17 minute read
AMTIL FORUMS
from AMT DEC 2021
by AMTIL
Laura Whiteman explains the new national register of hazardous chemicals – called the IChEMS Register - where chemicals will be categorised into one of seven schedules, based on their environmental hazard. It is hoped the Register will be available early in 2022.
Industrial chemicals in Australia have always been tightly regulated, with the current focus on health and physical hazards. However, environmental hazards for these chemicals have not been subject to regulations previously. This lack of regulation has led to the development of the Industrial Chemicals Environmental Management Standard (IChEMS) by the Department of Agriculture, Water and the Environment. This standard aims to create a national approach to the management of environmental risks that arise from the use of industrial chemicals. The standard will cover the use, storage, handling and disposal of environmentally hazardous chemicals. Australia regulates chemicals based on their use type, and there are four chemical regulators which govern at the Federal level. Industrial chemical use is defined as being any chemical which doesn’t fit under the other three regulators. Chemicals can have multiple use types and are managed as follows: • The Australian Pesticides and Veterinary Medicines Authority manages agricultural chemicals and veterinary medicines. • The Therapeutic Goods Administration manages medicines, biologicals and medical devices and maintains the Poisons
Standard. • The Food Standards Australia New Zealand develops ingredient, additive, vitamin and other foodstuff standards. • The Australian Industrial Chemicals Introduction Scheme (AICIS) regulates the importation and manufacture of industrial chemicals in Australia – and covers any chemical that is not regulated under the above three authorities. Determining the scheduling for each chemical
Under the new IChEMS, there will be a register of hazardous chemicals – called the IChEMS Register, which will work alongside the AICIS. To determine the scheduling for each chemical, the Federal Minister for Environment, Sussan Ley, will use AICIS risk assessments, Stockholm Convention documentation and other appropriate sources. The Minister will then use advice from the Advisory Committee, public consultations and/or State and Territory Environment Ministers to assist in making a scheduling decision. Chemicals that currently have AICIS assessments may fast-track through this process. Chemicals will be categorised into one of seven schedules, and the decision recorded on the Register. Chemicals on the Register may be identified by the CAS ( Chemical Abstracts Service) name and number; International Union of Pure and Applied Chemistry (IUPAC) name; molecular formula or the chemical’s AICIS approved chemical name (AACN). The seven schedules being adopted categorise substances based on their hazard to the environment. As the schedule number increases, the threat of environmental harm increases, thus triggering more extensive regulatory standards. The Draft for the “Industrial Chemicals Environmental Management (Register) Principles 2020” indicates that Schedules 1 to 5 will also consider the Globally Harmonised System of Classification and Labelling, also known as the GHS classification of the chemical. In particular the acute or chronic aquatic toxicity, and if the chemical is hazardous to the ozone layer. Chemicals on Schedule 1 have very low or no hazard Users will be expected to use the information on the Register when designing their products and ensure they meet all requirements listed on the Register. A consistent, national approach will make it easier for industry to manage and comply with the requirements.
to the environment, and there will be only basic risk management measures for these chemicals. Schedule 7 chemicals are those that pose a significant, often irreversible, risk to the environment, and are generally chemicals that are bioaccumulative, toxic or persistent. These chemicals will be prohibited from import, manufacture and use. Introducers and users will be expected to use the information on the Register when designing their products and ensure they meet all requirements listed on the Register. Development of the IChEMS is a two-stage process. Phase one was the creation of the legislation and getting it passed through the houses of parliament. This phase began back in 2015, with the draft legislation developed over the following three years. It went to public consultation in 2020 and passed by parliament in March 2021. Phase two of the process is getting the IChEMS incorporated into the legislation of each State and Territory within Australia. They can adopt the Register with or without modification. A consistent national approach will make it easier for industry to manage and comply with the requirements. The hope is that Phase two will be complete and the IChEMS register available early in 2022. Recommended action items
The industry needs to be aware of this upcoming change to industrial chemical regulation in Australia, as it will impact all industrial chemical manufacturers and importers. Companies will need to ensure that they check their chemicals against the IChEMS Register once it becomes available. If chemical scheduling restrictions cannot be met, more environmentally friendly chemicals must be considered.
Laura Whiteman is a senior regulatory specialist at UL, which provides innovative material and regulatory data solutions to facilitate a transparent and sustainable product supply chain. With fully automated chemical compliance software platforms, industry-leading data resources and an unprecedented global network of regulatory expertise, UL removes barriers and solves critical challenges to help companies stay one step ahead of global regulations. For the latest regulatory news and important industry updates, sign up for UL’s monthly regulatory newsletter. www.ul.com/services/solutions/chemical-data-management customerservice.anz@ul.com Ph: 03 9846 2751
Identifying the intangible assets in your manufacturing business
Manufacturing is a process of evolution, it continues to progress and re-invent itself, in Australia the movement towards Advanced Manufacturing has become the norm, which is reflective of the use of innovative technology to improve products or processes. While physical assets, tools, machinery and instruments will continue to be a key to success of manufacturing enterprises, the inescapable truth for any business is that the drivers of wealth creation are to be found in its intangible assets. An analysis of the enterprise value of businesses less their tangible asset value, across a vast array of industries (except for investment and banking entities) reveals that 80% of the real value of a business is held with intangible assets such as acquired goodwill, brand names, trademarks, customer lists and the like, as opposed to tangible assets. The shift in value paradigm from tangible assets to intangible assets began in the early 20th century with the growth and dominance of stock exchanges around the world, mergers and acquisitions and the focus on how brands (like Coca Cola for instance) were able to generate huge revenue streams and therefore cash inflows on the back of consumer loyalty. Business valuations progressed from an analysis of balance sheets to a focus on sustainable earnings and consideration of valuation methodologies to determine the extent to which cash flows could be generated from the value of intangible assets. Consider where the underlying value of intangible assets exists within an enterprise and it can be grown and supported for wealth creation. Especially where the predominant value of intangible assets for an enterprise is driven by its brands, trademarks, internally developed technology, systems and secrets. Underlying intangible asset value of enterprises
This value is found in an organisation’s culture, its people, and its purpose. Leading American business magazine Forbes partnered with market research firm Statista to compile a list of the World’s Best Employers in 2020. They surveyed 160,000 full-time and part-time workers from 58 countries working for businesses with operations in multiple nations or regions. Participants were asked to rate their willingness to recommend their own employers to friends and family and to rate their satisfaction with their employers’ COVID-19 responses and score their employers on image, economic footprint, talent development, gender equality and social responsibility. Unsurprisingly, the top 10 companies listed as “World’s Best” include Big Tech giants Samsung (1), Amazon (2), Microsoft (4), Apple (6), Adobe (7) & Alphabet (8). Excepting that there is substantial acquired goodwill intangible assets on their respective balance sheets, especially as they have grown and acquired smaller competitors along the way, the fundamentals of these enterprises is that they have a culture and purpose which attracts the best talent and branding which attracts very loyal customers. There is nothing new in these fundamentals, but the key issues to consider is how and what to invest in and what to do differently to attract and retain the best talent, develop these people and ultimately build the brand to sit above competitors. Ironically, the following two areas I’ll focus on are the “intangible elements” behind the intangible assets: • Rebuilding team and culture • Diversity, equity and inclusion In other words, these are the real intangible assets to focus on – people and culture. Rebuilding team and culture
As we emerge from an extraordinary two years of challenges, employees can be feeling disconnected from their teams, disillusioned, stressed, concerned for the future, and perhaps unsupported or alone. Even if regular Zoom meetings were held, these can lack a level of communication, learning and support that comes from physically being together. In addition, many employees had to home school their children or assist with their learning to some extent, care for elderly parents and experience other challenges that nobody predicted or prepared for. The fallout post COVID-19 will involve many employees making choices to leave their current roles seeking alternative employers or roles where work life balance and flexibility are a given, where greater support and understanding is provided, including for learning, career advancement and benefits available. Rebuild your organisation’s culture means investing in people and technology to allow people to work where they perform best and to enable participation in a range of activities which promote rebuilding teams, supporting positive culture and assisting employees to fulfil their potential. Diversity, equity and inclusion
Perhaps this should be referred to as empathy, because when you consider the feelings of your team members, their perspectives on the culture and performance of the enterprise, their ability to communicate their thoughts, be heard, respected, and engaged with, that’s what we are talking about. Knowing that employers will respect and promote diversity is not only decent, but good for business. Greater diversity in teams is more likely to advance innovation and avoid “group think” outcomes. Moreover, it creates a culture of merit, higher performance, and a more enjoyable workplace. Your call to action
Enterprises should focus on these intangible qualities of rebuilding team and culture, diversity, equity and inclusion as priority because being the employer of choice will attract the best people and having the best people enables an enterprise to achieve optimal outcomes. Afterall, these intangible elements are the drivers of business success and the intangible assets you should value so highly.
Jeffrey Luckins is a Director in the Audit & Assurance Division at William Buck – a leading firm of accountants and advisors www.williambuck.com.au Ph: 03 9824 8555
We have before us a great opportunity to reignite Australia’s manufacturing sector and take advantage of the optimism amongst businesses and industry associations. And skills development must be a key focus writes Sharon Robertson.
Trade disruptions due to COVID-19 have companies working to onshore more of their supply chains and the closure of borders has largely halted skilled migration, demanding a fresh approach to sourcing skilled labour. A highly skilled workforce is the cornerstone of a strong economy, and the pandemic has provided Australian manufacturing with renewed opportunities to reclaim sovereign capability across manufacturing. However, if it is to become the cornerstone of Australia’s economic future, skills development must be a key focus. In the words of Australian Industry Group CEO Innes Willox, “You don’t have industry if you don’t have skills.” Earlier this year, IBSA Group released its Scaling up: Delivering Modern Manufacturing through a Skilled Workforce report to further the conversation around the skills needs that Australian industry and its workforce require to deliver a vibrant, modern manufacturing industry, and the actions needed to rebuild our economy. In putting together the report, IBSA conducted an extensive series of research and national industry engagement which sought the views of industry stakeholders who are active in a wide range of manufacturing sectors. Over 500 stakeholders participated, representing thousands of businesses. The data and findings were analysed to develop the report, which identified the priority actions needed, and proposed strategies, to ensure Australia has the highly skilled workers required to support modern manufacturing. IBSA found a strong and clear consensus from manufacturers, training organisations, peak bodies and unions operating within the sector that a skilled workforce is vital to achieving a competitive manufacturing industry able to address Australia’s most critical needs. It also found a real sense of confidence amongst participants regarding the future opportunities that exist within the sector, and strong support for the Scaling Up report’s key recommendations. These include increasing sovereign capability, addressing national skills shortages, investing in new technology and new skills, increasing skills system responsiveness, the need for greater collaboration between industry, VET providers and higher education, and workforce development that prioritises the upskilling and reskilling of workers. In terms of sovereign capability, industry has emphasised the current strength of Australian manufacturing capability, both in the six priority areas identified in the Federal Government’s Modern Manufacturing Strategy but also in more traditional manufacturing sectors. If there is to be significant expansion, it will require the development of a workforce strategy that supports both the onshoring of production and supply chains for essential goods. Establishing a Workforce Development Strategy for modern manufacturing, that has apprenticeships as the bedrock of entry-level training and prioritises the reskilling and upskilling of existing workers, is needed to deliver the framework for advancing the sector. This will lead to more work-based learning and apprenticeship training opportunities that create pathways to higher skills development. There is no doubt that the manufacturing sector wants to see a system of apprenticeships that incorporate extensive STEM-based skills and provide qualifications equating to a diploma or advanced diploma. For greater recognition of apprenticeships as pathways to higher qualifications and higher learning, and more collaboration between industry, VET and Higher Education sectors need to create synergistic skills development pathways. Embracing new opportunities in areas we have a competitive advantage, requires building a workforce skilled in product development, new technologies, design and prototyping, along with gaining efficiencies through sustainability and collaborative skills. This will enable the development of integrated, innovative systems and business models across subsectors and design, production and distribution teams, as well as between training organisations and industry. Most critically, industry must be allowed to lead this process through the establishment of priorities and the setting of standards. Governments are also committed to reskilling our workforces which is incredibly encouraging and exciting for Australia’s manufacturing and related industries. In addition, the recently announced Skills Reforms to the Vocational Education System provide a welcome opportunity to overhaul the system. Now is the time for all of us invested in skills training in Australia to be bold and determined. To work alongside industry and to propose and, most importantly, get stuck into, implementing practical solutions that will deliver relevant, dynamic training programs. These programs must meet the skills needs of current and emerging employers and industries, and attract school leavers, the unemployed and current workers to the real, skills-based career opportunities available in manufacturing. There is no doubt that the Australian manufacturing sector is ready to share its expertise, energy and insight to position the sector and the Australian economy for continued productivity and prosperity for generations to come. With a renewed sense of confidence, it stands ready to take back its sovereign capability and invest in developing highly-skilled workforces that support modern manufacturing and associated industries.
Sharon Robertson is CEO, IBSA Group. The IBSA Group is a notfor-profit organisation in the Vocational Education and Training (VET) sector, dedicated to shaping workforce skills for the future. IBSA Group incorporates a Skills Service Organisation, which develops training packages and qualifications for the manufacturing sector, and Australian Training Products, which designs and develops high-quality accredited learning and assessment resources. IBSA Academy also forms part of the Group and offers non-accredited professional development for training practitioners. IBSA Group is committed to supporting the VET sector within Australia and globally, through working with stakeholders across industry, government and training providers to enable the workforce of the future. www.ibsa.org.au
Succession Planning Case Study: A family affair
No one can work forever. Whether you run a small or large business, at some point you will retire or wind down your involvement. Julia Cameron explores the importance of a succession plan.
The operational demands of running a family business can be allconsuming, but it is vital that owners take the time to assess their future needs. A solid succession plan can drive the growth of the business, reduce taxes, set the stage for retirement and a generational transition. We recently assisted a family-owned manufacturing business implement its desired succession plan. The following case study sets out how our cross-practice team came together to provide workable solutions to enable our client to keep the business in the family and avoid irreparably damaged sibling relationships. The business
• Manufacturing business founded by the patriarch whose two sons, Dave and Steve, worked in the business with him. • On the patriarch's death, the two sons continued to run the business harmoniously for a number of years with an understanding that they were equal owners of the business. • The business was owned in a discretionary trust with a corporate trustee. • The brothers had agreed that if one of them passed away, the surviving sibling would inherit the business, and each trusted the other to look after the widow of the deceased brother. • There was a life insurance policy on both of their lives that paid 50% of the policy to the business and 50% to the deceased brother’s widow (a buy/sell was also in place). Objectives
• Protect the brothers and the business. • Maintain an income stream for their families. • Ensure the business can be passed down to the next generation. • Formalise the agreement between the brothers in a legally enforceable contract. The challenge
• Cracks started to appear when Dave’s wife raised concerns about her future lifestyle and financial needs if Dave died. • While the brothers did not want their wives getting involved in the business, they wanted to ensure the wives were taken care of after they died. • The business structure (a discretionary trust) was inappropriate to enable the business and its assets to pass to the next generation. The solution
We provided the client with three strategies designed to secure the succession of their business moving forward: 1. Corporate restructure – the business was rolled out of the trust and into a company. The rollover mechanism avoided a capital gains tax liability on the transfer of the business to a new structure. The two brothers would each own an identifiable 50% share in the company which now owned the business. 2. Future income – the company’s constitution provided for the issue of shares to the brothers, which provided a lifetime income via dividend when the brothers were no longer actively involved in the business and an issue of shares to the
brothers’ wives which would ensure them a lifetime dividend if the brothers died while still a shareholder. 3. Shareholders’ agreement – this document set out: a. the composition of the board and how decisions were to be made b. what happened on the death of the brothers c. a first right of refusal to buy out the other’s interest in the business if the other brother wanted to sell. We also prepared new Wills for Dave and Steve that dealt with the transfer of the business and ancillary documents providing instructions to the executors as to what is to happen when one brother survives or on the death of both brothers. What to think about
• Does the existing structure enable ownership of the business and its assets to be passed on to the next generation? • Are there governing documents in place which deal with disputes, incapacity and death? • Do all the family members who work in the business get along? Are there underlying problems that haven’t been addressed? Who wants to continue in the business? • If your business partner dies, do you want to be in business with their spouse or children, or do you want the opportunity to buy them out of the business? • Will you and your family continue to receive an income stream upon your retirement? Need to know more?
Rigby Cooke’s team can guide you through the succession planning process by advising you on all of the necessary considerations. Whether you require business or individual succession planning, we will help you identify the best strategy tailored to your personal circumstances.
