Western Sydney Business Access Family Business October 2020

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Family Business Welcome

With David Pring

Welcome o KPMG Family Business ea ure ar icles. I you would like o discuss hese ar icles or how KPMG can help wi h your business please eel ree o con ac me on 9455 9996 or davidpring@kpmg.com.au

Facing he rise o cyber crime in he COVID era n GORDON ARCHIBALD he COVID-19 pandemic caused he mass reloca ion o workers rom he rela ive sa e y o heir corpora e ne work o s udies, bedrooms and ki chen ables all over he world –expanding he atack sur ace o organisa ions exponen ially. So, wha changes has he o ce exodus brough o our cyber hrea environmen .

In addi ion o he cyber-crime challenges be ore he crisis, more han our in en organisa ions (41 percen ) have experienced an increase in cyber-securi y inciden s according o he 2020 Harvey Nash/KPMG CIO Survey. Las year’s edi ion o his research, he larges global survey o echnology leaders, sugges ed a posi ive rend when i came o cyber-crime. I showed ha as he board’s aten ion o cyber-securi y grew and inves men increased, cyber-atacks had opped ou and even s ar ed o decrease.

In responses colla ed be ore he pandemic, major atacks had allen ye again.

Un or una ely, no amoun o board aten ion could have predic ed or compensa ed or he unexpec ed mass reloca ion o o ce workers rom corpora e ne works o home ne works. Eigh y-six percen o survey responden s moved a signifcan percen age o heir work orce o remo e working. Te atack sur ace o organisa ions expanded exponen ially, wi h I depar men s s ruggling o suppor and secure he myriad o new, personal devices accessing ne works.

Overall, hree-quar ers o responden s indica ed he impor ance and role o cyber-securi y increased as a resul o COVID-19. Bu how has he atack landscape changed? Globally, he bigges rise was in spear phishing (83 percen ) and malware (62 percen ), ollowed by denial-o -service atacks (21 percen ).

Te jump in phishing and malware indica es he grow h in risk has come mainly hrough cyber criminals arge ing newly remo e-working employees.

Perhaps unsurprisingly, securi y is now he op echnology inves men pri-

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ori y, lis ed by 47 percen o responden s.

And, or he frs ime in his survey’s hisory, cyber-securi y exper ise has become he mos in-demand skill se .

As well as remo e access rom personal devices, he rapid scaling o cloud-based so ware and he managemen o vas amoun s o da a and documen s across a complex echnology environmen all represen new pressures on securi y and privacy. Cus omer experience and engagemen , he second highes priori y ech inves men , will rely heavily on a cloud-based digi al inras ruc ure, so cloud securi y becomes paramoun .

Tere are some core ac ivi ies ha organisa ions can under ake o pro ec hemselves rom increased hrea s:

• Dynamically evalua e risk including he con ex o he changing opera ing environmen .

For example, hrea s and risks deemed low in a pre-COVID world, may now be high.

• S reng hen educa ion and awareness o s a , who may be prone o increased phishing and malware atacks.

• eassess he e ec iveness o cyber con rols pro ec ing cri ical sys ems and da a and new delivery pla orms.

• e-evalua e con rols wi h your hird par ies. Tere have been recen cases o infl ra ion occurring via hird par ies, who have had weaker securi y con rols in place.

• Upda e and es Business Coninui y processes and programs and have confdence in he abiliy o recover rom an inciden .

Wi h cyber risks increasing, companies will urn o ou sourced or managed services o help keep heir sys ems robus agains atacks. Wi h every home rou er now a po en ial weak poin , a securi y rehink is needed or he new ‘hybrid work’ environmen , where signifcan numbers o workers will remain ou side radi ional workplaces, par or all he ime.

First published by Gordon Archibald, Partner, National Lead, Cyber Security Services KPMG Australia and Mark Tims Partner, Technology Risk, KPMG Australia on KPMG Newsroom on 1 October 2020.

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Increasing childcare a ordabili y would boos economy and socie y n ALISON KITCHEN n GRANT WARDELL-JOHNSON US RLIA needs a rebound in economic ac ivi y, and produc ivi y gains o bring us ou o he recession – and a major impedimen o driving our economy is unequal gender work orce par icipa-

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ion.

Te COVID lockdown has highligh ed jus how impor an childcare provision is o working paren s, paricularly mo hers, who have wres led wi h rying o work a home, while looking a er pre-school children.

KPMG’s own Vic oria o ce has seen an 84 percen rise in carers leave reques s during he period o S age 4 lockdown – a proo poin i any were needed on he impor ance o childcare. oday we publish a repor recommending some changes o he unding o he childcare sys em and we have ound ha shor - erm inves men now will pay rich economic and social dividends in years o come.

Te Child Care Subsidy: op ions or increasing suppor or caregivers who wan o work is he f h paper in our series examining gender issues in he work orce bu is he frs since he COVID pandemic – which has added ex ra urgency o he need or re orm, given he economic slowdown has hi lower earners, mos ly women, hardes .

We have iden ifed wo op ions – a pre erred longer- erm plan and an in erim s age o ge here, given he di cul fnancial posi ion he ederal governmen now aces.

Te frs op ion ou lined is raising he Federal Governmen ’s Child Care Subsidy (CCS) o a nearly ully- unded 95 percen , rom i s curren 85 percen , which he s udy shows would boos he economy annually by up o $7.4bn, a a cos o $5.4bn in addi ional CCS expendi ure (ne o addi ional income ax receip s ha would ow rom he increased work orce par icipa ion).

Tis, we believe, should be our long- erm goal.

An addi ional cumula ive benef o GDP would arise rom his op ion, as paren s increased heir career-long produc ivi y by being able o s reng hen heir engagemen wi h work and pro essional developmen while heir children are very young. Our modelling es ima es ha over 20 years his could add up o $10bn o GDP. Te second op ion – and a more realis ic in erim measure given i s lower cos – involves he elimina ion o per-child subsidy caps, and an increase in he maximum subsidy or he lowes income amilies. We es ima e he annual GDP benef o his policy op ion is $5.4bn, a a cos o $2.5bn (again, ne o addi ional income ax receip s). Helping he wors -o mus be he immedia e priori y.

A major issue explored in he repor is how he CCS in erac s wi h he income ax and amily ax benef (F B) sys ems – and i highligh s how he progressive wi hdrawal o CCS and F B and he subsequen increase in marginal ax ra es can combine o crea e large disincen ives o a paren working more hours.

Tis issue we have defned as he Work orce Disincen ive a e (WD ) – and our modelling confrms ha while he curren CCS has improved he fnancial posi ion o many amilies, o hers con inue o ace WD s opping 100 percen – meaning a amily can ac ually be worse o i a paren works addi ional hours. Te WD problem a ec s people across he income scale.

Te in erim op ion we recommend will see he CCS modifed o elimina e he ‘cli s’ inheren in he curren sys em – where jus one ex ra dollar earned could cause a household o lose up o $5,000 o subsidy.

Childcare is a barrier we have imposed on our economy and socie y – we frmly believe ha Aus ralia could cross a produc ivi y ron ier i we could remove ha barrier. Te s udy shows ha annually an es ima ed addi ional 200,000 ex ra workdays per week could be unleashed by a near- ully- unded childcare sys em. Tis is why i mus be our long- erm goal, even i we have o ge here in s ages.

We have o s ar seeing childcare subsidy no so much in he prism o cos s (as di cul as ha is in he immedia e circums ances) bu as an inves men in he abili y o paren s, especially mo hers – given Aus ralia’s his oric ‘1.5 model’, where men work ull- ime and many women par - ime – o maximise heir con ribu ion o he economy, according o heir needs and pre erences.

Aus ralia is curren ly considering various s imulus measures o boos our COVID-impac ed economy.

Increasing produc ivi y by boos ing childcare suppor should be righ up here.

First published by Alison Kitchen, National Chairman, KPMG Australia and Grant Wardell-Johnson, Lead Tax Partner, KPMG Economics and Tax Centre, KPMG Australia on KPMG Newsroom on 7 September 2020.

Time to look at strategies for repurposing n PETER LIDDELL I H closed borders and he resul an all in demand or Ausralian resh produce normally des ined or overseas Asian marke s now is he ime o look a how our na ional supply chain can be repurposed o address he disrup ion.

Te supply chain is a business- o-business s ory (B2B) s ar ing on he arm, or in he sea, wi h produce reigh ed in o marke s and ood ou le s.

Te las mile is a business- o-consumer s ory (B2C), righ in o people’s homes using e-commerce/las mile delivery pla orms.

In response o he COVID-19 crisis, we’re seeing vi al supply chain work being done wi h par ners like Foodbank, and he u ilisa ion o governmen care packages.

Bu here’s also he oppor uni y or businesses o re hink domes ic delivery capaci y. Flee s o vehicles curren ly delivering supply o resh produc s such as bread or our hours each morning, could have heir capaci y reu ilised in o her key par s o he supply chain.We could hink o his as he ‘uberisa ion’ o ranspor and logis ics. igh now, he marke wan s resh rui and vege ables, sea oods and proeins. Ye a he same ime here’s a slowdown o ranspor as domes ic borders limi speed o delivery and he re urn o asse s like rucks and con ainers. Tere is also he rising cos o reigh . Expor s are experiencing limi ed access o air reigh (and even shipping con ainers) or resh produce and excessive prices rom <$1k

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up o as high as $25/kg. Tese prices don’ realis ically suppor expor s in o Asian marke s.

On he domes ic ron , he high demand surge or B2B-flling o re ailer’s shelves and B2C-home deliveries or ood, spor ing and en er ainmen equipmen is changing ranspor pa erns rapidly. Ta means pivo ing and repurposing ranspor ee s a he same ime building in managemen o he vi al aspec s o OH&S and regula ory or ood handling and dangerous goods.

Wha is he specifc solu ion or he domes ic supply chain righ now?

We need o analyse curren ailures and choke poin s driven by he COVID-19 pandemic and build new business con inui y planning models.

Te aim is o pu supply chain ron and cen re in reshaping ac ivi ies. In o her words, iden i y by cri ical indus ry wha mus change o suppor Aus ralia as a sel -sus aining coun ry.

Whils cer ain businesses can de er ac ivi y like fshing or lobs er and o her sea oods, o her commodi ies like rui and vege ables mus be harves ed or hey go o was e. For hese commodi ies, i is ime o pivo and re-purpose – moving resh in o rozen produc s, ex rac ing key proper ies as inpu s in o vi amins and supplemen s or as ingredien s in o ood and beverage manu ac uring. Tese are jus a ew examples o how businesses mus hink di eren ly during imes when borders and access o radi ional marke s remain closed.

Addi ionally, we can also look a he ow o inbound and ou bound produc s

hrough he lens o regional and local supply chain ows. Wherever possible we mus seek o u ilise al erna ive modes o ranspor a ion and conduc radeo s according o cri icali y, needs, cos , service, and risk scenario analysis o all viable op ions.

How can we unders and ‘cri icaliy’? Te answer is frs ly on ype ( resh, perishable) and hen supply cri icali y.

We need o crea e inven ory and supply visibili y across he end- o-end chain – iden i ying hose cri ical choke poin s and reconfguring ows, s orage, and domes ic supply chain s ruc ures.

Supply risk managemen is based on our key ac ors: i em classifca ion; supplier loca ion (local, in ers a e, o -shore); al erna e supply op ions, al erna ives; available ranspor rou es and lead- imes (po en ial delays across s a e lines, access o road and rail reigh , access o ood con ainers).

Pivo ing and repurposing also involves mapping he supply chain. Ta is abou enabling beter visibili y o several iers o suppliers, as well as he logis ics be ween hose suppliers. We need o know where he al erna ive rou es and access poin s are o be ready when disrupion (eg. no reigh or con ainer access) hi s he supply chain.

Businesses need o conduc a value chain assessmen o o her risk ac ors ha may escala e cos s. Tis includes knowing ha ranspor a ion shor ages may increase cos (as ranspor companies see an oppor uni y o raise margins) and impac service and inven ory capabili ies. I ’s essen ial o ake proac ive

ac ion o address an icipa ed shor ages, such as possibly pre-booking/consolida ing reigh or char ers wi h o hers – even compe i ors! Ano her in elligen approach is o iden i y addi ional supply sources even across o her indus ries, near-shore op ions and/or iden i y collabora ion oppor uni ies wi h compe iors in he same geographical area.

By shi ing produc ion closer o he end cus omer, organisa ions can o er as er ulfllmen a a lower cos and wi h a smaller carbon oo prin . Micro supply chains also mi iga e he impac o reverse logis ics, he annual cos o which in he U.S. alone is expec ed o reach $550 billion by 2023. Working wi hin ra her han across borders means micro supply chains are ar less vulnerable o changes in regula ion, in eres and exchange ra es, wage in a ion or ari s. Te abili y o manu ac ure in smaller ba ches keeps inven ory cos s and was e o a minimum.

Supply chains o he u ure won’ be driven by produc s and processes, bu by cus omer needs. Tey won’ depend on capi al-in ensive fxed asse s and linear ows bu on an ecosys em o modular capabili ies, delivered hrough a ne work o rus ed hird-par ies ha can be scaled and recombined as needed. I ’s likely oo ha opera ors will become managers – and ha means new skills will be required and new job roles crea ed. Ta ’s he evolu ion we’re seeing; pivo ing and repurposing now will help us ge here.

First published by Peter Liddell, Partner, ASPAC Head of Supply Chain, KPMG, on KPMG Newsroom on 15 September 2020.

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