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China’s manufacturing sector recorded its first decline in six months, according to the latest HSBC Purchasing Managers' Index (PMI) figures.  
The final PMI for January came in at 49.5, down from a score of 50.5 last month, where a reading below 50 points indicates a deterioration in conditions.  
“A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January,” HSBC chief China economist Hongbin Qu says.  
“Policy makers should pay attention to downside risks and pre-emptively fine tune policy to <a rel="nofollow" href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-01-30/final-hsbc-pmi-confirms-chinese-manufacturing-decline/5227892?section=business" target="_blank">steady the pace of growth if needed</a>.”
This article first appeared on <a href="https://www.StartUpSmart.com.au" target="_blank">StartUpSmart.</a>
 
 
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Chinese manufacturing declined in January

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Oil giant Royal Dutch Shell has officially confirmed it is looking to sell its Australian refineries and petrol stations, along with its $7.4 billion stake in Woodside Petroleum.  
The sale process, overseen by Bank of America Merrill Lynch, has reportedly gained the attention of Macquarie, Glencore Xstrata and oil trading firm Vitol.  
“We are making hard choices in our worldwide portfolio to improve Shell’s capital efficiency,” Shell chief executive Ben van Beurden says.  
“Our ambitious growth drive in recent years has yielded a step change in Shell’s portfolio and options, with more growth to come, but at the same time we have lost some momentum in operational delivery, and <a rel="nofollow" href="https://www.theage.com.au/business/mining-and-resources/shell-puts-petrol-stations-woodside-stake-on-the-block-20140131-31q70" target="_blank">we can sharpen up in a number of areas</a>.”
This article first appeared on <a href="https://www.StartUpSmart.com.au" target="_blank">StartUpSmart.</a>
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Shell confirms Australian assets are on the market

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Retail giant David Jones has confirmed it received a merger offer from rival Myer in October last year.  
David Jones revealed it received the “confidential, conditional and non-binding and indicative” offer from its rival on October 28, which saw Myer offer 1.06 shares for every David Jones share.  
However the offer, investigated by the Australian Securities and Investments Commission, was rejected on the grounds it had “substantial commercial, market, and regulatory risks” including a review from the Australian Competition and Consumer Commission.  
“The board formed the view that the potential transaction did not have sufficient merit for David Jones shareholders to warrant engaging in discussions and providing the access and information requested by Myer,” David Jones said.
This article first appeared on <a href="https://www.StartUpSmart.com.au" target="_blank">StartUpSmart.</a>
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Myer discussed a merger with David Jones last year

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The NBN Co has issued a statement saying small businesses in 15 localities across Australia will have copper phone services, ADSL and Telstra cable switched off on May 23.
The suburbs and towns affected are <a href="https://www.urban.com.au/property-observer" target="_blank">Armidale</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Minnamurra</a> and <a href="https://www.urban.com.au/property-observer" target="_blank">Kiama Downs</a> in New South Wales; <a href="https://www.urban.com.au/property-observer" target="_blank">South Morang</a> and <a href="https://www.urban.com.au/property-observer" target="_blank">Brunswick</a> in Victoria; <a href="https://www.urban.com.au/property-observer" target="_blank">Townsville</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Aitkenvale</a> and <a href="https://www.urban.com.au/property-observer" target="_blank">Mundingburra</a> in Queensland; <a href="https://www.urban.com.au/property-observer" target="_blank">Deloraine</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">George Town</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Kingston Beach</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Sorell</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">St Helens</a> and <a href="https://www.urban.com.au/property-observer" target="_blank">Triabunna</a> in Tasmania.
The NBN Co also warns other towns and suburbs are scheduled to have fixed-line services switched off over the coming months.
These include <a href="https://www.urban.com.au/property-observer" target="_blank">Toowoomba</a> (August) and <a href="https://www.urban.com.au/property-observer" target="_blank">Aspley</a> (September) in Queensland; <a href="https://www.urban.com.au/property-observer" target="_blank">Coffs Harbour</a> (July) and <a href="https://www.urban.com.au/property-observer" target="_blank">Gosford</a> (October) in New South Wales; <a href="https://www.urban.com.au/property-observer" target="_blank">Bacchus Marsh</a> (October) in Victoria); <a href="https://www.urban.com.au/property-observer">Gungahlin</a> (July) in the ACT; <a href="https://www.urban.com.au/property-observer" target="_blank">South Hobart</a> (September), <a href="https://www.urban.com.au/property-observer" target="_blank">Midway Point</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Scottsdale</a> and <a href="https://www.urban.com.au/property-observer" target="_blank">Smithton</a> (October) in Tasmania.
NBN Co notes transitions to the national broadband network aren’t automatic, and has posted maps of the <a href="https://www.nbnco.com.au/about-us/media/news/tasmanias-final-copper-countdown">affected areas on its official website</a>, where business owners are urged contact their internet service provider to discuss their options.
Businesses using an EFTPOS terminal, fax or alarm system are asked to contact the provider of that service (for example, their security company for an alarm) in order to find out which NBN services support their device.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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NBN switching off copper phone and ADSL services in 15 communities on 23 May

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Apple could be looking at releasing its own platform for smart home appliances at its World Wide Development Conference next week.
According to reports in the <a href="https://www.ft.com/cms/s/1bef71b8-e433-11e3-a73a-00144feabdc0,Authorised=false?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F1bef71b8-e433-11e3-a73a-00144feabdc0.html%3Fsiteedition%3Duk&amp;siteedition=uk&amp;_i_referer=http%3A%2F%2Ftechcrunch.com%2F2014%2F05%2F26%2Fapple-said-to-be-prepping-smart-home-software-platform-for-wwdc-reveal%2F#axzz32plUeY1I" target="_blank">Financial Times</a> and <a href="https://techcrunch.com/2014/05/26/apple-said-to-be-prepping-smart-home-software-platform-for-wwdc-reveal/" target="_blank">TechCrunch</a>, the platform will allow iPhone, iPad or Apple TV owners to control their “smart” home appliances using an iOS device.
Devices able to be controlled through the smart appliance platform include lights, security systems and other household appliances.
Control of home appliances would be built into the users’ iOS device rather than through a string of third-party apps, with third party appliance makers such as Dropcam, Google/Nest and Philips able to gain official certification for their appliances from Apple.
The platform will allow users to do things like automatically switch their lights on when they arrive home or switch on an alarm system when they leave in the morning.
The news comes less than a week after Korean media outlets circulated rumours that Apple’s key rival, <a href="https://www.smartcompany.com.au/technology/42096-samsung-dumps-secret-app-platform-project-with-microsoft-rumours-circulate-of-smart-home-and-vr-research-focus" target="_blank">Samsung Electronics</a>, is working on a smart home platform of its own, with the company demonstrating a single app <a href="https://www.smartcompany.com.au/technology/information-technology/33396-samsung-to-demo-single-app--smart-home-solution--at-ifa--alongside-galaxy-gear-smartwatch" target="_blank">smart home platform at IFA last year.</a>
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Apple to join Samsung in creating smart home platform

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The mining boom, and the resulting increase in fly-in fly-out (FIFO) workers, has led to housing shortages across Australia. It’s a problem an innovative new website hopes to solve – by turning spare rooms into cash.
Founded by brothers Daniel and Chris Del Borrello, <a href="https://www.fifohousemate.com.au/" target="_blank">fifohousemate</a> is a new website that aims to connect FIFO workers with spare rooms for hire.
Meanwhile, because FIFO workers are looking for places to stay away from their mining or job sites, fifohousemate is open for property listings across Australia.
Co-founder and director Daniel Del Borrello told StartupSmart the service was inspired by his brother’s experiences in trying to rent out a spare room.
“My brother was looking for a housemate – he has a small two-by-one apartment. It’s a small space, and he doesn’t want to have someone living there permanently and cramping his style,” Del Borrello says.
“He came up with the idea of splitting the rent by having a FIFO worker rent a room. But there’s nowhere specifically where you can find a FIFO worker, so he came to me with the idea for the site.”
Del Borrello says fifohousemate can help alleviate the housing shortage by unlocking new properties that can be rented out.
“It connects rentals with FIFO workers, effectively creating new rooms for them to rent,” he says.
“So, for example, a young family with a spare room is probably not going to look for a full-time housemate. But they might be open to having someone use the room one week out of four.”
While the website has been online for just three weeks, Del Borrello says it has already attracted 10,000 visitors and 350 listings.
Around 80% of its visitors currently come from the traditional mining state of WA, although interest is growing rapidly in the other states.
Victoria has already overtaken Queensland as the state with the second-most visitors. Del Borrello predicts the number of listings will only increase as awareness grows across Australia.
This article first appeared on <a href="https://www.startupsmart.com.au">StartupSmart</a>.
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The new website turning spare bedrooms into FIFO rental gold

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The current tax treatment of investment property losses, through a combination of negative gearing and capital gains tax, has come under fire for putting the financial system at risk, according to the federal government’s Financial System Inquiry interim report.
Currently, <a href="https://www.smartcompany.com.au/finance/investment/34310-should-negative-gearing-be-scrapped-experts-weigh-in" target="_blank">negative gearing</a> means that interest costs and other property expenses are fully tax deductible, while capital gains tax on properties is applied with a 50% discount.
The Financial System Inquiry, headed up by David Murray, states in its interim report that these arrangements “encourage leveraged and speculative investment — particularly in housing”.
“Because of these tax arrangements, owners of residential property have an incentive to repay their mortgage as slowly as possible to maximise the tax deductions they can accrue,” says the report.
“Loans with interest-only periods help to maximise these tax deductions in the early years of a loan, although these loans also give borrowers more flexibility with repayments. The tax system, therefore, encourages individuals to take on more risk, which does have implications for risks to lenders.”
Aside from negative gearing and the asymmetric tax treatment, the report identifies additional tax-related factors that are also distorting the housing market.
“In addition to the more favourable tax treatment, individuals have an extra incentive to put more of their wealth into their primary residence because of the means test for the age pension, which excludes the primary home. This leads to higher allocation of wealth to housing and, for some, an inefficient level of consumption of housing services,” the interim report states.
Current arrangements also mean family homes are a key savings vehicle for many Australians.
“Returns on owner-occupied housing (including imputed rent and capital gains) are exempt from tax, although this is not unusual by international standards. This makes housing a very attractive vehicle for savings,” the report states.
The favourable tax treatment for property investment has created a situation of increasing mortgage indebtedness, which in turn has created risks for the financial system.
“Since the Wallis Inquiry, the increase in households’ mortgage indebtedness has been accompanied by banks allocating a greater proportion of their loan book to mortgages; the share of loans for housing has increased from 47% in 1997 to its current share of 66%,” says the report.
“A large enough disruption to the housing market could have significant implications for household balance sheets, financial stability, economic growth, and the speed of recovery in household spending and broader economic activity following a shock.”
Mark Chapman, head of tax with lobby group Taxpayers Australia, told SmartCompany the report is correct in identifying that tax deductions people claim over the life of a property are greater than the losses they claim at the end.
“For high income earners, it’s an astute way to reduce their tax rate. But 70% of those using negative gearing are not high income earners, and are required to buy an asset to get a tax deduction,” Chapman says.
“It needs to be reformed. From a tax policy perspective, [negative gearing in its current form] makes little sense. In most jurisdictions, offsets for losses on property investments can only be claimed against profits on other properties, or be carried forward against future profits.”
Philip Soos, a research Masters candidate at the School of Management at Deakin University specialising in property tax law, told SmartCompany that since 2001, most investment property rents have not been high enough to cover interest and expenses.
“Around 60% of investor loans are interest only. It’s a big leverage bet on a capital gain – as long as wages are high enough to sustain the rents,” Soos says.
“While the argument is that it encourages new property development, around 96% of all investment property loans by value are spent on existing properties.”
“Abolishing negative gearing would be better than reform, but that’s unlikely, so quarantining it or reforming it so it’s limited to new, rather than existing properties, is probably the best option,” says Soos.
Brian Chant, managing director of Property Asset Planning, told SmartCompany negative gearing has some important benefits when applied to new properties.
“I think it’s very effective when used on brand new property. It allows you to turn over the economy, and when you turn over the economy, you employ people. It allows you to build new homes and new affordable housing,” Chant says.
“It needs to be reviewed and discussed further, but when it’s applied to new homes, it’s brilliant.”
However, Property Tax Specialists' Shukri Barbara told SmartCompany reforming negative gearing too quickly could create its own risks.
“One important issue is the banks, who lend up to 90%, are heavily dependent on negative gearing. If you remove it too quickly, the values will drop and create the risk that people will sell their properties for less than they owe on their mortgages,” he says.
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.
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Negative gearing could be putting the Australian financial system at risk: Murray inquiry

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Hundreds of electricians are out of work after a major national electrical contracting firm with annual revenues of $350 million collapsed into receivership on Monday. 
At its peak, Pacific Services Group employed 1300 staff nationwide, across 40 active project sites and 14 offices, however the group's headcount fell to around 700 employees by the time of its collapse.
Major projects overseen by Pacific Services Group included works at the Chadstone Shopping Centre and Royal Children’s Hospital in Melbourne, the NBN rollout in Tasmania and the Lotus Glen Correctional Facility in Queensland.
The group, based in North Melbourne with offices across Australia, was created through an initial investment by Wolseley Private Equity in 2006 in a bid to become the nation’s largest electrical, data and communications engineering company.
Between February 2006 and October 2009, Pacific Services Group went on a buying spree, acquiring Elecraft in Victoria, Russell Smith Electrical in Tasmania, Boffa Russo in South Australia, Richard Flanagan &amp; Co in Queensland and RSE Electrical in NSW.
However, the electrical firm soon hit financial hurdles, with <a href="https://www.afr.com/p/opinion/kordamentha_takes_control_of_pacific_lDV8jauszuDjsyWGRvareL">The Australian Financial Review</a> reporting Pacific Services Group had lost a major maintenance contract with retail giant Woolworths.
In July of last year, then-chief executive Peter White announced Pacific Services Group had received a $10 million injection from investors, and had secured a deal to restructure its debt from lenders.
“The recapitalisation will inject fresh money into PSG and restructure the group’s debts in a manner that will significantly strengthen the group’s financial position. You will all see the practical impact of this over the following weeks and months,” White said at the time.
“Thank you all for your support over the past few months; it has been a challenging time for us all. The recapitalisation provides us with a robust platform on which to move forward and to bid for the projects that are in the market. We look forward to continuing to work closely with you on both existing and new opportunities.”
Despite the cash injection, by September, Pacific Services Group announced it had appointed former Tyco Fire Protection Services APAC operations director Jeffrey Bretz as its new chief executive.
However, Bretz was unable to turn the company around, with PPB Advisory partner Craig Crosby appointed as an administrator, while Scott Kershaw, Michael Brereton and Craig Shepherd of KordaMentha were appointed as receivers earlier this week.
The Victorian state secretary of the Electrical Trade Union, Troy Gray, blasted the company’s management in a statement provided to SmartCompany, saying the company’s electricians, who had made millions of dollars for the company, including 200 in Victoria, would be left without an income.
“It's not just 200 workers. It's the families of these 200. They don't have an income. They can't get their entitlements, we're told by the government, for 40 weeks. We call on the government to fast-track that,” Gray said.
“Many of these workers will not get re-employed. The construction industry in Victoria isn't fantastic at the moment and they need those entitlements. The annual leave, banked RDOs, they need to live on, to buy food with.”
In a statement, Crosbie told SmartCompany he was still investigating Pacific Services Group's finances, and would report back to creditors by the end of the month.
"We are mindful of the impact on employees and are working with the Electrical Trades Union, the receivers and managers and PSG management to ensure entitlements are calculated as a matter of urgency," Crosbie says.
“We understand the receivers and managers have ceased to trade the businesses. At this stage it is unlikely that funds will be available to meet unsecured creditor claims. In the event the PSG companies are wound up and there are insufficient funds to pay employees, they will be entitled to lodge a claim under the federal government’s Fair Entitlement Guarantee scheme. The administrators will facilitate this process."
“We have notified the Department of Employment that a Fair Entitlements Guarantee claim is being prepared and we will do everything in our power to secure FEG funding and process employee claims as quickly as possible.”
The collapse follows the administration of another multimillion-dollar electrical contracting business called Global Electrotech in <a href="https://www.smartcompany.com.au/growth/32891-leading-wa-electrical-services-contracting-business-collapses--industry-is-shot">July of last year</a>.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany.</a>
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Short circuit as $350 million electrical contractor collapses

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Baked potato franchise Spudbar is having a second bite at expanding beyond its Victorian base, after two stores previously closed in Western Australia.
In its hometown of Melbourne, the baked potato chain has grown to 11 stores since its initial launch in 2000.
This growth had previously led to Spudbar opening two company-owned stores in Western Australia in a bid to expand its brand, with outlets in the Perth suburbs of Cannington and Joondalup.
However, both stores eventually closed, with the first going out of business 18 months ago, and the second closing in January of this year.
Despite the closures, the company is planning to embark on a second round of national expansion.
SmartCompany understands the company is working with a franchisee in Western Australia ahead of a future store opening.
In addition to the Perth-based store, the company <a href="https://www.franchisebusiness.com.au/c/SPUDBAR/opportunities" target="_blank">is also advertising franchise opportunities</a> in Canberra, Hobart, Adelaide, Perth, Darwin, the Gold Coast, Brisbane and Sydney.
According to the advertisements, an investment of between $230,000 and $290,000 will be required to open each store.
The chain is one of a number of rapidly expanding Melbourne-based fast food retailers in Australia, including <a href="https://www.smartcompany.com.au/leadership/profiles/34482-roll-d-gold-how-bao-hoang-delivered-rice-paper-rolls-to-the-masses" target="_blank">Noodle Box</a> and <a href="https://www.smartcompany.com.au/leadership/profiles/34482-roll-d-gold-how-bao-hoang-delivered-rice-paper-rolls-to-the-masses" target="_blank">Roll’d</a>.
However, there are clear risks to the national expansion of a fast food franchise.
Back in 2010, fast food chain <a href="https://www.smartcompany.com.au/growth/17745-20101203-fast-food-franchise-souvlaki-hut-collapses-into-administration--but-buyers-waiting-to-pounce" target="_blank">Souvlaki Hut collapsed into administration</a> just 10 months after being named one of Australia’s fastest growing franchises.
SmartCompany attempted to contact Spudbar, however, no official comment was available prior to publication.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Melbourne’s Spudbar taking another bite at the Western Australian market

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Home improvement company Gotta Getta Group has paid $20,400 in penalties after being issued with an infringement notice by the consumer watchdog, which alleged the company engaged in misleading advertising.
According to the Australian Competition and Consumer Commission, Gotta Getta Group offered consumers 60 cents per kilowatt hour for energy fed back into the grid if they purchased a solar panel and entered a three-year energy plan with Simply Energy.
The advertisements, which ran on television, the internet and radio in South Australia during 2013, claimed the feed-in credit meant consumers would recoup the cost of their solar panel up to three times faster than if they purchased it from a competitor.
The ads also claimed consumers would not have to spend any money in order to benefit from the offer.
In a statement, the ACCC alleged the Gotta Getta Group advertisements made false or misleading claims and contravened Australian Consumer Law.
“Gotta Getta Group did not take into account the fact that consumers who purchased a solar system from another supplier would receive the benefit of the 9.8 cent minimum retailer payment in addition to the 16 cent South Australian Government feed-in tariff,” said the competition watchdog.
“Gotta Getta Group charged consumers an amount in relation to the 60 cent feed-in tariff offer, by including in the purchase price of its solar systems an amount in respect of a commission payable by Gotta Getta Group to Simply Energy,” said the ACCC.
However, an ACCC spokesperson told SmartCompany infringement notices are not an admission of conduct.
SmartCompany contacted Gotta Getta Group this morning, but did not receive a response prior to publication.
The incident is the latest in a series of investigations into the energy sector by the ACCC.
Last month, the agency instituted proceedings in the Federal Court against Origin Energy, claiming it had made <a href="https://www.smartcompany.com.au/legal/41863-origin-energy-in-hot-water-over-alleged-false-conduct">false or misleading representations to consumers</a>.
In a statement, ACCC Commissioner Sarah Court said complex terms and conditions can make it difficult for consumers to compare offers from competing suppliers.
“Suppliers must ensure that representations made about the benefits of purchasing a solar system are truthful and accurate, so that consumers can make informed purchasing decisions, and suppliers do not gain an unfair advantage over their competitors,” said Court.
Melissa Monks, special counsel at law firm King &amp; Wood Mallesons, toldSmartCompany in February the energy sector was one of the <a href="https://www.smartcompany.com.au/legal/35752-accc-to-crackdown-on-drip-pricing-and-big-businesses-posing-as-small-businesses">ACCC’s key priorities</a> for 2014. 
“We will definitely see litigation in relation to the savings ‘discounts off what?’ concerns, likely in the energy sector given the ACCC has been investigating this concern since at least June last year,” she said.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Andrew Sadauskas

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