio in her paper "The ageing of the Australian population: triumph or disaster". She concludes that fears that a reduction in the proportion of tax-paying workers will be unable to support a growing proportion of age pensioners are unfounded: even with no further growth in labour force participation rates, the dependency ratio is expected to decline from a current 53.6 per cent to about 44-46 per cent by 2061 – still higher than the mid-1960s of 42 per cent. "By today's standards, the economy [then] was prosperous. Few jobs in developed countries now require muscle power and more people are completing the higher levels of education needed for white-collar and knowledge-based work," she says.
"Moreover, the health and cognitive abilities of older people are better today than they were among older people in the past. All of these changes mean that a shortage of tax-paying workers does not have to cloud our future."
The ruler we use
The way we measure GDP and the value added by older Australians is flawed. We see the "take" in the form of welfare, but rarely the give in the form of unpaid work, volunteering, child-minding and intergenerational transfers of wealth.
Dr Kathleen Brasher, from Council on the Ageing Victoria, tried to put some numbers on these flows of capital at a national COTA forum on ageing last July. She values the volunteering efforts of older Australians at $74 billion per annum, and the intergenerational transfer of wealth at $53 billion.
Furthermore, in 2011 49 per cent of children aged 12 or below who were receiving childcare (including after school care) were looked after by grandparents (Australian Bureau of Statistics).
This leads us to a basic flaw in the May budget. It refuses to acknowledge the inputs of senior Australians, while berating them for becoming "leaners" rather than "lifters". The government has continued to reel from the shock that its socially inequitable budget was roundly rejected by ordinary Australians. So the heaviest of guns – Scott Morrison – is being positioned to tame this recalcitrant populace and force through changes to welfare that will see young people on Newstart go without basic support for up to six months, a re-indexation of the age pension, which will result in $80 less per week within 10 years, according to the Australian Council of Social Services, and an increase in the official retirement age from 67 to 70, whether there is work available or not.
The only hitch to Morrison's agenda, of course, is an increasingly unpredictable Senate crossbench.
So, back to Betty, and why I refuse to call her a drain on the public purse. Just like your mum, dad or elderly aunt, Betty first went to work in 1941. She was 14 and her dad William, a chronic asthmatic whose heart gave out, had just dropped dead in front of her. He had served as an airman in World War I, but there was no disability pension for William, and he was left to eke out a subsistence on a tiny plot in north Croydon, trying to support his wife and young daughter as his health failed.
The death of her dad meant that Mum was forced to find work as a typist in the city, involving a lengthy daily commute by horse then train. She worked at various jobs, barring a short break to have two children, until she was 60. By then, due to consistent saving and a very frugal lifestyle, she and Dad were largely self-funded in retirement.
Along the way they contributed to the university education of four grandchildren, untold hours of child-minding and similarly extensive community volunteering until their late 70s. Today it is her own savings upon which she has drawn to fund the bond and daily care fees in her new home.
So don't let the government's rhetoric cloud your judgment or stoke an intergenerational war that is both false and unnecessary.
Betty is just one of hundreds of thousands of older Australians who continue to pay their own way and contribute far more than they have ever received in social service payments. For 40 or 50 years they paid taxes, which built the kindergartens, schools, universities, roads and airports that subsequent generations have enjoyed. Upon retirement they gave back with countless hours of volunteer work, within the family and community, and intergenerational transfers of wealth which our GDP simply doesn't measure.
It is high time we took stock and recognised their contribution. And spoke up to protect the meagre pension entitlements they so richly deserve.
Kaye Fallick is the publisher of www.yourlifechoices.com.au.
As part of its service to the members, AIEA is launching a FREE Jobs Board to introduce AIEA members to companies in need of their expertise.
The AIEA members are not just ordinary business people, they are seasoned executives who are prepared to deploy on an interim basis, be it a contract, a consultancy, FIFO or a high-level, part-time role. This includes Board positions. Whilst all are structured for interim work, 58% of the members have stated that they are prepared to accept a permanent role that appeals to them.
The vacancy advertising service is free to use: AIEA does not charge the advertiser a fee and there are no contracts to sign.
Recruiters, HR Managers and SME owners are invited to submit their vacancies to the AIEA Jobs Board for circulation to the members.
For more information contact Mal Walker at email@example.com
2014 was a year with lots of talk and not much action. As Joe Aston from Financial Review mentions in his yearly wrap up, it only gets more difficult to sum up the defining qualities of a calendar year, the longer you try to do it, as they start to resemble each other. However, in the ‘action’ category, this year like many others has involved movement at the top of many iconic Australian businesses, there was the slow movement of Channel 10 to market, and the current federal governments messy sell job of the budget was also in the headlines for a majority of the year.
Quarter 4 was the beginning of the oil and iron ore price fall affecting a number of Australian and international energy businesses. It wasn't all doom and gloom for the Australian economy though with Australian investment bankers having their best year in quite a while.
Joe Aston from the Financial Review has put together his annual year in review article and as always his overview of the year that was is educational as well as entertaining. His full article can be found below and is definitely worth a read.
AFR - Joe Aston - Rear Window - Poking through the embers
During your working life, you focus on saving and building wealth. But too many people forget that it's just as important to plan for the transfer of your wealth once you've gone. Current statistics show that 60% of Australians do not have a valid Last Will and Testament in place, and have not planned for unforeseen events that could affect their ability to manage their affairs.
What is estate planning?
Estate planning is about peace of mind. Estate planning is all about putting the right structures in place to make sure your assets are distributed the way you want and in an effective way. Estate planning also includes documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.
Why is an estate plan important?
An estate plan involves much more than just having a Will in place. Although it’s important to have a valid Will, an estate plan covers many other aspects relating to the transfer of your wealth after you pass away. Family trusts, powers of attorney and the tax implications for beneficiaries can all be managed with an estate plan.
Also, with blended families becoming more common in recent times, estate planning has become more important for those with complex family structures.
What are the benefits of having an estate plan?
By having an estate plan in place, you will help your beneficiaries avoid difficulties and disagreements because you can:
Developing an estate plan
There are a number of things to consider when planning for the distribution of your estate once you’ve passed.
The first step is to make sure you have a valid Will. But a Will is just the beginning. An estate plan allows you to put plans in place for once you’ve gone, but also for while you’re aging.
Ask yourself the following questions:
Who’s in charge? Who can manage your affairs for you if you become injured or sick and no longer able to manage your finances or make decisions about your medical and lifestyle conditions?
Who gets what? Who will inherit which assets and in what proportions after you pass away?
How much debt? In the event of your death, do you have enough to provide for your family and pay off debts?
A good estate plan should minimise the tax paid by your heirs, and help avoid any family squabbles. Documents included should cover:
Steve Garden is a Law Clerk for Australian Probate Lawyers and can be contacted as follows:
Phone: 0438 328 619
A trap many entrepreneurs and small to medium family businesses fall into is the lack of outside or objective advice and trying to do everything themselves. Nobody is an expert on everything and everyone will benefit from sharing ideas, thoughts and processes that may help the business. This is why an advisory board can be so beneficial to the success of these small businesses. They will be able to assist and guide the business owner through any business issues that arise as well as provide support in identifying new business opportunities and threats.
Identifying potential advisory board members can be challenging for business owners who don't have a wide network of peers available to them. There are however a number of organisations out there that will be able to assist you find the right person for these positions. AIEA is one such organisation and those interested in additional information on how we can assist you in your search for advisory board members should contact Mal Walker at firstname.lastname@example.org
BRW have posted an article outlining the benefits of an advisory board for entrepreneurs and small businesses as well as the areas of the business they may be able to provide insight into. The full article can be found below.
BRW - Why every entrepreneur needs an advisory board: leadership expert Steven Bowman
Years of work across multiple Australian governments has gone into the recently signed Australia-China Free Trade Agreement. After a slow start, the final agreement came down to the wire, and was signed by the Chinese government at 5 minutes to midnight before the deadline. Many Australians don't know what it will mean to them, who will ultimately benefit from this agreement or which industries will be better off.
The Age has done the leg work and highlighted which industries will benefit the most from this new agreement. The full article can be found below.
The Age - Who wins in Australia-China free trade agreement?
There have always been brands that are highly recognisable (whether you love them or hate them). For the last few decades, Microsoft and its products are unquestionably in that category. Most of the planet will have used a Microsoft product like Office or Windows at some time in their lives. Windows was a pioneer in the operating system space and was created 30 years ago by Bill Gates, a university drop out like so many entrepreneurs to follow.
30 years later, Windows is still the most widely used operating system throughout the world. There have been a number of iterations over the years starting with Windows 1.0 and culminating with Windows 10 to be released in 2015. Their naming structure hasn't always made the most sense however there must be a reason as to why Windows has dominated the market for so long.
Slate.com has posted an interesting article outlining the evolution of Windows over the last 30 years. It is quite a trip down memory lane – how many did you use?
Slate.com - Microsoft Windows has changed a lot in 30 years
The recent G20 summit in Brisbane seemed to go off without a hitch. However, politics aside, do you think Brisbane or Queensland received a benefit for hosting the event? Millions of dollars were spent getting the city ready for the G20 this month, including everything from beautification projects to security. Graham Quirk claims the long term benefit will total $100 million.
ABC news has asked various international media outlets what their coverage focused on. The results were mixed, with some countries focusing purely on their delegates’ meetings and the politics of the event as a whole whereas others took a more holistic approach to the event and the city.
It remains to be seen if there is a longer term benefit, however if you are interested in additional information on how some of the delegate countries reported on the event, the ABC article can be found below.
ABC News - G20: International journalists put business before Brisbane when it comes to summit coverage
There are many questions you must ask yourself before accepting and starting an interim assignment. What are your objectives during your time in the role? Are you there to hold the fort or to instigate change? Does this role have the potential of going permanent and are you even open to this? If you are, will you even be considered for this position?
In many cases interim managers are brought in to instigate change and these changes lead to business restructuring and redundancies. If this is the case it is beneficial to identify that your position of change manager will have a certain shelf life and you will have to plan accordingly.
George Bradt has written an interesting article for Forbes on some of the key things to understand when beginning and interim assignment, whether you are already within the organisation and looking after the position or if you have been brought in externally and are new to the position.
The full article can be found here:
George Bradt – Forbes - The secret to success in an interim leadership role
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