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La Trobe Business School

Month: February 2016

The La Trobe Commerce Students Association: An organisation for all LBS students

Commerce Student Association La Trobe University

By Evelyn Palmese

Hi fellow La Trobe Business School Students,

My name is Evelyn Palmese and I am the President of the La Trobe Commerce Students’ Association (CSA) for 2016. This year I will be entering my fourth and final year of a Bachelor of Accounting/ Bachelor of Finance double degree. As a student of La Trobe I understand that students are constantly striving and struggling to maintain a well-balanced university life. I am also highly aware of the stresses and difficulties that students often face when searching for employment for after they have completed their University degree.

Since our inception the CSA has strived to help students have a balanced university experience, by exposing them to professional industry and by providing them with the opportunities and tools that will place them in good stead when seeking employment. We also seek to organize networking opportunities with potential employers and fellow students through various enjoyable and informative events.

The CSA is the official student association on campus, which aims to further the interests of all students who are part of the La Trobe Business School. We are here to help students from all disciplines that fall within the School, including Accounting, Finance, Economics, Marketing, and Management, just to name a few.

Over the course of the year we will be running a multitude of different events starting with our Career Development Month which will be happening over March and April. During this time students will be able to attend workshops run by leading industries such as EY, CPA, CA and FPA, as well as a large careers expo that will bring together the entire month. There will also be the CSA Ball, and a Q&A panel and networking event, which will give students the opportunity to meet more of their peers and chat with individuals from across the industry. Also, don’t forget to look out for the two careers guides that we will be releasing and our stalls that will be popping up across the Uni during the year.

Being a part of a student society, especially a School based one, is a great way to meet people. It is also a great way to show potential employers that you have a real interest and passion for what you are studying, giving you that extra competitive advantage when applying for jobs.

Therefore I encourage all students from the La Trobe Business School to keep a look out for the CSA around campus, like us on Facebook and really get involved in the events that we have going through the year.

Wishing you all a fun and successful 2016!

Innovation and shared value critical for regional development, says LBS Professor of Practice

Dr Mark Cloney, Professor of Practice, Economics

By Mark Cloney

Could a new approach to regional development policy premised on creating shared value and utilising existing institutional networks be a key catalyst to the implementation the Turnbull government’s national innovation agenda?

The upcoming Federal Budget should outline more details of the government’s national innovation agenda. One way to ensure the successful implementation of the agenda could be to utilise established institutional arrangements and networks that foster regional economic development across Australia’s regions – and not duplicate or marginalise their efforts.

In December 2015 the Turnbull government announced an Innovation Statement that committed $1.1 billion dollars over the next four years to support business based research, development and innovation. A key focus of the Innovation Statement is a desire to strengthen the ties between business, universities and scientific institutions.

Many leading theorists have written on the importance of innovation and regional development to the international competiveness of firms and nations. For example, Harvard business gurus Michael Porter and Mark Kramer (2011) argue for the importance of creating shared value, which focuses on the connections between societal and economic progress including enabling industry clusters. Much of what they say is consistent with the Innovation Statement objectives.

According to Porter and Kramer (2011), policies, collaboration and operation practice that enhances competiveness of a company while simultaneously advancing the economic and social conditions in the communities in which they operate will be the power behind next wave of global growth. They cite firms such as Google, IBM, Intel, Johnson and Johnson, Nestle, Unilever and Wal-Mart as examples of companies that have embarked on shared value initiatives within the communities where they operate. According to Porter, in particular, the success of every business is affected by the supporting companies and soft and hard infrastructure around it and the networks within which they operate (i.e. the microeconomic foundations). Therefore stronger local capabilities in areas such as education and training, R&D, transport services and logistics, supplier collaboration, distribution channels and infrastructure are key to increased competitiveness and innovation. To support industry cluster development, business needs to identify gaps and deficiencies in these areas and enter into closer collaboration with like businesses, peak industry groups, government and universities to collectively address local deficiencies.

Regional Development Australia (RDA) is a national network of 55 committees (including metropolitan RDA’s) made up of local leaders who work with all levels of government, business and community groups to support economic and social development of their regions. This initiative is funded by the Australian Government and supported by state, territory and local governments in all jurisdictions. Most RDAs have at least one university in their catchment area and are at various stages of maturity in their engagement with them. For example, La Trobe University is a board member of both the North Melbourne (NM) RDA and North Link, two regional development bodies who between them cover seven local government areas in Melbourne’s northern suburbs (incorporating La Trobe University’s Bundoora campus).  La Trobe has been supporting these organisations for a number of years and provides facilities for North Link at its R&D Technology Enterprise Centre. The established networks of NMRDA and North Link are all about facilitating R&D research connections with business, industry and the tertiary sector in the northern region with an objective to help local business grow and innovate.

Perhaps options to consider delivering the innovation agenda through policies focused on creating shared value and directing new resources to the existing institutional arrangements and networks of the RDAs would provide an efficient mechanism and real impetus to delivering the government’s innovation vision.

Dr Mark Cloney is a Professor of Practice Economics at La Trobe Business School.

Mark has had 20 years’ experience in the federal government in corporate areas including program design, implementation, evaluation and compliance. He was a member of the Senior Executive Service in the department of Agriculture and completed a PhD with the University of Sydney in 2003 on regional development policy and economic theory.

Michael E. Porter and Mark R. Kramer (2011) The Big Idea: Creating Shared Value, Rethinking Capitalism, Harvard Business Review, Jan- Feb – https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/pr

North Melbourne RDA – Regional Development Australia web site: https://rda.gov.au/

North Link website: http://melbournesnorth.com.au/

Galileo software and LBS tourism student employability outcomes: a look into the back-end of the travel industry with Yvonne Lennard

Almost everyone who travels has at one time or another booked a flight or accommodation through a travel agent. Central to this process and widely used in Australia, but often invisible to the customer, is the booking software Galileo.

Yvonne Lennard, who is a Galileo specialist, teaches tourism and other students at La Trobe Business School about how to access and use the system. Yvonne explains: ‘While the system is complicated, anyone can do it. We see a lot of our students pick it up very quickly and in a very intuitive manner. Funnily enough, for students who are extremely technical, navigating the Galileo interface sometimes proves to be harder for them, mainly because of preconceived ideas they may have when it comes to navigating software platforms’.

The Galileo system is one of three operating systems for travel agents used globally. To use the connected database, travel agents use a set of command lines that resemble shorthand, to look up airline codes and travel dates. ‘Learning how to navigate the system is similar to learning a language, really,’ Yvonne Lennard comments. ‘All it takes is practice and common sense.’

Yvonne has been delivering a subject in the Galileo software at La Trobe Business School for over ten years. Students are tested through an online examination and a live examination. When they pass without any issues, they receive a certificate that makes a significant difference in the travel industry, enabling graduates to hit the ground running: ‘In this course, students have to learn about every aspect of making a booking. For their live examinations, we use a simulation system that works with real time flight data. To pass, students have to process a realistic and complicated booking where they have to book space for extra luggage, find a hotel, and book tickets and special meals for fictional customers. If they eventually opt to work in the travel industry, they can skip the training entirely. Even when they go to Europe, where most companies use Amadeus, a similar booking system, they only need one training day. The two systems are so similar that a certificate will make a difference, no matter where you go.’

The classes themselves are very hands-on: ‘The students love that [practical] side of it. At university, a lot of courses tend to be heavily theory-based, so for students to work with something so hands-on, Galileo can be an exciting thing.’ Yvonne says. For her, that practical approach was one of the main reasons why she ended up in the travel business. ‘I studied Health Science, but sometimes things were a bit too dry for my liking. I tumbled into the travel business after managing a Flight Centre store. When a training centre for Galileo was set up in Melbourne, I was approached to become a trainer. I was immediately fascinated, and have been training people ever since.’

In December last year, Yvonne Lennard was presented with a teaching award at the Travelport Forum, after being nominated by her students. ‘The experience was enormously rewarding, and it’s nice to receive that validation. Being a teacher isn’t just understanding the system: it’s understanding how students approach it when accessing it for the first time, and knowing how best to convey knowledge to them.‘

When asked if she thinks the system is facing trouble with the growth of on-line sites like booking.com, Yvonne is a positive thinker: ‘Booking through a travel agent will always provide a customer with the kind of ease you will never get from internet bookings. Airline websites can be hard to navigate, and when you have to book flights, accommodation and rental cars while wading through visa regulations, things can easily become overwhelming. What happens quite often, is that people don’t realise they need certain documents in order to travel, like insurance papers, or specific visas. When they realise this too late, they end up paying twice as much to get it processed quickly. A travel agent can save you all that trouble for little extra cost. The booking systems are definitely changing, but I have faith that the travel industry will change with it.’

For LBS tourism students, having skills with Galileo clearly enhances their employability on graduation.

LBS PhD candidates researching greenwashing and the well-being of para-athletes

Hannah MacDougall Anne Brouwer Is Nothing Sacred

Last month, La Trobe Business School PhD students Hannah MacDougall and Anne Brouwer were featured in an episode of Is Nothing Sacred?, airing on Joy FM radio station. In the episode, five La Trobe University PhD students summarise the subjects of their thesis and answer further questions.

Anne Brouwer speaks about green-washing, while Hannah MacDougall’s research analyses the well-being of para-athletes. Hannah McDougal was one of the finalists for the 3MT competition in 2015.

Listen to the full episode on the JOY 94.9 FM website.

LBS Professors of Practice: How to develop effective representative boards

Catherine Ordway Michael Wildenauer Governance La Trobe Business School

Recently, La Trobe Business School’s Professors of Practice Michael Wildenauer and Catherine Ordway attended the 32nd National Conference of Contemporary Governance, where they conducted a workshop on ‘The Challenges of Representative Boards’.

The workshop, aimed at an audience of governance professionals including lawyers, corporate secretaries and board members, mostly consisted of attendees who currently worked on or with representative boards, keen to discuss challenges they faced, and strategies they could develop to confront those challenges.

“Most of the members attending came from a governance background with years of experience.” Michael Wildenauer says. “In that context, there isn’t anything new I would be able to teach them about how boards worked and what is required of them as directors. But what we could do was present them some really relevant research findings to spark a discussion, identify challenges in representative boards across sectors to see what they may have in common, and how these challenges could be overcome.”

“When you are a member of a representative board, elected or appointed” Michael explains, “it is important to remember that you are representing more than just your constituents. The board is responsible as a whole for every decision the governing body makes.” According to Michael, there are numerous factors that contribute to a well-functioning board, some structural and many cultural. One of the big issues is diversity, both on the board itself and within subcommittees.

Representative boards structurally create the opportunity for some diversity through providing a seat at the table for particular interests. While this structural diversity is important, as Michael explained, the workshop also explored the need: “to ensure that there is diversity within the various ‘factions’ on representative boards. For example, if all the employer appointed directors on a superannuation trustee board are 60 year old males and the union appointed directors are 35 year old women, the ‘us vs them’ dynamic can be very powerful. Furthermore, if boards have a token member from a diverse group, it’s possible that this token member will not have the confidence to speak up if they feel isolated. Or maybe they will speak, but they may not be heard.” For these reasons, Catherine Ordway points to the significant amount of research that supports that idea that a board that better represents the community in terms of gender and the range of education, culture, language, religious and life experiences can assist in: “more robust, creative and innovative decision-making”.

Other factors influencing the efficiency of a leadership board can be more straightforward, such as the size of the group and length of tenure. If there are too many directors, it creates room for passive members, who want to join a board for prestige purposes, but don’t necessarily play an active role in the board’s deliberations. Catherine’s experience with sports boards echoes this and she believes that: “the current scandals at the international level in tennis, football, the AFL and athletics relate back to self-interested board members who fail to put the organisation’s interests before their own”. Michael agrees: “A lot of the feedback we received from workshop attendees did relate to size and to long tenure. When attendees were asked to map out the challenges they encountered on sheets of butcher’s paper, the same topics resurfaced again and again. The group was very engaged in discussions around overcoming these challenges, and were very keen to share their own ideas and listen to those of others. That’s a good start.”

The Reform We Have To Have: The Superannuation Challenge

Mark Morris La Trobe Business School Professor of Practice
By Mark Morris

Like many baby boomers I am reluctantly coming to terms with the need to bump up my superannuation contributions so that I can fund a reasonable lifestyle in retirement.

However, I find it hard to generate much enthusiasm for the prospect given the tantalising alternatives of an annual trip to London or an upgrade of the family car. Nonetheless the rationalist in me knows it is something I should do.

Accordingly, one of the very last things I want to grapple with when I struggle to make extra superannuation contributions is yet another barrage of tax changes to our superannuation laws.

However, I accept that tax changes to our superannuation regime are now inevitable as the costs of maintaining the existing superannuation rules are unsustainable and difficult to justify in the more straightened times we live in.

In part, this is because Treasury’s 2014 Tax Expenditures Statement vividly illustrates the burgeoning costs of maintaining our current superannuation regime most of which was set in place way back in May 2006 when the country was thriving under the mining boom. For example, Treasury estimated that the cost of maintaining the concessional tax treatment of employer sponsored contributions alone would be $18.1 billion for the 2016-17 year.

At the same time the Turnbull Government needs to urgently find sufficient revenue to finance the cuts in corporate and personal tax rates needed to lift national investment and productivity in a period of falling revenues.

In this context it looks increasingly unlikely that such cuts will be fully financed through an increase in the Goods and Services Tax rate and/or base, especially given the Opposition’s commitment to fight such reforms.

Accordingly, the Turnbull Government is slowly but surely building up its rhetoric on superannuation reform including its oft mentioned references to tax reform which is both fair and equitable.

In doing so it rarely refers to the fact that it is easier to sell superannuation reform where the impact of cost savings only hit home at some vague point in the future as opposed to GST reform where increased prices will immediately hit the hip pocket.

You really grasp such reforms are almost fated to occur when the Financial Services Council urge the Federal Government to cut back superannuation concessions for high income earners as they did on January 14. When a peak body representing superannuation and management funds calls for a revamp of superannuation concessions for the wealthy you know that a major overhaul to the superannuation regime is almost certainly on the agenda.

Hence, as there is growing consensus that there needs to be some form of superannuation reform, what policy options are available to effect those changes? Especially if the Federal government wants to generate sufficient revenue to help finance more broad-based tax reform?

In my view the Federal government should consider four major policy changes.

First and foremost there is real merit in revisiting Recommendation 18 of the Henry Tax Review which proposed that the tax on superannuation contributions be abolished, and that superannuation contributions should be taxed as income in the hands of individuals at their marginal rates, albeit subject to a 15% refundable tax offset.

In these circumstances a high income earner subject to the current highest marginal rate of tax of 49% would obtain a 15% tax offset in respect of any employer superannuation contributions made whilst a low income earner on the 19% tax rate would similarly receive a 15% tax offset thereby leading to a more equitable tax treatment of superannuation contributions.

We would therefore avoid the current scenario where a multi-millionaire’s superannuation fund effectively pays 15% tax on contributions received being the same 15% tax rate that would apply to a fund receiving employer contributions made on behalf of a sales assistant deriving an annual taxable income of $40,000.

Deloitte recently championed a variant of this proposal in its publication “Shedding light on the debate – Myth busting tax reform” which it suggested would generate a reform dividend of around $6 billion in the 2016-17 year. Not surprisingly similar changes are also the centrepiece of the recent modelling undertaken by the Financial Services Council in tandem with PWC on possible superannuation reforms.

Second, the Turnbull Government should consider the former Government’s proposal that income derived by a fund in pension mode should only be tax-free up to $100,000 a year with any excess subject to tax at a rate of 15%. Whilst this change was only expected to generate around $350 million back in April 2013 the revenue take from such a proposal could be further increased if transitional relief under that measure was ditched and a more punitive rate than 15% applied to funds generating $300,000 or more taxable income per year.

Third, we should revisit the notion that funds are entitled to a refund for excess imputation credits. It is wholly appropriate that funds should be able to extinguish their 15% tax liability during the contributions phase but another thing altogether to allow them to also get a refund of the 15% surplus franking credits on dividends franked at 30% in the dollar.

Finally, it makes little sense that funds in the contribution phase should only pay an effective tax rate of 10% on any capital gains made, being a one third discount on the 15% tax rate that applies to such funds. In a sense this is a doubling up of concessions as the fund is already subject to a low rate of tax being 15% and does not require an additional CGT concession to encourage investment.

Of course we should all recognise that implementing the above changes will invariably mean that some people are worse off being predominantly high income earners.

As is the case with any tax reform some will lose and will have to wear some grief.

However, such changes are absolutely crucial if we are to sustain a superannuation regime which is both robust and fair, and which will provide the additional revenue needed to finance much needed tax reform.

Put simply, superannuation tax reform is a change we have to have if the country is to prosper.

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