Peter Lawrence

This week the RBA announced the end of their quantitative easing program resulting in the conclusion of their bond buying stimulus scheme. The end of the program, which was implemented in 2020 to ease the possible derailment of the Australian economy due to COVID-19 by stimulating economic growth, is a sign that Australia is recovering from its economic downfall.

However, this announcement has raised the hairs on many people’s necks as they now fear an imminent rise in interest rates.

In their first meeting of the year the RBA confirmed that interest rates will be held at 0.1 per cent although, with inflation running above the RBA’s long-term target inflation range, there are predictions of an increase to occur as early as May this year.

A rise in the RBA’s cash rate will mark the first time since November 2010 that the cash rate has been increased. This could put homeowners with mortgages under severe financial pressure as they will be faced with unanticipated mortgage repayments, driving many into financial hardship.

Additionally, job security continues to be a wavering issue in the country, despite the unemployment rate dropping to 4.2 per cent (December 2021) and with it being predicted to drop below 4 per cent by the end of 2022. Employment remains an ongoing concern for many Australians, particularly for those with agile roles that have been, and continue to be, detrimentally affected by the pandemic and government restrictions.

The predicted rise of inflation to 3.25 per cent in combination with potential job loss and increasing mortgage repayments could see hard working Australians struggling to meet their financial responsibilities, with some having to eventually forfeit their loan repayments.

Banks can, and already have, raised their mortgage rates, independent to the RBA’s cash rate, with more than 60 lenders increasing the interest rate on their three-year fixed loans in December 2021. It is obvious that banks are sending a clear signal to the market that they are expecting RBA rates to rise in the short term.

As a result, many Australians now face the risk of falling victim to their overcommitment to their home loans, that they originally entered into as they were under the false impression that the long history of low and steadily decreasing interest rates was a forecast for the future.

On the contrary, an interest rate rise could see Australia’s housing affordability take a turn, with an increase in loan defaults as investors begin to seek to offload rental properties to beat any potential price drops, and reduce their financial commitments, resulting in a surplus of properties on the market.

This could benefit those who have struggled to break into the property market, providing them with an opportunity to take advantage of lower property prices. Although, they will still need to manage the risk of having to make larger monthly mortgage repayments into the future.

In order to avoid coming under financial hardship it is important to work with an accounting or lending professional to create a financial plan so that preparations can be made in order to counteract the impacts of rate changes. A financial plan should provide clarity on your mortgage, lender details, special considerations available and it should also take into consideration repayment limits and ways to alleviate financial demands.

Loyalty to a lender can sometimes translate into larger repayments, so be sure to discuss with your advisor about alternate lenders who may be offering a lower interest rate that would better suit you now and into the future.

The RBAs promise to not increase interest rates until 2024 seems to be a statement of the past with rising inflation and interest rates becoming an imminent reality. Mortgage owners must now take action in order to overcome the looming challenges that they will face once the RBA raises interest rates. To lower the risks involved in financial planning, it is best to seek the assistance of a professional advisor who will provide guidance on the planning and execution of financial decisions, ensuring a better future for you and your family.

By Peter Lawrence, Partner

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Christian Golding

Until recently central banks around the world have been ironclad in assuring businesses and consumers that they should expect interest rates to remain historically low for years to come. This stance was a critical tool in supporting confidence which helped Australia’s economy survive the tumultuous events brought on by COVID-19. It has also has been key in assisting the economic rebound in consumer spending, business investment and asset prices around the world as we emerge from the shadow of the pandemic.

Although as the world has reopened, this economic momentum has contributed to growing inflationary pressure, leading many market commentators to talk up the prospect of increasing interest rates. The recent spike in local headline inflationary numbers no doubt has also turned some heads in the Reserve Bank of Australia (RBA), forcing contemplation over the possibility of needing to increase interest rates sooner than their initial estimates indicated.

The RBA currently holds an inflation rate target of 2-3%, with this band allowing for sustainable economic decisions to be made. When inflation moves outside of this band for a sustained period, the RBA will implement strategies to increase interest rates, thereby reining in overspending and stabilising the economy.

However, if a central bank implements strategies prematurely or too rapidly then it could have an adverse effect. An example of this was in 2018 when the US Federal Reserve lifted interest rates from 1.5% to 2.25%.

This change, together with the expectation of more rate increases to follow, saw heightened apprehension amongst investors that consequently rattled equity markets. In the last four months of 2018, the US market fell circa 20%, with the Australian market following suit down 15% and housing prices contracted significantly.

As a result, the potential of a repeat of history will undoubtedly be at the forefront of central bank thinking around the world as they attempt to normalise policy, without derailing confidence.

Changes or expected changes in interest rates affect future return expectations on other asset classes in both a positive and negative manner, depending on the type of asset. For instance, cash returns have been detrimentally affected with rates reaching all-time lows, whereas investments in growth assets, such as shares and property, have seen their value skyrocket.

This is due to the nature of how growth assets traditionally increase in price, which occurs in one of two ways – through growth in the earnings of a company or rent of a property, or by a general revaluation against other assets (relative value) such as cash.

The RBA’s stance that interest rates would remain at historical lows until 2024 contributed to a flock of investors competing for property and share assets as lower long-term interest rates reduced the required returns on these growth assets while cheap debt just added fuel to the fire. This environment has contributed to the currently high multiples being asked of stock and property, but much of this revaluation ‘free ride’ is now baked into prices. However, should interest rates start to rise on a sustained basis it will have the opposite effect, creating a headwind for price appreciation of growth assets.

Those potentially most at risk, are first home buyers, who in competition with property investors, have borrowed heavily to stay ‘in the game’ and bid prices higher.

This brings us to the question on everyone’s minds – will interest rates remain low or were we all sold a dream that was never going to become true? The key to answering this question is inflation.

The current hype around the recent inflationary spike is fuelling the debate as to whether inflation is transitory (short term) or more structural (long term) in nature. If transitory, as the RBA and many central banks around the world would have you believe, there is no case for rates to rise in the short term because the jump in inflation is merely a period for recalibration to the reopening of the economy before supply and demand factors return to normal.

However, if inflation is more structural because of higher sustained energy prices, the disruption of supply chains and the reduction in China’s focus on exporting cheap components, the RBA will be forced to lift rates more aggressively to bring equilibrium to Australia’s rebooting economy.

For now, the RBA is certainly not leaving anyone guessing where it stands with its Governor, Dr Philip Lowe reaffirming his expectations that there will be no need to raise rates until 2024.

Central to the current scenario, inflationary pressures arising from factors such as issues in the supply chain and jumps in energy prices are likely to be naturally resolved before inflation becomes entrenched. The expectation being energy producers will increase output while there is already evidence that transportations costs may have already peaked – but both will take time to return to normal.

In Australia, the big inflationary ticket item is wage pressure – and currently there is none.

Even with unemployment continuing to trend downwards, the tighter labour market has not presented itself through higher wages. If tight labour markets persist it would be expected to spill into wage pressure however, increasing automation and globalisation of the workforce through technology will continue to place a headwind on wage inflation getting too far out of whack.

Although there are some who expect rates to rise locally in the next year, thereby creating havoc for asset prices, the prospects of this appear to be more about headlines than trendlines.

A rise in inflation however should not be viewed solely as a negative as it is often an indicator of a strong economic environment which in hand reflects positively on factors such as company earnings and rental income. If inflation remains within a reasonable band then we can expect a robust economy, however, like many things, too much of it creates headaches such as asset speculation, slowed business investment and wage pressures.

It is fair to say that although interest rates are likely to remain low, at least in the short term, as the economy continues to build momentum over 2022 it is likely we will see a move in interest rates earlier than currently expected by the RBA to which asset prices are vulnerable.

By Christian Golding, Partner

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Gail Murphy-Nakkash

Pitcher Partners Adelaide is thrilled to announce the appointment of Gail Murphy-Nakkash as Pitcher Partners Adelaide’s CEO, the first in the firm’s 40-year history.

Building on the local opportunities that have presented themselves as a result of COVID-19, the firm wants to seize on growing organisation capabilities, improving employee experience and enhancing the client experience. Gail joins the firm having previously holding the Global General Manager position at Alliance and Partners and has recently located with her family to Adelaide (after 24 years in Sydney) to take on the role.

Ben Brazier, Managing Principal at Pitcher Partners Adelaide said :“With a growing firm and several new Partners in the firm, it was important to bring in someone with a diverse background who could drive growth and build capabilities in a newly created leadership role.”

“Gail joins the firm having previously holding the Global General Manager position at Konica Minolta Australia and has recently located with her family to Adelaide (after 24 years in Sydney) to take on the role.”

Gail Murphy-Nakkash, CEO at Pitcher Partners Adelaide said: “After years of holding global and national roles, I made a conscious decision to find a locally based role where I can be part of building a great company culture and driving success.

“The fact that I’m not an accountant is actually an advantage. What I bring to the role is a “lived experience” from different sectors, with an understanding of the fundamentals that underpin success in highly competitive and evolving markets.

“It is such an exciting time to be in South Australia. COVID-19 and investments such as Lot 14 have added energy to the business community to innovate and grow. That is also evident here at Pitcher Partners, not only through this role but also through our Pitch Labs business where we have a great offering to support clients in transforming their finance operations through technology.”

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Shaun Mahony

Accounting, audit and advisory firm DFK Crosbie has announced it will merge with the Newcastle and Hunter Valley practice of Pitcher Partners.

The merger will see DFK Crosbie take on the Pitcher Partners brand from 15 November 2021 and will be jointly led by Pitcher Partners Newcastle and Hunter’s current Managing Partner, Michael Minter and DFK Crosbie’s Managing Partner, Shaun Mahony.

Discussing the merger, Michael Minter said that the amalgamation will see the continued emphasis on providing personalised services that will build on the current foundation for long-term, rewarding, and mutually beneficial relationships.

“It is about providing our clients with absolutely the best advice and outcomes; it is about combining our shared knowledge, experiences, talent, and passion for our clients, so that their business continues to grow and seize newfound opportunities,” said Mr Minter.

“Being a client of Pitcher Partners means having access to expertise and knowhow from our network of firms across Australia and around the world. Merging provides significant scale and it will further strengthen the firms’ presence in the region.”

Both Pitcher Partners and DFK Crosbie have a long history in providing clients with a great depth of skill and expertise, focussing on helping clients achieve their goals through many practice areas, including business advisory, tax, audit, SMSF, wealth management, and finance.

DFK Crosbie joins Pitcher Partners with specialist knowledge of the hospitality industry, and the merged firm will continue to offer expertise across a diverse range of industry sectors including, family and privately owned businesses, manufacturing, transport, medical, property and construction, as well as NFP and aged care.

Shaun Mahony commented that the team will focus not only on helping businesses manage their finances effectively for long-term stability and growth, but it will truly partner with the community. The newly merged firm will take on a leading role in each of its client’s journeys, guiding them every step of the way, no matter how simple or difficult their path may be.

“There is nothing more rewarding to us as advisors than seeing our clients be successful. As we emerge from lockdown, the future is bright, and we are truly excited about the opportunities 2022 will bring. We want to support businesses and our clients to seize those new opportunities,” said Mr Mahony.

Throughout the merger process, both Pitcher Partners and DFK Crosbie were united in their vision and mission, to putting clients and the community first.

“The firms’ real strength is our fantastic people and we can assure our clients that on 15 November, that our focus will remain on exceptional service, and continuing to build personal relationships,” said Mr Mahony.

Our strong community presence means that we will be able to provide the region and greater NSW with outstanding expertise, long into the future.

With a strong alignment in values, culture and approach to servicing clients, the combined firm will provide a greater opportunity to serve our business community and provide amazing career opportunities for our people.

The merged firm will have upwards of 140 team members, including 12 partners, and have offices located in Newcastle and Maitland. The five Directors of both firms well established wealth management practices will join forces as well. The union will add to the strength of the Pitcher Partners national network, and globally through the Baker Tilly International network.

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Louise Meijer

Last week, Canva’s co-founders Melanie Perkins, Cliff Obrecht and Cameron Adams pledged to donate 30% (approx. $16.4b) of their business’s equity into the Canva Foundation. This is a very generous donation and is an example of long-term planned philanthropy in action.

An ideal way for a family to conduct sustained philanthropic activities, like the Canva co-founders plan to do, is through a Private Ancillary Fund (PAF). A PAF is a trust structure that operates on a not-for-profit basis that can be established by individuals, families, or associates to invest in charitable efforts.

Characteristics of the fund include having a responsible person, the subjection to have an annual audit and 5% of its assets must be distributed each year (valued at the previous 30 June). It is to be noted that a PAF can only distribute to Australian registered DGRs.

Additionally, to be cost effective there is a general industry consensus that a PAF must have at least $1 million of assets to justify its establishment and ongoing costs. This can be built up over several years.

The advantages of a PAF

A Private Ancillary Fund is a cost-effective way to manage a pool of funds to support charitable causes over time. It holds the ability to engage families in philanthropic opportunities and objectives and allows for the creation of an enduring legacy.

Many families form this type of fund to connect and teach the next generation about their family’s wealth and how to manage it alongside trusted professional advisors such as accountants, lawyers, and investment professionals.

As PAFs are a registered Deductible Gift Recipient (DGR), all donations made to it are tax deductible to the donor, in the year of the donation. This is advantageous if there is a significant income in a particularly year as donations can be made over a long period of time and in a more considered manner to “ultimate” DGRs, rather than one lump sum donation having to be made.

There is also the ability to donate specific assets to the fund and offset the tax consequences of doing so, such as capital gains tax. This is beneficial if a family would like to retain certain assets or if the assets are difficult to liquidate but they would still like to apply them towards charitable purposes.

The fund is not subject to income tax or capital gains tax on earnings, with any franking credits received being refundable to the PAF. This results in a higher overall return on investment due to the tax-free environment afforded to a PAF and can assist with the preservation (or even increase) of capital, depending on the PAFs donation strategy.

Who can be a responsible person?

A PAF must have a minimum of two directors, one of whom must be a responsible person.

A responsible person is an individual with a responsibility and duty of care to the community because of employment or belonging to a professional body. This can include, but is not limited to, accountants, financial planners, doctors, lawyers, or members of other professional bodies.

A responsible person cannot be a founder, a major donor to the fund (contributing more than $10,000) or a relative or other associate of the founder/major donor.

The establishment process

It takes approximately eight weeks to establish a PAF due to the various ATO and ACNC endorsements required. If a PAF is to be established prior to 30 June, then it is best to commence the registration process in early March.

Structure establishment

To be recognised as a PAF it must have the following characteristics, as stated by the ATO^[1]:

• It is a fund, established and maintained under an instrument of trust
• It operates on a not-for-profit basis
• It is established solely for the purpose of providing money, property, or benefits to DGRs
• The trustee is a constitutional corporation

To incorporate the trustee company and trust deed, the name, details of board directors and their details must be established. The drafting of the deed will require a lawyer (a model deed can be viewed on the ATO website^[2]).

Once the legal documentation has been completed, the above is to be executed. The appropriate documentation must be submitted to the ATO and ACNC for endorsement as a DGR for the issuing of an ABN and TFN.

Board activities

The fund is required to maintain a written investment strategy and board of directors who are required to meet annually, at a minimum. The board are required to keep up-to-date with annual audit requirements and adhere to obligatory ATO and ACNC reporting.

An annual timetable should be established to ensure these requirements are met, including how often the board of directors will meet and the responsibilities of individual directors.

The investment strategy outlines how the capital of the PAF will be invested. The drafting of this strategy is financial advice and if professional assistance is required to prepare this document then an investment professional is required to be involved.

Ongoing administrative considerations

Once an initial donation has been contributed, all funds are to be invested in-line with the investment strategy.

There is a requirement that a minimum of 5% of the opening market value of assets must be distributed each financial year to DGRs. This requirement does not apply in the year of inception. The directors are required to review this on a regular basis to ensure the minimum distribution requirements are met.

Post year-end the annual financial statements, audit and various reporting requirements will need to be completed.

It is encouraged that those wanting to travel down the philanthropist path consider the costs associated with their generosity. Private ancillary funds are a way for good deeds to be performed, all while managing funds in a tax efficient manner.

By Louise Meijer, Partner

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[1] https://www.ato.gov.au/non-profit/getting-started/in-detail/types-of-dgrs/private-ancillary-funds/?anchor=fall_within_DGR_category#fall_within_DGR_category
[2] https://www.ato.gov.au/Forms/Private-ancillary-fund-model-trust-deed/

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Gavin Debono

The Pitcher Partners network has released its annual Pitcher Partners Business Radar: Understanding the businesses that drive Australia’s economy.

Canvassing the trends, challenges and opportunities faced by middle-market businesses across Australia, the report shares insights into how the COVID-19 pandemic has affected business confidence and the top priorities for businesses as they move ahead to continue growing.

As the engine room of Australia’s economy, the middle-market produces just under 25% of Australia’s revenue ($645b) and one-fifth of the nation’s net tax revenue.

Key findings from the report include:

• Riding the COVID-19 wave: 40% of middle-market businesses felt that the pandemic had a positive impact on their business. One of the biggest challenges that arose in 2020 was the realisation of how reliant businesses and countries are on only having one export market or concentrating a large part of their supply chain in one destination.
• Strategic planning and business confidence: Middle-market businesses with low confidence in their current strength are twice as likely to make ad hoc decisions as businesses with high confidence (33.9% v. 15.9%).  In contrast, confident businesses have formal mid to long-term strategic plans and take a strategic approach to decision-making.
• People challenges: Staff retention is a challenge for 50% of businesses surveyed. Remuneration is perceived to be the largest contributor to staff turnover (34.5%). Staff attraction and retention are the most common challenges for businesses with 200+ employees.

Gavin Debono, Executive Director at Pitcher Partners Melbourne, acknowledged that while the pandemic was challenging for businesses, confidence levels remained strong between the first edition of the report and this second edition.

“Businesses did not let the pandemic go to waste,” Mr Debono said.

“Our research revealed that confidence increased across most areas. Levels grew in current business strength, the future success of the business, industry, and the Australian economy. Confidence levels in the global economy declined slightly.

“It is a testament to the growth mindset and resilience among Australia’s privately owned businesses.

“Driven by the changes businesses had to make throughout the height of the pandemic in 2020, there were, unsurprisingly, some shifts in the top five priorities for Australia’s middle-market businesses. Consumer preferences dropped out of the top five, indicating that it could be time for businesses to re-engage with their customers now they have weathered the challenges of 2020.

“Technology advancements and digital marketing remain high on the list for business owners and leaders, seen as both a challenge and an opportunity. Similarly, navigating and understanding government regulations remained in the top five priorities for business.”

One of the key findings in the first edition of the Business Radar report^[1] was that global geopolitical and macroeconomic events did not impact confidence levels amongst middle-market business owners and leaders. While some of these events eventually filtered down to affect the middle-market, it was not a significant consideration for many businesses.

“Arguably, the events of the last year have changed this. The pandemic has impacted businesses across many sectors. It has also reinforced the importance of understanding what is going on beyond their immediate organisation or industry,” Mr Debono said.

When research for this second edition of the report was gathered, Australia was moving on from the height of the first wave of the pandemic. The economy was recovering quickly, and business and consumer confidence had reached all-time highs, despite the nation’s continued vulnerability through exposure to global events and intermittent domestic lockdowns in most states.

“Thinking ahead, knowing how to plan effectively, and being ready to adapt to and overcome challenges along the way, is front and centre for middle-market businesses as they turn their minds to the continued recovery and a new normal,” Mr Debono said.

“Not surprisingly, the most confident businesses have systematic, ongoing, strategic planning processes, and have engaged in succession planning. We found that less than half of mid-market businesses are confident in their strategic planning and decision-making.”

Having a formal strategic plan in place, whether short or long-term led to higher confidence levels: 52.5% have a formal mid to long-term strategic plan in place, 31.7% have a formal, short to mid-term strategic plan in place, and 15.8% say they tend to make strategic decisions in an ad hoc manner.

More than half (58.4%) of businesses still had not undertaken succession planning. Organisations that incorporate succession planning as part of their strategic planning are significantly more confident in their business and the effectiveness of their decision-making.

At least 62% of businesses intend to implement or continue succession planning, in a sign of an increased focus on this issue, with a quarter of mid-market businesses expecting succession to be a pressing issue within months, growing to more than a third of those businesses with 200+ employees.

“As our clients’ advisors, we are well-placed to help businesses continue the momentum and capitalise on newfound opportunities for growth they may have discovered in 2020,” Mr Debono said.

“Equally as important, it is our role to support business owners and leaders in addressing challenges to realise their personal and business goals.”

The Pitcher Partners Business Radar: Understanding the businesses that drive Australia’s economy report is an independent research report conducted with strategic growth consultancy Forethought.

The research canvassed 400 businesses using both quantitative and qualitative research to further understand the mindset and unique challenges of businesses in the middle-market.

Read the report.

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[1] Business Radar report

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National Chairman of the Pitcher Partners association John Brazzale said it was important to recognise the value and care that our new partners continuously demonstrate to our clients each day

“Our network’s partnerships are tasked with leading the charge as we continue to advocate for the middle market to strengthen Australia’s engine-room; evolve the way we look after our clients; and ensure our people are supported with their professional goals,” John said

“Recognising our new partners drive to making business personal, as they continue to navigate different challenges and seize on newfound opportunities, is important. Through the peaks and troughs of COVID-19, consistent client care – has been and is – at the heart of what they do.

The new partners are based across Adelaide, Brisbane, Melbourne, and Sydney, and bring an assortment of expertise, as well as the determination to build new practice areas:

• Jarrod Morris – Principal, Pitcher Partners Adelaide, PitchLab
• Andrew Robin – Partner, Pitcher Partners Brisbane, Audit and Assurance
• Andrew Mitchell – Partner, Pitcher Partners Melbourne, Private Business and Family Advisory
• Debbie Hung – Partner, Pitcher Partners Melbourne, Private Business and Family Advisory
• Andy Hough – Partner, Pitcher Partners Sydney, Corporate Finance (mergers and acquisitions)
• Jyotika Rangel – Partner, Pitcher Partners Sydney, Private Business and Family Advisory
• Paul Marino – Partner, Pitcher Partners Sydney, Tax Advisory

Jarrod Morris joined Pitcher Partners Adelaide in 2020 as the innovation and technology lead, later announcing the creation of Pitch Labs, a disruptor to the accounting industry by enabling an outsourced accounting and advisory service on a subscription basis.

When taking his position as principal, Jarrod shared his standout piece of advice for aspiring professionals, “associate yourself with people who believe what you believe, don’t be afraid to challenge the status quo, and use your intuition and embrace failure”.

Andrew Robin joined Pitcher Partners Brisbane from Deloitte in 2020. Upon making partner this year, Andrew said he valued the empowerment that Pitcher Partners places in its team. “It is rewarding and allows you to make a real impact with the clients you get to work with. Making business personal is all about getting to the heart of the business, the people behind it, and what they want to achieve. Having this understanding creates a strong foundation on which to build a collaborative relationship to best support clients on their journey”.

Andrew Mitchell and Debbie Hung bolster the partnership team at Pitcher Partners Melbourne. Andrew said of his career growth, “fostering interests and outlets outside work is important. It allows you to expand your networks and start every week with a fresh perspective, plus it makes you a more well-rounded person”.

Debbie said she has always wanted a career that helps people, but, as accountants that version of help is different. “We help clients sleep at night because they know everything is under control. As their trusted business advisor, you know someone’s finances, what is driving them and the bigger picture of what they are looking to achieve in life and business”.

Andy Hough, Jyotika Rangel, and Paul Marino join newly minted Managing Partner of Pitcher Partners Sydney, Adam Irwin. Of his appointment, Adam said he is proud of what has been achieved throughout his time as COO at Pitcher Partners Sydney.

“I have led the firms’ transformation journey, from the operational, technological and change management elements of our merger, to navigating the firm’s response to COVID-19,” Adam said.

Andy Hough will join from Deloitte on 1 August. He said, “being able to join a firm that fosters getting in the (metaphorical) shoes of clients and walking a mile with them, resonates with my approach to client care. Middle market clients are often living and breathing every decision to do with their business, so I see my role as understanding the business beyond the numbers”.

Jyotika started as a graduate at Pitcher Partners and has been an integral part of the team since. Jyotika said, “listening and learning from every situation and everybody has helped my career grow from strength to strength at Pitcher Partners.

“I’ve had incredible mentors and supporters, worked with incredible teams and clients during my tenure, and now I get to take on that role in a more formal capacity. I know the importance of a mentor; they will make the world of difference to your personal and professional wellbeing.”

Paul said making business personal means building a relationship with your clients that is more than one of a transactional nature.

“Striving to do the best for your clients is getting to know them professionally and personally, being on the same page as them and appreciating being able to be on the journey with them.”

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National Chairman of the Pitcher Partners National Association John Brazzale said tonight’s Budget has been built on the backdrop of an ongoing global pandemic with the next federal election in sight.

“This Budget has focussed on continuing to support the economic recovery through big ticket spending on infrastructure and targeted support for industries. However brave structural moves — a more rapid reduction to corporate tax or initiatives to fuel business and new industries growth — have been left on the shelf,” Mr Brazzale said.

“Australia prides itself on being a developed economy but looking at the industries represented by many of the largest businesses in our economy, we are heavily weighted to traditional industries of finance and materials. This is much more so than our peers in the USA and Europe, where technology, communications services and biotechnology represent much larger parts of the business community than they do here in Australia.

“With borders up and the economy locked, Australian middle market businesses need a plan that will deliver the skilled workforce and incentives to invest and grow.

“Australia’s borders are not expected to re-open until at least mid-2022, which means immigration and international tourism are still off the table, as are most international student arrivals.

“Immigration and international students are important, not only for the industries and businesses they support through their spending, but are critical for labour supply in many industries if we are to make the most of the expected economic bounce the Budget seeks to support.

“This Budget has rightly left business to do the heavy lifting of bringing the economy back to recovery, but, without the necessary structural reform needed for the decades to come,” Mr Brazzale said.

There are some concessions aimed at the middle market, including:

• 12-month extension of the loss carry-back offset introduced in the 2020-21 Budget, allowing corporate entities to carry back tax losses for the 2022-23 income year for up to four income years
• Extended instant asset write off
• Consumption stimulus through the extension of the low and middle-income tax offset
• Tax relief for small brewers and distillers, which includes increasing the excised refund cap from $100,000 to $350,000

“We look to the future with cautious optimism. However, the Budget forecasts are predicated on a complex set of assumptions. Invariably, these will be concerned with fundamentals such as growth, core commodity prices and general trading conditions,” Mr Brazzale said.

Mr Brazzale said that the Government could have looked to lift education outcomes with a view to evolving the economy to be able to innovate; enacted long-term tax reform that encourages research and rewards outcomes, and foster import replacement industries by encouraging local production such as advanced manufacturing.

“As we have seen with both the strong rebound in employment and the vaccine rollout, expectations of timelines are changing rapidly, and these will continue to have large impacts on short term budgets and economic conditions.

“Staying flexible, efficient, and productive will be as important as ever for the middle market in the year ahead.”

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Campbell Gould

Pitcher Partners Sydney is delighted to welcome Campbell Gould, who will be joining the firm as a partner in the Private Business and Family Advisory team, providing tax compliance, planning and advisory services.

Campbell is an alumnus of Pitcher Partners having worked with us a tax advisor from 2000 to 2005 then moving to Moore Stephens until 2010 (so Campbell has double alumni credentials). Over the last seven years Campbell has been managing his own firm, Unity Advisers, building a solid book of clients, which range from building and construction companies and IT organisations through to more niche clients, such as Centennial Parklands and one of Australia’s largest motorcycle rallies.

With a portfolio of mid-market clients that are growing, expanding, consolidating, or even looking to exit, Campbell recognised that accessing specialist technical experts to help deliver the right advice quickly made the difference between a good and a great outcome.

Campbell said it made sense to make the move to a firm he knows and trusts. “Pitcher Partners has the infrastructure to best support my clients and my personal growth aspirations,” Mr Gould said.

“Client care and support is at the heart of what we do, and it is this philosophy that reigns strong at the Pitcher Partners Sydney firm. The middle-market has done it tough this year and it is more important than ever that we are here to assist our clients navigate unprecedented challenges, but also, new opportunities.”

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John Brazzale, National Chairman of the Pitcher Partners National Association congratulated the newest crop of partners, noting that this is welcomed news at a time when care, commitment and support is needed most.

“Yesterday’s announcement is recognition of years of dedication of our newly appointment partners in living our firm ethos of personal client care and high professional standards,” said Mr Brazzale.

“Career growth must continue, even during trying times, to sure up the future of the next generation of trusted advisors. The journey to partner is a humbling one, characterised by drive and commitment to making business personal for the many business owners and leaders leading the middle-market – the engine room of Australia’s economy.

“Client care and support is at the heart of what we do, and this support is more important than ever as businesses navigate unprecedented challenges, but also newfound opportunities,” said Mr Brazzale.

The new partners are based across Adelaide, Brisbane, Melbourne, Newcastle and Sydney and bring diversity in thought and experience, as well an unrivalled commitment to building their practices and supporting clients.

• Chris Hanna – Principal, Private Business and Family Advisory- Adelaide
• Cheryl Mason – Partner, Audit and Assurance – Brisbane
• Kieran Wallis – Partner, Corporate Finance – Brisbane
• David Bedford – Partner, Investment Advisory – Melbourne
• Peter Lawrence – Partner, Private Business and Family Advisory – Newcastle
• Jake Berger – Partner, Private Business and Family Advisory – Sydney

Upon the announcement, John Brazzale said the addition to the already strong partnership team underpins our firms of tomorrow with the new leaders to champion causes important to businesses and individuals around the country and the globe through connection with the Baker Tilly network.

“The middle-market is doing it tough due to COVID-19 and it’s our job to support our clients to foster stronger business investment, which will in turn fuel employment opportunities and the economy,” said Mr Brazzale.

“Today’s news does not come as an overnight decision. It has been years in the making for our colleagues, whom have demonstrated consistent care and commitment to our clients, particularly in times of need like the world we find ourselves in today.”

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