Commerce Notes

Nature and structure of government in Australia

Democracy: society based around the idea that a governments power is

derived from the will of the people and is exercised by them either directly or
indirectly.
Federal Government: decides on matters that affect the whole nation. E.g.
immigration, defence, foreign affairs, taxation, communication and
quarantine.
To become prime minister, you need to rely on a majority of votes in the
House of Representatives. A ministry is appointed for responsibility over
various functions of government. Senior ministers are members of the
Cabinet.
State Government: responsible for: e.g. health, water/power supplies,
transport, consumer affairs, education and law and order. All state
governments except Queensland consist of the Legislative Assembly and
Legislative Council
Local Government: responsible for small areas e.g. local roads, libraries, child
care, garbage collection, recreational facilities. An individual local government
is called a shire/council.

Political Involvement
Political action and decision making

Some issues will affect all Australians, but there are others that target specific
groups, e.g. age groups ( Younger Australians are affected by housing, interest
rates etc. Older Australians will be affect by superannuation, pensioner
benefits etc.
In a democracy, we have the right to voice opinions and protest if we do not
agree with anything. We engage in political action to influence the decision
making process. We can also influence the process by joining a political party,
taking individual action, becoming an activist in interest groups, or contacting
the media.
Interest groups can include trade unions, community based groups or
professional or trade associations. Interest groups raise public awareness of
an issue.
The media is the main means by which politicians communicate with the
public and provide a public forum in which members may voice their
comments and opinions.
Factors that often influence the decision making process are Governments,
Business, Welfare organisations and the media.

Political parties

Labor Party: formed 1891. Representing the concerns of trade unions.

Liberal Party: formed 1944. Representing big and small businesses.
Nationals: formed 1919. Representing farmers and regional Australians.
Democrats, representing ordinary people in policy development.
Greens, green activists from various environmental groups.
Independents tend to vote on the merits of a proposition.
Parties select candidates to contest elections for public office. This is known
as preselection. These candidates must follow the party line and argue in
favour of their policies.

Participation in democratic process

Right and responsibility of all Australians over 18 to vote in federal, state and
local elections. Federal elections must be held at least once every 3 years.
Two methods of voting, first-past-the-post voting or preferential voting.
First-past-the-post is simply where the most favoured candidate wins. Used
from 1901 to 1918.
In preferential voting, a voter must show their preferences by giving each
candidate a number, in order of preference. For the vote to count, all
candidates must have a number next to their name. If a ballot paper is
incomplete, illegible or is missing a number, it is considered an informal vote,
and not counted.
If candidates are numbered sequentially down the ballot paper, it is a donkey
vote.
To win a seat in preferential voting, a candidate needs an absolute majority of
votes (more than 50%) If no candidate has over 50% of votes, the candidate
with least votes are eliminated, and that candidates votes are redistributed to
all remaining candidates by their second preferences. This procedure is
repeated until a candidate with an absolute majority appears.
Ensures the most widely preferred candidate is elected and minor political
parties can still have an influence.
Optional preferential offers the voter a choice to either select just one
candidate, or allocate preferences. In NSWs optional preferential proportional
representation voting system for the Upper House, a group (consisting of 15
candidates) determines the order of their own candidates. The position of the
group is decided by a draw conducted by the electoral commissioner.
Two ways to vote, above the line and below the line. Above the line is done by
placing a 1 in the in the group voting squares, recording a vote for the first
candidate, while the preferences go to the other candidates in that group.
Below the line voting is where the voter selects their own order of preferences
by placing the numbers 1 to 15 in order of preference.
To be elected, candidates must obtain a quota (4.5% of total formal votes).
Any votes a candidate receives above the quota are known as surplus votes
and may be distributed to remaining candidates in order of preference.

Interest groups

Interest groups are often compared to political parties because both are
organisations that communicate the views and concerns of citizens to
governments.
Interest groups are set apart from political parties as they: do not seek to win
elections. Often campaign continuously on issues, whereas political parties
tend to be most active before elections. Interest groups are more issue
orientated than political parties and depend on supporters, while political
parties depend on mobilising voters.
Two main types of interest groups. Sectional and promotional groups.
Sectional groups aim to promote the interests of specific sections of a
community and include trade unions, professional associations, religious
organisations, motorist groups, pensioner groups, ethnic associations and
business/farming groups.
Promotional groups seek to promote a particular cause, e.g. environmental
and moral issues.

Strategies of interest groups

Deputation to members of parliament a small group meets with a member

of parliament, who then approaches the relevant minister or raises the issue
in parliament.
Direct appeals to ministers
Petitions to parliament
Letter writing
Advertising
Protests and demonstrations
Legal intervention
Direct political intervention

Advantages for interest groups

Disadvantages
to interest groups Allows people to participate in the process
May not be run democratically
Representing minority groups with little influence
May put own interests
before majoritys
Educates public on certain issues
Some groups have
greater influence
Highlight ignored problems
May offer one-sided or
biased information
Keeping check on government actions
Informing government of electorates feelings

Law and Society

The legal framework

Laws exist to regulate our society, designed to protect us and our property
and to ensure that people behaves the way the community expects them to.
Regulations: similar to rules but are more general and less specific.
The law is not specific and applies to all of us all the time.
Hierarchical court system, court is graded into inferior and superior courts,
each dealing with different matters.
Courts are generally the final place to settle legal disputes, and people are
encouraged to use all other legal options first. If this fails, courts are used to
reach a legally binding decision.
The most inferior court in Australia is the local court, presided over by a
magistrate. This court aims to deal with matters quickly and cheaply. Deals
with minor criminal offences (summary offences) and conducts committal
proceedings foe serious matters (indictable offences). The aim of this court is
to determine whether there is enough evidence to make a case. If there is,
the case will be moved to a higher court.
The district court is a more senior court and is presided over by a judge,
dealing with serious and civil law matters. Includes a jury of 12 people.
The supreme court is the highest court in the hierarchy system, hearing the
most serious cases and those that involve difficult points of law. Its decisions
can create common law.
If a legal matter involves an aspect of federal law it will be dealt with by a
federal court. Deals with taxation, immigration, copyright and companies.
The High Court of Australia is the most senior court in Australia, used to
ensure that law-makers do not breach the constitution, but also hears
appeals.
Judges and magistrates are the presiding officers of a court. In a criminal law
matter, a magistrates role is to determine whether the accused person is
guilty of a crime. A sentence is then issued if found guilty. In civil law matters
the magistrate arrives at a verdict and decides on any compensation.
Judges role in court is to instruct the jury on legal matters and if found guilty,
to impose a sentence.
In every case, there are two opposing legal teams. The prosecutors role is to
prove to the court that the accused is guilty and should be punished. The
defence is there to help the accused show that he was innocent, or to reduce
the sentence imposed by the court.
The jury consists of 12 adults randomly chosen from the community. The role
of the jury is to determine whether the accused is guilty. In order to convict a
person, the jury must be satisfied that the evidence presented shows that the

person is guilty beyond reasonable doubt. If a juror has any doubt about the
accused guilt, the juror must find the accused not guilty.
Juries are used in all criminal cases, but have no role in passing sentences. In
some serious civil matters, only 4 or 6 people are used. In cases in NSW, there
must be a unanimous verdict.

Areas of Law

Laws are generally generalised into two groups, public law and private law.
Public law deals with the standards of behaviour that society expects from its
government and people and those who work within the government. Includes
criminal, constitutional and administrative law. Private law (civil law) deals
with the way individuals interact with each other, including laws that regulate
the behaviour of people towards each other, and the behaviour of businesses.
Criminal law is to protect the public from harm. If a person breaks a criminal
law, they are considered to be harming all members of society. The police
investigate the matter and bring the case against the accused.
Crimes against person
o Homicide intentional killing of another
o Manslaughter accidental or justifiable killing of another e.g. in self
defence
o Assault causing or threatening to cause injury to another

Crimes against property o Larceny removing a persons property without their consent
o Break and enter illegally entering someones property without their
consent
o Robbery using violence or threat of violence to take another persons
property

White collar crimes usually committed by professional people and are not
associated with violence or damage to property, such as tax evasion and
computer hacking.
Crimes against the state (country)
o Sedition encouraging a hatred of the state
o Treason If a person or organisation actively tries to bring about the
collapse of a government or assists the enemies of a country

Public order offences crimes that disrupt activities of our society. They can
include swearing in public and being drunk or disorderly.
Traffic offences Most widely committed offences in our society. Involves
crimes such as speeding or driving without a seatbelt. Most of these are dealt
with by on-the-spot fines, but more serious offences, e.g. drink-driving, result
in court proceedings

The constitution
Constitutions are documents that set the rules outlining how a government
should be run. The Australian Constitution does not contain the rights of the
Australian citizens. Most of our rights come from statute and common law.
The Australian Constitution outlining the powers of the Commonwealth and
State governments and details how power is to be divided between the three
governments (local, state, federal).
The powers that were transferred from the states to the Commonwealth
government are referred to as exclusive powers. The most important, external
powers, deal with other nations e.g. customs, foreign relations, defence, rights
to enter into international agreements.
Powers shared between state and Commonwealth government are concurrent
powers
One of the most important aspects of our constitution is that no one person
or group can take control of Australia, and therefore separates the powers
between the three most important groups in the ruling of Australia; the
executive, the legislature and the judiciary.
Administrative law deals with the rules regulating the powers of government
agencies and departments. When the government creates a department, it is
done so through the making of a statute law, outlining the role and powers of
the department.
Civil law governs the legal relations between individuals and organisations.
Civil law matters are launched by individuals or organisations who feel that
they have been wrong by actions of others. No criminal activity is involved.
The person bringing the case is the plaintiff, who must prove that the
defendant has wronged them in some way. There are three main areas of civil
law:
o Contract law A contract is a legally binding agreement between two
parties. The majority of civil law cases involve contracts.
o Property law Property is anything that can be bought and sold. Laws
govern the way goods are to be purchased and the way people or
organisations must behave.
o Tort law Torts are civil wrongs, involving actions of people that cause
discomfort to others. There are 4 main types of tort law.
Negligence a lack of duty of care
Nuisance when a person interferes with others rights
Defamation when ones reputation is damaged by another
Trespass when property is interfered with

Family law is the body of law that regulates marriage and divorce, the
relationship of parents with their children, and other family issues (adoption,
etc) Greatly influenced by moral values of society. Dealt with in the Family
Court of Australia.
Making Laws

English Common Law based on laws coming from two sources, statute and
common law.
Statue law involves parliament passing a Bill (proposed law).
Common law is based on the ruling of judges and is used when there is no
appropriate statute law. When a judge makes a decision in relation to the
matter, all lower courts must follow that decision, known as following
precedent.
Common law is more easily changed than statute law. To ensure important
common laws are not lost, many common laws are changed into statute law.
Morality can be considered as doing good things. There are two types of
morality: private and public. Private morality refers to values we each have
personally. Public morality refers to the values that are held by society as a
whole.
Ethics relate to what is right, which may not always be good. E.g. a lawyer
defending a guilty client
As the influences on our society change, so do our ethical and moral values.
In order to change statute law a new bill must be passed by the relevant
parliament. These bills are known as amendments and must go through the
same process as any other bill. There are commissions who provide advice on
which laws may be out of date and need changing.
A common law can be changed by the decision of a judge in a higher court.
To change constitutions, a referendum must be held. More than 50% of the
country in at least four of the states must agree for the change to take place.
A bill must be passed before the referendum is held.
Using the legal system

We do not have a right to have a lawyer in court, we may choose to represent

ourselves, but we do have a right to a fair trial.

Legal Aid

To ensure people obtain fair treatment from the legal system, the Whitlam
government introduced legal aid. Each state has a Legal Aid Commission,
whose role is to provide legal assistance to people who cannot afford a lawyer.
Anyone can gain 15 minutes of free legal advice.
If further advice is needed, the applicant must pass several qualifying tests
o Means test Assesses whether the person is able to afford to pay for a
lawyer.
o Merit test Assesses the likelihood of the case succeeding.
o Jurisdiction test Whether the case is provided by Legal Aid (criminal,
family and certain aspects of civil law)
Children have an automatic right to Legal Aid
There are four factors that we must consider to determine a persons ability to
access the legal system; cost, time, procedures and language.

Law in Action

Legal capacity is the legal rights and responsibilities that come with the age of
a person.
The age of majority, that is, the age at which the law recognises the person as
an adult.
Legal capacities
o Be convicted of a criminal offence : > 10 years
o Receive a criminal record : > 16 years, except in cases of serious crimes
o Leave home : > 16 years
o Stop attending school : > 14 and six months
o Get a job : > 15 years
o Drive : > 16 years
o Marry: > 16 years
o Drink alcohol: > 18 years
Laws placing certain restrictions on the type of activities young people can do
are called public behaviour laws.
If an accused in under 18 years, the case is heard in the Childrens Court.
To prove that a person is guilty, the prosecution has the responsibility called
the burden of proof. They must prove the accused had:
o mens rea meaning the accused had a guilty mind, committing the
illegal act with intent, recklessness or negligence
o actus reus the prosecution must show that the accused is the person
who committed the crime.
If a person has mens rea, but not actus reus, it is considered a conspiracy.
Penalties:
o Imprisonment: Offender is held in prisoner for a set period of time
o Fines: Offender is require to pay money
o Bonds: Offender must meet certain conditions. Failure do so will result in
punishment
o Home Detention: Offender must remain at home for a period of time. If
they leave the home, they will be sent to prison
o Community service orders: Offender is to work for a community
organisation.
o Periodic Detention: Offender attends prison at regular intervals.
A contract in civil law is a legally binding contract. If you sign a legal contract,
we become party to the contract and are now liable for the contract, that is,
we must do what the contract states.
Before a contract becomes legally binding, a number of steps are taken,
known as the elements of the contract:
o The offer one party offering something to another party.

o The acceptance the accepting of the offer that has been made, some
negotiations would have taken place.
o The consideration a legal principle that states that a contract should
benefit all the parties involved.
A guarantor is someone who guarantees to pay the loan should the borrower
be unable to.
Negligence is the failure to exercise a duty of care to others and their
property. Two key factors are required to sue for negligence.
o That the accusing party was owed a duty of care by the negligent party
o That the negligence has resulted in the accused party suffering an
injury or hardship

Rights and responsibilities

A family is two or more people living in the same household who share a
relationship
o Nuclear family A married man and woman living with their child(ren)
o Single parent family One parent living with their child(ren)
o Extended family Parents and their child(ren) living with other relatives
o Blended family A couple living with their child(ren) from previous
relationships
o Married couple A married man and woman with no children
o De facto couple A man and woman who have lived together for > 6
months but are not married. May (not) have children. Includes
homosexual couples.
Each family member has a right to live free of violence or fear of violence.
Violence within a family is known as domestic violence. There are several
statute laws that prohibit domestic violence and give police considerable
power to deal with it. Police must report domestic violence to a magistrate
who can issue an apprehended violence order (AVO)
Parents have special responsibilities placed on them by law, such as to
exercise care and responsibility over a child and their actions. The law ensures
that a child is educated, receives proper medical care, and lives in an
environment that will not cause harm.
When a parent fails to fulfil these responsibilities the law will step in to protect
the children if they are subject or at risk of being subject to neglect or
emotion/physical/sexual abuse.
The most important rights of family members during divorce are the
distribution of property and the payment of maintenance. The couple may
choose how to distribute the property, and if this is not possible, they can ask
the court to do it for them, who will consider the contribution each partner has
made, the current/future needs of each partner and children.
If the couple have children, the court can be asked to decide which parent the
child(ren) should live with. These are known as parenting orders

Employment
Types of Employment
Casual usually on an hourly basis without access to entitlements but
receive a loading to compensate
Part time work regular hours but fewer per week than full-time employees
and receive entitlement on a pro rata basis
Full time generally work 38 hours a week and have continuing employment
with a range of entitlements
Self-employed and individual who works for himself or herself
Voluntary and unpaid- an individual provides services without an expectation
of compensation
Changing work patterns
Types of working industries
o Primary industry produces raw materials from nature
o Secondary industry turns raw material into finished or semi-finished
products
o Tertiary industry (Broken up into Quaternary and Quinary industry)
provides service to others
o Quaternary industry made up of services involved in transfer and
processing of information and knowledge
o Quinary industry Domestic services many carried out within own
homes
Labour force people aged 15 and over who are employed or unemployed
Very low primary industry and low secondary industry due to more efficient
methods and automation, moved onto tertiary (services) and expected to
grow rapidly
Well educated labour force wants more challenges and choose jobs in a range
of different businesses
More independence, self-decision making
Significant increase in casual employment (40% of labour force)
Some casual workers like the flexibility in balancing work and personal lives
and dont want extra work hours
Some, especially younger casual workers find difficulty in getting full-time
employment
Over past 20 years, increased cutbacks, automation, downsizing, increased
competition from imports and non-unionised domestic companies
Job security cannot be taken for granted and is a significant issue for many
Australian workers
Technological advances causing new jobs created and others redundant
Information revolution has led to massive changes to work
Flexible working conditions

Allow employees to balance work and family obligations more

More opportunities for home-based work
More flexibility during work hours
Many business offer permanent part-time work, job-sharing and flexible
working hours to retain skilled and valued staff who have family
commitments
o Employee and employer different views on flexibility
o Employee may view it as the opportunity to rearrange work hours to
better suit lifestyle or family commitments
o Employer may view as longer shifts or scrapping penalty rates for
weekend work
Benefits of education and training for employees:
o Higher incomes
o Opportunities for promotion and self-improvement
o Adaptability
o A challenge
o Improved job satisfaction
Types of employment contracts
Offer, acceptance and consideration
Offer information about the terms and conditions that apply to the job
Acceptance agreement to the offer is acceptance
Consideration company supply the wage and other conditions, employee
provide the labour
A contract down not have to be written, can be verbal
Generally safer to have a written contract, especially when one of the parties
does not fulfil their side of the contract
Three types of employment contracts:
Awards are:
Legally binding documents containing minimum terms and
conditions of employment
o Awards include:
Wages, including penalty and overtime rates
Hours of work and rest breaks, including flexible work
arrangements
Allowances for uniforms or tools
Leave, including sick, holiday, long service, study, family and
maternity leave
Superannuation
Redundancy entitlements
o Advantages of awards
Set minimum for pay and conditions
Cover all employees performing a similar job
Protect employees from exploitations
o
o
o
o

o Disadvantages of awards
Inflexible may not suit all employees
Prevent recognition of individual initiative as all employees
receive same pay
Enterprise agreements are:
Agreement about pay and conditions made at a
workplace/enterprise level
o Features of an Enterprise agreements include:
May cover rates of pay, penalty rates and overtime, hours of
work, allowances and leave
Must be in writing and approved by all parties
Must be approved by Fair Work Australia (FWA), who must be
satisfied that the agreement:
Passes a better off overall test (BOOT) compared to the
modern award
Does not include any unlawful conditions
Has an expiry date
Outlines how disputes are to be settles
Includes a flexibility clause allowing for variations if required
o Advantages of Enterprise agreements
Consultation with and involvement of employees
Possibility of improved pay and conditions
Access to training
Greater flexibility
o Disadvantages of Enterprise agreements
Possibility of undermining of award standards, with some
employees working longer hours
Possibility of job losses
Greater inequity in wage rates between employees
Common law contracts are:
When an employer and an individual employee negotiate a
contract covering pay and conditions
o Advantages of Common law contracts are:
Right to sue for compensation if the employment conditions are
not met
Flexibility to suit the varied needs of individuals
Individual initiative rewarded
o Disadvantages of Common law contracts are:
Offer less protection than other agreements
Possible exploitation of employees due to unfair bargaining
positions

 Expense of any court case if either party sues for compensation

Rights and responsibilities in the workplace
Employees have the:
o Right to have the employer pay for work-related expenses (e.g. uniform)
o Right to a safe and healthy workplace (workers compensation,
protection from unfair dismissal and protection from harassment)
o Right to be paid the appropriate wage ( pay for extra work,
superannuation guarantee levy, regular pay slips, holiday leave loading)
o Leave entitlements ( sick leave, other leave entitlements, four weeks
annual leave)

Responsibilities of employees include:

o Responsibility not to give away company secrets (duty of confidence)
o Responsibility to exercise care and skill
o Responsibility not to work for a competitor at the same time
o Responsibility to follow reasonable instructions
Legal duties are responsibilities that members of society must accept, which
stem from societys religious, ethical and moral standards.
Areas of common law that set out the legal responsibilities of Australians are:
o Defamation law a responsibility not to make defamatory statements
o Contract law a responsibility to honour the conditions of any contracts
o Tort law a responsibility to ensure our actions are not harmful to others
All accused are given a presumption of innocence, that is, they are innocent
until proven guilty.
Accused people have rights including:
o The right to remain silent
o The right not to be detained unless they have been formally arrested
o The right to have their interviews with police recorded
o The right to not have their past convictions mentioned in court.
A victim has several rights:
o To have the police investigate any allegations
o The right to protection from the accused
o The right to be made aware of the progress of the case
o The right to make a victim impact statement
A victim impact statement is a right for the victim or their family to make a
statement before the judge or court.
Witnesses who present evidence have the right to give evidence free from
fear or revenge.
Legal issues relating to the workplace
o Work Health and Safety (WH&S) Act 2010 came into effect due to too
many deaths or injuries at work
o WH&S states that employers must ensure:
their workplace is safe

machinery is regularly inspected and maintained

protective clothing and adequate training are provided
committees have set up to enforce the WH&S (formerly OH&S)
rules
have a written WH&S policy
o Employees must:
Comply with safety instructions
Report any situation they think may be dangerous
Cooperate in the investigation of accidents in order to prevent
them from happening again
Bullying in the workplace
Suggested 85% of workers suffer or witness bullying in the workplace
More noticeable forms of bullying in the workplace are intimidation,
humiliation, verbal abuse, slamming doors, pushing, touching or fondling and
threatening
Sexual harassment
Anti-Discrimination Act 1998 and the Sex Discrimination Act 1984 make
sexual harassment unlawful
Sexual harassment covers a wide range of unwelcome behaviours of a sexual
nature including comments on a persons physical appearance, questions
about a persons sex life and display of pornographic images
Unfair dismissal
Unfair dismissal is when an employee is sacked or threatened and they
believe the dismissal is harsh, unjust or unreasonable
Protection from unfair dismissal is incorporated into federal legislation, under
Fair Work Act 2009 (Cwlth) an employee who believes they have been unfairly
dismissed can apply to Fair Work Australia for reinstatement and/or
compensation
Redundancy
Redundancy occurs when a job a person is doing is no longer required to be
performed, often due to technological changes
Unless the existing employee can be retrained for another job they will be
made redundant
Voluntary redundancy occurs when the business decides how many
employees should be let go
Employees who nominate themselves for voluntary redundancy are offered a
redundancy care package: a payout of a sum of money, including a payout of
any unused entitlements such as long service leave and termination pay
If too few employees volunteer the business may be forced to decide which
employees to be made redundant involuntary redundancy, the involuntary
redundancy package is less than the redundancy one
Privacy
When employed, chances are someone is monitoring your performance and
behaviour

Many businesses monitor telephone conversations, web hits, key strokes,

completion time and emails
Such monitoring raises a number of ethical issues
It is an invasion of privacy if a business:
o Performs genetic screening to deny employment to people whose future
health problems might disadvantage the business
o Demands drug and alcohol testing of employees
o Listens to phone calls and checks web hits to determine whether they
relate to the job or are being made for private purposes
Outsourcing
Outsourcing is the contracting of some tasks to outside suppliers
Those in favour of outsourcing argue that resources are used more efficiently
and it provides employments opportunities, opponents argue that it results in
reduced job security and lack of employee entitlements
Trade unions
A trade union is an organisation that looks after workers in a particular job or
industry
Members pay a fee to finance the unions operation
By joining together workers are able to approach employers and bargain with
more strength for improved pay and conditions
Unions generally aim to:
o Protect the interests of union members; for example, by undertaking
campaigns and negotiations for increased pay rates
o Improve the working conditions of members; for example, by
monitoring health and safety
o Ensure fair treatment of employees at work; for example, by preventing
unfair dismissals
o Promoting quality life issues; for example, by limiting work hours
Resolving Disputes
Main methods of resolving disputes depending on seriousness are:
o Grievance procedures
o Negotiation
o Mediation
o Conciliation and arbitration
Grievance procedures:
o Are complaints that an employee has formally recognised with a
manager or union representative
o Most businesses have developed a system of grievance procedures: a
number of predetermined steps that are followed to resolve a dispute
Negotiation is a method of resolving disputes where the parties involved
discuss the issues in an attempt to reach a compromise
Mediation occurs when a third party helps those involved in a dispute to reach
a solution acceptable to both sides.
o Both parties will feel that they have achieved something by themselves

o Provides a win-win solution

o If mediation fails then the next alternative is to have the case heard in a
court by Fair Work Australia which has the power to conciliate and
arbitrate
Conciliation and arbitration
o Conciliation is similar to mediation that a third person, in this case Fair
Work Australia helps settle a dispute by offering advice and suggestions
o If no solution is reached and the dispute continuous, arbitration comes
next
o When Fair Work Australia Arbitrates, it makes a decision that is legally
binding
Taxation
Taxes are needed for the Government to fun certain goods and services open
to the community such as schools, hospitals, defence forces and social
welfare payments
The most common method of paying personal income tax is through Pay As
You Go (PAYG) system, generally applies to wage and salary owners.
The federal government also earns revenue from:
o Company taxes paid by businesses out of their profits
o Excise duty, a special tax placed on cigarettes alcohol and petrol
o Customs duty, a tax on imported goods
o Capital gains tax, a tax on profits made on the sale of assets such as
property and shares
o Since 2000, Australia also had a Goods and Services Tax (GST) broad
based tax of 10% on the supply of most goods and services consumed
in Australia
When you start a new job, should complete a Tax File Number (TFN)
declaration form which the ATO will use the information to determine the
amount of tally deducted from pay
Superannuation
Superannuation is a compulsory savings scheme whereby your employer
contributes part of your wage or salary into a special type of investment
account known as a superannuation fund, these funds are then invested to
increase their value before they are paid to you when retiring
Employees can choose to contribute to this fund also
The government encourages employees to make personal contributions by
allowing some contributions to be tax deductable
Advantages of superannuation:
o Forced saving scheme
o Money is automatically deducted and invested
o Value increases over time
o Maintain lifestyle into old age
o Given right to select which investment options are preferred
o Stays active when employer changes

Disadvantages of superannuation:
o Most have to wait until 60 before they can access super funds
o May lose value over time
o Government doesnt guarantee safety of super funds
o Administration and management fees are charged by super funds
o Taxation must be paid on certain lump sum payments
Running a Business
Being an entrepreneur
Advantages of being self-employed
o Independence
o Develop own ideas
o Overcome unemployment
o Employ family members
o Possible tax advantage
Disadvantages of being self-employed
o Hard work
o Income may fluctuate
o Risk of Failure
o Stress and worry
o High levels of responsibility
o Difficulty in selling the business
Personal Characteristics
o Self-motivation
o Self-Discipline
o Logical decision maker
o Good communicator
o Sets goals
o Accepts responsibility
o Takes advice
o Leadership qualities
Selecting business opportunities
o Market Research: collecting and analysing information about customers
and the business opportunities, Who are our customers, what are they
like, why do they buy our product
o Location: Good location can be difference between success and failure,
some businesses need a constant flow of people walking past
o Demographics: Important to understand the changes that are taking
place in the population, characteristics like age, ethnicity, gender,
marital status, family size and income
o Competition: Aim for a sustainable competitive advantage over
competitors to capture larger share of market
o Target Market: Refers to the group of customers which the business
intend to sell its products

Appropriate Structure
Sole Trader: owned and operated by one person, most common type of
business in Australia
o They receive all profits but suffer all losses, unlimited liability which means
they can be forced to sell personal asset to pay off debts, usually has
personal name
Partnership: owned and operated between 2 and 20 people, share profits and
losses equally
o Unlimited liability and usually have partners names in the business
name
Propriety (private) company: Usually between 2 and 50 private owners, known
as shareholders
o Have words Proprietary Limited (PTY LTD), and have limited liability
Public company: can have unlimited number of shareholders, must have
limited after its name (LTD)
o Can sue and can be sued, can own and sell property
Arranging finance
Many small business are financed with a mix of debt and equity
Debt finance is money obtained from loans, equity finance is money received
from the sale of shares or ownership in the business
Debt financing allows the owner to keep all ownership of the business and has
certain tax advantages
Going into business
Two main ways to go into business, setting up a new one which may involve
establishing a franchise and purchasing an existing business
Advantages of stating a new business:
o Owner has freedom to set up how they want the business
o Owners objectives can be matched more closely to the business
o More flexibility to select the location, target market, range of products
and level of customer service
o No goodwill for the owner to pay
o Possible to begin on a smaller scale
Disadvantages of starting a new business:
o No previous reputation, harder to secure finance
o More time is needed to develop customer base
o If start up is slow profits might take a long time to generate
o Potential customers may be difficult to attract
Advantages of purchasing an established business:
o Sales to existing customers generate instant income
o Good business history increases likelihood of business success
o Stock is already acquired
o Equipment is ready to use
o Existing employees can provide help

Disadvantages of establishing a business:

o Existing image may be hard to change
o Success may be due to previous owners personality
o Difficult to value goodwill
o Some employees might not like any change
Advantages of buying a franchise
o Products, equipment, premises design and marketing are already
established
o Often provides training
o Less need for the franchisee to have previous experience
o Investment risk may be lower
o Immediate benefit from goodwill
Disadvantages of buying a franchise
o Franchisor controls operation
o Profits must be shared
o Charges a service fee for advice
o Contracts may be biased in franchisors favour
o Franchisee may feel like an employee
Meeting regulations and selling products
Federal Government obligations:
o Payment of Pay As You Go (PAYG) income tax and fringe benefit tax
o Deduction of income tax from employees who earn above the minimum
taxable wage level
o Possible collection of Goods and Services tax (GST) on behalf of the
Australian Taxation Office
o Provisions for employee superannuation
o Abiding by unfair dismissal laws when dismissing employees
o Not engaging in anti-competitive practices
State Government obligations:
o Registration of the business name unless the business carries the name
of the owner
o Provision of employee entitlements such as: workers compensation.
Occupational health and safety and award rates of pay and conditions
o Not engaging in misleading or deceptive advertising
o Abiding by any pollution controls
o Observing regulations relating to the sale of food, cigarettes and alcohol
o Adequate and non-deceptive labelling of all foodstuffs and clothing
Local Government have control over:
o Determining land zoning and approving new development applications
o Fire regulations, especially fire prevention facilities
o Parking regulations governing the number of spaces that need to be
provided
o Health regulations, especially the safe handling of food

o The size, shape and location of business signs

Selling products
Promote business through:
o Networking, telling people about the business
o Creating a website
o Social media
o Testimonials, existing customers tell others about positive experiences
o Publicity, articles related to the business
Maintaining records
Income statement how much profit a business is generating at a particular
time
o Step 1: Record the revenue, income earned by the business
o Step 2: Record the expenses, costs incurred when running the business
o Step 3: Calculate the profit or loss, gross profit or loss is the amount
remaining when cost of goods is deducted from revenue. Net profit/loss
is the amount remaining when operating expenses are deducted from
gross profit
Balance Sheet Shows the financial position of a business at a particular
time, records three different sets of accounts, value of assets, value of
liabilities and proprietorship or owners equity
o Value of assets, assets are items of value owned by a business
o Value of liabilities, liabilities are the debts owed by a business to others
o Owners equity, represents the value of the business to the owners and
sometimes called capital
Cash flow statement indicates the movement of cash receipts and cash
payments over a period of time
o By regularly comparing the totals of receipts and payments, business is
able to calculate surplus or deficit of cash
o Important indicator of a businesss liquidity, the ability to pay its debts
on time
Risk management
Risk management is the process of:
o Evaluating the risks faced
o Calculating the possible costs
o Implementing procedures to minimise such risks
Planning for the future
o Thorough planning is required to minimise damage of unexpected
events, some risks and strategies are:
o Rising bad debts: Enforce a strict credit policy if customers are
consistently paying late
o Lawsuits: Comply with statutory regulations and take precautions not to
harm others
o Falling sales: conduct market research to find out why sales are falling,
reduce costs

o Machinery breakdowns: Set aside money to cover costs of repairs and

service equipment regularly
o Physical damage: Take out appropriate insurance policy such as fire,
storm, flood or earthquake
o Copyright infringement: Obtain protection of your new product or idea
(patent)
o Supplier problems: use a number of suppliers, do not rely on one
o Ill health: Death or disability insurance
o Tax obligations: Keep up to date with changes to taxation and keep
detailed records
o Expanding too quickly: Slow growth rate to more sustainable level
o Writing cheques in excess of funds: Examine cash position and talk to
suppliers
o Theft: Put in place stock loss and crime prevention measures and
improve security
o Computer security: Install anti-virus software, operate from a secure site
and back up all files

Key issues relating to running a business

o Keeping a business successfully requires time, effort, dedication and
management
o Management of production involves four tasks:
Purchasing obtaining raw materials and equipment to produce
goods or services
Stock control to have right amount of stock on hand
Scheduling ensuring that correct materials are delivered at the
right time to the right place
Quality control ensuring that goods and services are produced
to meet set standards
Operating a business
o Management of administration
Includes payroll salaries and benefits
Financial statements revenue statement, balance sheet and
cash flow
Order processing and invoicing
Customer database names and addresses of customers
o Management of marketing
Product quality, design, name and packaging
Price setting the correct price for the product
Promotion methods used to inform, persuade and remind
customers about the products
Place (distribution) how to get the product from the business to
the customer
o Management of finance

Prepare cash flow statement, construct revenue statement and

prepare balance sheet to determine the businesss financial
performance