What Happened

The Surprise Party: How the Coalition Went from Chaos to Comeback
By Aaron Patrick
Black Inc, $30, 256 pages, ISBN 9781760642174

There’s always the unexpected, isn’t there? The chattering classes, the media commentariat, the denizens of the Canberra bubble: all of them thought that the 2019 election was over before it started. The Coalition would be swept from office, the Labor Party would be returned to its place as the natural party of government, all would be right with the world. Didn’t work out that way. Sorry.

The Surprise PartyIt’s a strange story, the tale of the election campaign, and Patrick is a good person to tell it. His previous books, Downfall: How the Labor Party Ripped Itself Apart and Credlin & Co: How the Abbott Government Destroyed Itself, established him as a fair-minded writer and a careful researcher. As a senior writer for the Financial Review he had a ringside seat for the twists and turns of the campaign as well as access to key people, and he is experienced enough to not take too much at face value.

A central element in the view that the Coalition was doomed were the opinion polls, which had shown Labor ahead for years. It seemed that the public, after the government churning through leadership dramas and policy failures, were waiting with baseball bats. The Labor policymakers agreed, signing off on a suite of big, complex policies. It was mainly the old-time religion, with more taxes and more money for anyone who put their hand out, but a new wrinkle was a belief that the public was hungry for radical solutions on the climate change issue.

The one area of weakness for Labor in the polls was Shorten, who was consistently behind Morrison. No matter, said the old hands: every PM usually polls better than the Opposition Leader.

To many on the Labor side, Morrison ScoMo was a figure of ridicule. Beefy and suburban, he even went to a Pentecostal church, where he sang and clapped and prayed. You could almost hear the Labor elite saying: really!? Church!? In 2019!? He’s dead.

Patrick provides an interesting discussion on this point. He speculates that faith might be more important to Australians than previously realised, but the point of Morrison going to church (and being filmed) was that it indicated his authenticity. What you see is what you get.

Middle Australia, on the other hand, never really trusted Shorten. No-one knew what he believed in, except his own ambition. The story he told of his working-class background did not fit the facts, and his attacks on ‘the big end of town’ sounded like a sound-bite package. Patrick reiterates a comment that how could a man who had changed his faith, his wife, and his football team be trusted.

Personal shortcomings might not have mattered if Shorten had been able to sell the policy package. But he kept getting crucial details wrong, then backtracking. He seemed surprised that journalists would actually ask him difficult questions and check the answers. He was not helped by colleagues like Chris Bowen, who said that if voters did not like the policy on franking credits they should not vote Labor. In fact, this policy – framed by the Coalition as a “retirees’ tax” – was one of the key game changers.

Another was the Labor attitude on climate change policy. It came across as an attack on the fossil fuels sector, which was a killer in Queensland especially. Even worse, Shorten could not explain how it would work, how much it would cost, and who would pay for it. The Greens, always willing to open their mouths and put their foot in it, created a huge problem for Labor with a caravan of protesters to the communities near the Adani coal mine, where they happily told people how awful they were.

Yes, there was plenty of dishonesty on both sides, and Patrick analyses the major examples. The Liberals had been taken unaware by the ‘Mediscare’ campaign in 2013 and were determined they would go on the attack, and did so with gusto. Labor’s assertions that there had been huge cuts to social spending did not fare well, with the Coalition ready with reams of refuting statistics. Even the ABC was sceptical of the Labor claims, which should have sounded a very loud warning bell.

Patrick notes that while the public polls through the campaign showed Labor ahead the parties’ internal polls revealed a different story. Broken down into regions and seats it was even worse. Maybe this is why Morrison seemed to increase his energy over the campaign, while Shorten started fraying.

Nevertheless, on election eve Labor was still sure of triumph. The actual results were a devastating shock, with some journalists refusing to accept the trends until the numbers could no longer be ignored. In the end, only a small number of seats changed hands, although it was enough to give the Coalition a working majority.

But this was not just a personal vindication for Morrison, says Patrick. He looks at data showing that many of the people who switched to Labor were in the upper brackets for income and education. Conversely, many of those who switched to the Coalition were what Labor considered to be its blue-collar base. This is something the new Labor leaders will have to look at closely.

The reasons are not clear. Was it just dislike of Shorten and Labor’s policies or are larger factors at work? Has the social conservatism of the non-elites overtaken historic economic allegiances? It is too early to tell, but we might look back on this election as a pivot point. If so, this book will be a good one to go to.

Holiday reading

Appearing in In The Black magazine, December 2019

 

The Vagabonds: The Story of Henry Ford and Thomas Edison’s Ten-Year Road Trip
By Jeff Guinn
Simon & Schuster, $40

Vagabonds book coverJumping into a car and heading for the horizon is an idea often associated with young people but it was, in fact, started by two American inventors late in their careers. Edison was the tech entrepreneur of his era, and Ford had created the first affordable vehicles. When they met in 1911 they hit it off, and in 1914 they decided to hit the road. They continued to take regular sojourns for the next decade. They did not exactly rough it, with an accompanying convoy carrying camping and cooking equipment, servants, and a chef.

They traversed the American hinterland, a nearly roadless and often impoverished setting. By all accounts they had a wonderful time. Guinn punctuates the story with vivid portraits and interesting side-trips, and it adds up to an enjoyable tale. One is never too old for an adventure.

 

How To Do Nothing: Resisting the Attention Economy
By Jenny Odell
Melville House, $49

The early promise of the Internet was about binding people together in a network of opportunities and information. True to an extent, but the darker side is the way the screen often leads to disconnection from the real world. Odell, an artist at Stanford University, believes that we will lead longer, happier, more responsible lives if we ditch the devices occasionally and spend some time doing simple things that brings us satisfaction. After all, the objective of the tech platforms is to keep us looking at the screen so they can make money. Not much of a reason for us to give them so much of our lives, really.

So hit the ‘off’ button. Take a walk, hug someone you love, listen to the world, do something slowly. These things might not sound like much, but they are everything.

How To Do Nothing book cover

 

The Future is Asian: Global Order in the Twenty-first Century
By Parag Khanna
Hachette, $23

Parag Khanna, Managing Partner of FutureMap, a scenario planning and strategic advisory firm, is very good at drawing disparate pieces of information into a meaningful picture. He collects data on trade, demography and technology to paint a picture of a rising Asia, powered along by an aspirational middle class of over two billion people.

Future is AsianToo often, he says, Western commentators think of Asia only as China and the Pacific Rim. This region is important, he readily acknowledges, but there are plenty of interesting things happening on the Indian subcontinent, Central Asia and the Gulf States. Underpinning the boom in intra-Asian trade is new-gen infrastructure, especially China’s ‘Belts and Roads Initiative’.

Of course, it is not going to be all smooth sailing. Many countries have a legacy of political instability and corruption, and others have longstanding disputes with neighbours. There are no easy solutions but, on balance, Khanna is optimistic.

 

 

Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader
By John Rossman
McGraw-Hill, $40

Remember when Amazon just sold books? Now it bestrides the world, and everyone wants to know how Jeff Bezos & Co did it. Rossman was a senior Amazon executive who worked on the scalability side, so he is well-placed to explain. He offers a long list of guiding principles, ranging from developing platforms that can provide self-service growth to focusing metrics on customer relations to using AI-based technologies wherever possible.

On culture, Rossman emphasises the value of semi-autonomous teams and of constant testing and reviews. Even successful units are told to look for disruption opportunities in their area. Bonuses are given in shares and not cash.

Interesting stuff, although occasionally Rossman might have delved more deeply rather than skimming across the surface. Few companies could use all of these suggestions but most could learn from at least some.

 

The Moment of Lift: How Empowering Women Changes the World
By Melinda Gates
Macmillan, $33

As the wife of Bill, Melinda Gates could have chosen a simple life of counting money and attending parties. Instead, she – and spouse – jumped into global philanthropy, trying to focus their energy and resources where they could do the most good. For Melinda this meant working with women in under-developed countries, on the basis that they were the ones most likely to lift up their communities. She started with the idea that contraception should be readily available but soon realised that a change of mindset through education was needed.

This concept is not new but here it somehow feels fresh. Gates admits there have been times when she felt almost overwhelmed. She was only able to keep going by occasional personal successes – a “moment of lift”. It is a powerful, touching sentiment by someone who is intent on making the world a better place.

 

 

The Non-Obvious Guide to Emotional Intelligence (You Can Actually Use)
By Kerry Goyette
IdeaPress, $31

Many discussions on Emotional Intelligence quickly start to sound like feel-good fuzziness but Goyette, who was a psychotherapist before becoming a business adviser, keeps her focus on the practical. She explains how leaders can become more aware of their emotions by asking the right questions of themselves and by seeking feedback from others. This helps them to understand their own motivations and ultimately improves their decision-making.

The book has guides, tests and case studies to show how stronger EI can help a leader overcome performance derailers such as conflict avoidance and impulsivity. Once someone has improved their EI they can more easily recognise problems in others and lead them to better outcomes.

Goyette acknowledges that developing this level of self-awareness is not easy. But the gains in professional achievement and personal satisfaction make it, in the end, a worthwhile journey.

 

Outspoken: Why Women’s Voices Get Silenced and How To Set Them Free
By Veronica Rueckert
HarperBusiness, $60

Outspoken book coverSpeaking is not difficult, says communications coach Rueckert. Being heard: that is difficult. She has solid advice for women who want their voice to be heard, in both literal and figurative senses. She examines research showing how often women in the workplace are ignored due to their method of speaking, and suggests techniques on how to avoid being interrupted and how to interrupt a conversation – or monologue – successfully. She has interesting things to say about claiming physical space and asserting the right to speak without being aggressive.

Rueckert, who is a trained opera singer, also tackles the mechanics of voice projection, including useful exercises to help transcend “cubicle voice”. Her tone is encouraging and supportive, and sometimes funny. But she never loses sight of her serious point: that liberating the female voice is a key to liberating the self.

 

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries
By Safi Bahcall
St Martin’s Press, $27

Bahcall is a physicist who specialises in a field called phase transitions, such as when water turns to ice. He believes that this explains a wide range of shifts, from voting to the flocking of birds. A series of small structural events tip each other into a cascade.

The main thrust of this book is how phase transition fuels innovation, especially at the leading edge of possibilities. Bahcall presents plenty of examples in science and business, and finds a common thread of ideas being transferred between (apparently) unrelated fields by eccentric individuals. A once-crazy idea suddenly looks plausible, even inevitable. This is uncommon in large organisations, although they can compensate by establishing quasi-independent units of creative mavericks.

Bahcall believes that this area will be a key driver in the next decades. If his enthusiasm is an indication, he might be right.

Loonshots book cover

Culture, Prosperity and Transformation

Appearing in In The Black magazine, December 2019

 

Culture Fix: How To Create a Great Place to Work
By Collin Ellis
Wiley, $30

Culture FixA positive and productive culture is essential for business health but Ellis, drawing on extensive consultancy experience, sees very few leaders who are happy with their company’s cultural framework. He sets out to turn theory into practical steps, and by and large he provides a good roadmap of how to get from here to there.

He unpacks the six ‘pillars’ of culture – personality and communication, vision, values, behaviour, collaboration and innovation – and finishes each section with a list of actions. Complexity is the enemy of a healthy culture, so avoid lengthy mission statements and heavy-going training courses. The cultural parameters should be written down for everyone to see; Ellis cites the ‘culture deck’ of Netflix as a good example. Transparency is also critical: a leader, whether a CEO or team supervisor, must be able to explain the reasons for decisions. Solid achievement should be recognised but there should also be room for innovative experiments.

Ellis deftly examines how leaders can guide and develop the cultural process. He provides case studies of companies who have done it well, with Atlassian being a recurring example. There are no one-size solutions but this book offers plenty of useful tips in a critical field.

 

The Prosperity Paradox
By Clayton Christensen, Efosa Ojomo and Karen Dillon
HarperBusiness, $57

Christensen is a heavy hitter in business thinking, and his books on innovation and disruption are required reading. However, his original interest was in development economics, stemming from his time in South Korea when the country was impoverished. The process of how South Korea became an economic powerhouse has long fascinated him, especially when many countries around the world have remained poor despite trillions of dollars in aid and a wealth of good intentions.

Prosperity ParadoxIn The Prosperity Paradox Christensen and his co-authors apply the theory of innovation to the issue, and conclude that the identification of unmet consumer needs, involving products that do not even exist in that market yet, is the key. They look at dozens of examples: mobile phones in Africa, microwave ovens in China, even noodles in Nigeria. The social impacts are enormous.

Aid donors and domestic policymakers should focus on this area. Stable institutions corruption and reduced corruption are important but it is innovation that drives prosperity. Knowing how to use technology to lower costs is necessary but a culture of innovation can become self-sustaining.

This is a fascinating book, with lessons for business readers on how wealth is created through imaginative thinking and consistent vision.

 

Data Driven Business Transformation: How Business Can Disrupt, Innovate and Stay Ahead of the Competition
By Caroline Carruthers and Peter Jackson
Wiley, $51

Discussions on integrating data into business operations often bog down in technical jargon or somehow fail to reach the point of saying how you actually do it. Carruthers and Jackson, specialists in this field, avoid the techno-babble to provide a step-by-step guide, with flow diagrams and diagnostic tests to illustrate their points.Data Driven Business Transformation

Their starting point is to assess what information is already held and determine what more is needed. The next step is to bring it into a common digital architecture. They are wary about handing too much of authority over to the IT specialists, who might not always understand the business impact. In fact, transformation has to be led from the top, and everyone in the organisation has to be able to understand the benefits. This will take a major investment of time and resources but it is essential for both getting transformation going and then embedding it as a process. The authors also offer good advice on how to develop relevant metrics and then fold the results into policy, strategy and governance.

It adds up to a useful package for any organisation which sees digitisation as the next step in development and needs to know how to proceed.

 

Downloadable research

 

Interview FAQs

An interview for a new job can be a traumatic experience but it does not have to be, according to specialists from recruitment firm Michael Page. In a useful post they look at the most common interview questions, explaining why they are asked and what sort of response is best. Answers should be supported with examples but they must be succinct and relevant. Interviewers are often looking for self-awareness as well as ‘cultural fit’, which might be demonstrated by citing non-work interests. The overall message of the article is that some preparation, research and proof can go a long way.

Download from:
https://www.michaelpage.com.au/advice/career-advice/interview/common-interview-questions

 

Looking ahead

Future of Digital Banking coverKPMG’s The Future of Digital Banking report, developed in collaboration with the Commonwealth Bank, looks at how the banking sector will operate in 2030, drawing on a survey of over 1,000 customers. The report notes that customers will demand technology-enabled ‘autonomous experiences’, with personalised options, a trusted interface, and a financial ‘super-app’. They will be increasingly savvy about what is possible and will be willing to switch finance providers if they see a better offer. This will lead to intense battles between incumbents and challengers, with established firms emphasising their legacy and experience while new players offer dynamism and choice.

Download the report from:
https://home.kpmg/au/en/home/insights/2019/07/future-of-digital-banking-in-2030.html

 

Mental health support

Beyond Blue, the respected organisation which aims to improve Australians’ pyschological wellbeing, has released an online publication, Supporting Small Business Owners, to provide advisers and accountants with guidance on how to assist their clients. The free publication includes advice on recognising the symptoms of deteriorating mental health and wellbeing, how to speak with someone you are concerned about, and how to contact professional help.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has applauded the release of the guide, noting that it provides advisers with the tools they need to support their clients, without formal training in counselling.

Download from:
bb.org.au/supportingsmallbusiness

 

Resilience needed

Margaret Heffernan TED TalkAs the former CEO of five businesses, Margaret Heffernan is very familiar with the thought patterns that lead organisations and managers astray, and she examines them in an enlightening TED Talk. She believes that an unconsidered drive for efficiency can create systems which are unable to deal with unforeseen events, and that sacrificing some efficiency for greater robustness can make sense. She also notes that there has been a decline in social relationships in the workplace in the past decade due to ‘busy-ness’, depriving organisations and the people within them of essential support mechanisms and resilience in times of crisis.

Watch at:
https://www.ted.com/talks/margaret_heffernan_the_human_skills_we_need_in_an_unpredictable_world

 

Blockchain going global? Blockchain trade

Blockchain technology is slowly making its way into an array of business niches, and the World Trade Organization believes that it might eventually find a place in global trade. A WTO study, Can Blockchain Revolutionize International Trade?, looks at some of the possibilities. It opens opportunities for small-scale producers and companies, and offers the potential for better protection of intellectual property rights. Blockchain could also reduce trade costs and enhance transparency. The report recognises that there are many challenges that must be addressed before the technology can have a significant impact but it aims to encourage thinking in the area.

Download from:
https://www.wto.org/english/res_e/publications_e/blockchainrev18_e.htm

Generalists, careers, and creative solutions

Appearing in In The Black magazine, November 2019

 

Range: Why Generalists Triumph in a Specialized World
By David Epstein
Riverhead, A$53

Tiger Woods’ story is well-known: living and breathing golf since he could walk, putting in untold hours of practice, laser-like focus on building the skills. But this model is deceptive, according to Epstein, a sports writer who has crossed into business analysis. He provides plenty of examples of very successful people – Roger Federer is one, but there also mathematicians, musicians and inventors – who started fairly late, after a lengthy period of sampling other things. A better method for doing well, rather than the practice-practice-practice pattern, is having a generalist base with a specialisation on top. Range high resEpstein calls this “interleaving”, an approach that develops inductive reasoning and abstract thinking, and which applies to both physical and mental skills.
Along the way, Epstein draws on studies by cognitive psychologists and brain researchers. He has an eye for a telling example, such as the point that most successful start-ups are established not by twenty-somethings but by people in their fifties. Highly-developed skills can easily be degraded by a shift in technology or social patterns but an innovative mind never goes out of fashion.
This is a fascinating, briskly-written book. Epstein does not dismiss the achievements of hyper-specialists but there are, he says, other paths to success.

 

Career Conversations: How to Get the Best from Your Talent Pool
By Greg Smith
Wiley, A$22

When it comes to career development, getting the best from employees – and giving the best to them – is no longer a matter of promotion interviews and performance reviews, according to HR specialist Smith. Rather, it is about coaching them towards the career path they really want, and aligning their personal goals with the goals of the organisation.Career Conversations
Many people will move through several careers in their working life. The stages are exploration, engagement, advancement, growth, maintenance and disengagement. Smith provides good advice on the conversations to have with employees at each stage, looking at the structure of coaching interactions. He believes a narrative approach of helping employees recognise key transition points is usually the best path. He readily acknowledges that this sort of coaching is not easy, and he provides a useful chapter to help leaders evaluate their own competencies in the area, emphasising the role of active listening.
A crucial aspect of the book is the tests and checklists provided. There is a particularly useful template to help the employee and the coach write down the career development plan. A written plan helps to crystallise ideas and options and, says Smith, turns vague notions into a long-term, actionable strategy.

 

Unlocking Creativity: How to Solve Any Problem and Make the Best Decisions by Shifting Creative Mindsets
By Michael Roberto
Wiley, A$28

For a long time, the prevailing wisdom was that only certain people had a talent of creativity. Not so, says academic Roberto. He cites a number of highly successful companies that operate on the assumption that most people have a creative streak, and that a central activity for a leader is to bring it out.
Many large companies, especially those with a long history, have inadvertently constructed barriers against novel approaches. This explains why employees often say that their ideas go nowhere even while the CEO is talking about the need for innovation. Some of the barriers are structural, with managerial layers stopping ideas flowing upwards. But most of them are cultural. Benchmarking can Unlocking Creativity coverprevent people looking broadly, and there can be too much focus on the next quarter’s results. A common problem is that people are simply not given the time to ponder, consider, and try new things.
Roberto is better at identifying problems than presenting solutions but his view that leaders should see themselves more as teachers than executives, including providing positive feedback, is moving in the right direction. The book does not answer all the questions it raises but it offers a wealth of interesting things to think about.

 

Building negotiation skills

Appearing On In The Black Digital site, October 2019

 

Everyday, we act as negotiators. But we seldom think about the skills required or the processes we must follow to negotiate successfully, according to Chas Savage, CEO of Ethos CRS, a company that specialises in customised capability training in communications, regulation, policy, and leadership. In his CPA Congress address, ‘Mastering Negotiation Skills’, he examines the requirements of successful negotiations, especially in business.
“The negotiating process is about how you can create and increase value,” he says. “Ideally, it involves a conclusion that involves everyone walking away satisfied.”
There are two types of negotiations. The first is transactional. One side gains while the other side loses, at least in the short term. The zero-sum nature involved means that this type of negotiation is not well-suited if there has to be a long-term relationship between the parties.
The other type, collaborative negotiations, is one in which both sides maximise their gains and minimise their losses, because they work to realise common objectives.
negotiation“It is important that you don’t mistake one for the other,” says Savage. “Any negotiation requires clarity of mind – and a lot of homework. You must understand what the other side wants, both the practical elements and the psychological needs. Yes, negotiation is a form of manipulation, but that does not mean that it cannot work out to the benefit of both parties.”
As an exercise, Savage asked the audience to put themselves in the position of the North Korean negotiators dealing with the US team and President Donald Trump, trying to reach an agreement over nuclear weapons. This helped to understand how to assess the needs of those on the other side of the table.

Planning needed

Much of the hard thinking has to be done even before negotiations begin. What is your real objective? What are you willing to do to achieve it? What do you think the other side is trying to achieve, and what will they give up? What is the anticipated outcome, your minimum acceptable outcome, and your ideal outcome? Is no deal better than a bad deal?
A critical part of this is knowing what you will do if negotiations fail. This is called the Best Alternative To a Negotiated Agreement, or BATNA. The key is to establish and expand the areas of agreement. This is the Zone of Possible Agreement, or ZOPA. The larger the ZOPA the more the two sides will seek to collaborate.
“Business negotiations are generally done by teams,” Savage notes. “And everyone in the team must know what their role is and who is leading the team. The last thing you want is your own people contradicting each other or not having required information to hand. The good cop/bad cop tactic, where one member of the team makes extreme demands and another one offers a more moderate position, can be useful, but everyone has to know exactly what they are doing.”
Depending on the nature of the negotiations, it can be very useful to conduct a test run, with an ‘opposing’ team. Gaming can reveal potential problems and weaknesses, which can be addressed before the real thing starts.

Tactics and trust

Good preparation makes for good negotiations but across-the-table tactics are also crucial. A solid start is to cite standards, precedents, and the benefits of an agreement. This will provide a framework for discussion. From here, it should be possible to divide the negotiations into small steps, to minimise risks and misunderstandings. However, there has be a clear focus on the overall objective, and disputes on unrelated issues should be closed down immediately.
“There needs to be an element of trust,” says Savage. “That doesn’t mean you have to like each other. It just means that you have to know the other side can and will deliver on their commitments, and they know that you can and will deliver on yours.”
A useful idea is to draft an agreement document as soon as possible in the process, to give discussions a focal point. But ensure that there is only one copy in circulation at a time. The two sides having different documents is a recipe for conflict, and an undermining of trust. Do not, Savage emphasises, allow the other side to draft the document.
“In the closing stage, look for things like fading counter-arguments, body language suggesting fatigue, and converging positions,” he says. “The end is then in sight. Once there is an agreement, follow up promptly on the commitments you have made.”
Savage makes the point that the negotiation process can be intellectually and physically demanding. Complex negotiations require a high level of concentration over an extended period.
“Make sure you are healthy and relaxed,” Savage suggests. “There should be planned time and resources for rest and recovery. It’s hard work, after all.”

AAT minefield

Appearing in In The Black magazine, November 2019

 

Registered tax agents should think carefully before representing a client on a tax dispute at the Administrative Appeals Tribunal, as many of the rules are unclear and the issues are poorly-defined. It is entirely legal for accountants to appear for a client at the AAT – in fact, the Tax Agent Services Act expressly allows registered tax agents to do so – but that they can does not automatically mean that they should.
According to figures provided by the AAT in its submission to the review of the Tax Practitioners Board, last year about 30 per cent of people who took a tax dispute to the AAT were represented by their accountant/tax agent, or 198 of the 316 cases in the Taxation and Commercial Division. In the other cases, the appellant was represented by a lawyer.
The AAT is not a court but an administrative body that reviews specific decisions of other government agencies, including the Australian Tax Office. It considers whether, on the facts presented to it, the correct or preferable decision was made in respect of the applicable law, rules and government procedures. Its own decisions are judicially reviewable.
Despite the administrative status of the AAT, many issues put before it involve questions of statutory interpretation and close reading of rules. This raises a critical question for accountants: where is the line that separates appropriate tax advice to a client from unqualified legal advice?
Melbourne barrister and part-time Deputy President of the AAT, Frank O’Loughin QC, notes that when tax agents present cases in the AAT on behalf of their clients they are involved in work that includes both legal and factual elements.
“Applying taxation laws to the facts of a taxpayer’s case is always legal work,” he says. “Registered tax agents are permitted to represent their clients in undertaking this work. Different aspects of Australia’s tax system call for deployment of different types of skill and knowledge. Some aspects of the work in the AAT lend themselves to the skills of accountants, others lend themselves to the skills of lawyers. Other aspects are common to both.”

Safe harbour

The TASA provides a ‘safe harbour’ for registered tax agents against the prohibition on legal advice. This is a provision in a law or regulation that affords protection from liability or penalty under specific situations, or if certain conditions are met. The safe harbour concept is used in several areas of law, including taxation.
Stormy harbourA difficulty is that it applies only when an accountant is doing the ordinary, ‘bread and butter’ work of an accountant, including advising on general Commonwealth tax issues.
Chris Wallis, a barrister who has published a number of articles on the subject, believes that many accountants do not really understand the limits of the ‘legal advice’ safe harbour. He also questions a key decision known as the Felman Bubble.
The Felman Bubble concept is derived from the decision in Felman v Law Institute of Victoria [1998] 4 VR 324; (1997) 142 FLR 383, where Kenny J said [at pp.383-4]
… a tax agent who gives advice, as to income tax matters … does not give what is ordinarily understood as legal advice …

“Accountants have long believed that they are entitled to give advice, including legal advice, about the operation of the tax laws more generally,” he says. “But there is no legal basis for this belief, even if the advice is provided in relation to the preparation and lodging of a tax return.”
Wallis cautions that the Felman Bubble does not extend to work in relation to state taxes or superannuation (other than in the context of income tax).
He sees no real difference between ‘engaging in legal practice’ and providing legal advice, a distinction sometime made in the literature and legislation. He believes that accountants’ training simply does not extend to commercial law, legal personality, equity or rules of evidence.

Issues with TASA

John Morgan, a Melbourne barrister highly experienced in the tax field, likewise sees the weakness of the Felman decision, and argues that a registered tax agent must know not only the tax law but the general law as well, and so must have comparable skills to a legal professional.
“Tax agents are allowed to give ‘advice’ about ’taxation laws’ because it is a ‘tax agent service’ under s90-5(1)(a)(ii) of TASA 2009, and a Federal law overrides the State and Territory laws that prohibit unqualified legal practice,” he says. “Whether this protects non-lawyers from any advice they give that culminates in a tax liability has not apparently been not tested. It may be that a Court would ‘read down’ the TASA protection, in cases where the ‘public interest’ was not served, because of the complexity of the general law.”
There is also the possibility that the TASA may be unconstitutional in attempting to give non-lawyers the right to ‘give advice’ on general law matters, or on ‘liabilities under taxation laws’, at all.
“In any event, registered agents must comply with the TASA requirements, including the Code of Conduct,” Morgan notes. “This includes an obligation to do this, amongst other things, ‘competently’. Often this will be difficult without legal training.”
Morgan also points out that providing legal documents to a client is fairly clearly outside what tax agents are permitted to do. A breach of the Code of Conduct can lead to disciplinary action by the TPB, resulting in suspension or cancellation of registration.
There is also legislation in each state and territory that prohibits an unqualified, uncertified person from engaging in legal practice, and substantial penalties are involved, with similar carve-out arrangements impacting accountants.
And just because a matter relates to tax does not mean that it qualifies for the carve-out: it can depend on the particular circumstances of a case.

Serving the client

Another issue that Wallis raises is the potential for accountants to unwittingly engage in legal practice when they choose to represent a client at the AAT. He believes that many accountants who go to the AAT do not understand the breadth of the issues that can arise and whether the Felman Bubble, while it applies to the representation in the hearing, can be stretched to the research and other work required to prepare for the hearing.
“An accountant before the AAT is almost always appearing to defend a client in relation to work undertaken by the accountant,” he says. “If the accountant submits that the client had provided everything that was needed the accountant has implicitly advised on evidence rather than tax. Similarly, if the accountant concludes that the client did not provide everything that was needed they are advising on evidence.”
He also takes the view that it might be appropriate to require registered tax practitioners to undertake relevant continuing professional development in this area to qualify for the safe harbour provisions.
John Morgan emphasises that in the objection process there is a need to inform the client of the available options, including independent advice, representation by a lawyer and the choice between the AAT and the Federal Court.
“Strange as it sounds, there have been accountants who go to the AAT without their client’s knowledge,” he says. “Perhaps they are trying to defend a mistake they have made. In any case, it is hard to see that it meets the standards of the Code of Conduct.”
Chris Wallis emphasises that the protective strength of the Felman Bubble, which applies in Victoria but not necessarily in other states, is untested.
“From a tax practitioner’s point of view, a prohibition without a bright line test is a disaster waiting to happen,” he says. “The lesson is: if you go to the AAT, be very sure about the scope of the task you are undertaking and why you are doing it.”

Realistic assessment

Accountants who appear at the AAT should be aware of the indemnity issues, although Director of Fenton Green, CPAA’s Insurance Broking partner notes that not all PI Policies provide complying cover for accountants. “The Professional Indemnity policy coverage needs to provide cover for CPA By Laws as well as all usual professional activities an accountant would undertake. That would include going to the AAT for a review.”
He goes on to suggest that accountants representing their clients at the AAT should keep clear records relating to verbal advice and always reiterate verbal advice in writing. “Do not stray from providing factual and verifiable accounting advice for taxation and bankruptcy,” he says. “Peripheral and personal advice should be highly avoided.”
Deliberately committing an offence invalidates the policy through a ‘fraud and dishonesty’ exclusion. There is a ‘write back’ provision for innocent partners in a practice.
Fenton advises that taking a case to the AAT can involve significant time and effort.
“This decision really needs to be made jointly through consultation between accountant and client,” he says. “Part of that discussion should be to identify the possible benefits as well the chances of success. You have to be realistic in your assessment.”

The Journey Within

Appearing in Sunlight Press magazine, October 2019

 

The White Book

By Han Kang, translated by Deborah Smith

Random, $12, 160 pages, ISBN 9780525573067

 

If you want a novel with a clear, three-act narrative and an all’s-well conclusion, then this book by Korean writer Han Kang is not for you. In fact, it does not even look like a novel, written in short and seemingly unconnected snatches of prose. It is more like an extended meditation on life and death, on what might have been and on what once was. And that is enough. More than enough.

White book coverIt is unknown how much of The White Book is autobiographical but it feels as if a good part of it is drawn from lived experience. Han has no lack of courage as a writer, in that she was willing to make such a departure from her previous book, The Vegetarian, which won the Booker International prize in 2016. That novel – actually three connected novellas – followed the increasing detachment of a woman from the real world when she announces she will no longer eat meat, and then eventually stops eating altogether. Significantly, we never really find out why: the three novellas are (effectively) centred on her husband, her brother-in-law, and her sister.

But we know that she is on a journey that leads to the most innermost part of the soul – something we find again in The White Book, and an idea that underlies much of the dynamism of the current Korean literary scene. The narrator of the book is in search of herself through an examination of the past, reflecting the way that South Korea is itself looking for a way forward (a theme, interestingly, often taken up by Han’s novelist father, Han Seung-won). It is a culture looking for the elusive balance between past and future, retaining what is most valuable without a trace of bleary-eyed nostalgia. The path has not yet been found but there is a sense that it will be, eventually.

Make no mistake: making one’s own fate is not an easy process, just as The White Book is not an easy read, despite its apparent brevity. It requires a certain level of engagement, and the reader has to be willing to follow the twists and turns of the narrative. The story that weaves in and out of the book centres on the premature birth and death, after only two hours, of a baby that would have been Han’s older sister (eonni is the Korean term). Han imagines the heartrending scene of the mother holding the newborn close and begging: “Don’t die. Please don’t die.”

But the universe decided otherwise, and the tiny corpse is taken into the forest for burial. The white swaddling cloth became a funeral shroud. It is this image that leads Han to examine the white things that punctuate her life: rice, pills, salt, waves, a bird on the wing, an empty page where text should be. And snow, a connection that leads Han to reflect on “the city” where she lives for a while, a place where snow disguises and then reveals the past. It is Warsaw (although never identified by name), a city which, like Seoul, has been repeatedly destroyed and rebuilt, a cycle in which Han sees an image of her departed, un-named eonni and herself.

For she eventually comes to realise that if the baby had lived then she, Han, would probably not have been born. It is a duality, a balance, that provides Han with a comfort, with a sense that things worked out as they were supposed to, as they were fated to. In the book’s final passage, Han bids her ethereal sibling farewell: “Within that white, all of those white things, I will breathe in the final breath that you released.”

There is a toughness in Han, a sense of resilience and a willingness to peel back layers to find the core of being. This book could easily have become a mawkish plea for sympathy but the restrained, poetic writing provides a sense of moving from mourning to acceptance, a completed circle. It is a limited emotional pallet but the right one. It is no surprise to learn that the book took a long time to write and almost as long a time to translate.

The White Book is not for everyone but those who accept it on its own terms will find that it offers beauty, poignancy and resonance, a knowledge of what is lost and what is gained, and how one becomes the other.

Han Kang