Commerce Transformed Stage 5 – FTP pages (updated) by cambridge_aused

Interactive Textbook Included

SA PA M P G L ES E

Interactive Textbook Included

COMMERCE TRANSFORMED Roset Khair, Kate Dally, Wendy Mockler Giles Tom Spencer, Tania White

5 NSW STAGE

Shaftesbury Road, Cambridge CB2 8EA, United Kingdom One Liberty Plaza, 20th Floor, New York, NY 10006, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India Cambridge University Press & Assessment is a department of the University of Cambridge. We share the University’s mission to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence.

SA PA M P G L ES E

www.cambridge.org © Roset Khair, Kate Dally, Wendy Mockler Giles, Tom Spencer, Tania White 2027 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press & Assessment. First published 2026 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Cover designed by Denise Lane (Sardine) Text designed by Loupe Studio Typeset by QBS Learning Printed in Singapore by Markono Print Media Pte Ltd A catalogue record for this book is available from the National Library of Australia at www.nla.gov.au ISBN 978-1-009-78780-2 Additional resources for this publication at www.cambridge.edu.au/go Reproduction and Communication for educational purposes The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of the pages of this publication, whichever is the greater, to be reproduced and/or communicated by any educational institution for its educational purposes provided that the educational institution (or the body that administers it) has given a remuneration notice to Copyright Agency Limited (CAL) under the Act. For details of the CAL licence for educational institutions contact: Copyright Agency Limited Level 12, 66 Goulburn Street Sydney NSW 2000 Telephone: (02) 9394 7600 Facsimile: (02) 9394 7601 Email: memberservices@copyright.com.au

Reproduction and Communication for other purposes Except as permitted under the Act (for example a fair dealing for the purposes of study, research, criticism or review) no part of this publication may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above. Cambridge University Press & Assessment has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Information regarding prices, travel timetables and other factual information given in this work is correct at the time of first printing but Cambridge University Press & Assessment does not guarantee the accuracy of such information thereafter.

Please be aware that this publication may contain images of Aboriginal and Torres Strait Islander people who are now deceased. Several variations of Aboriginal and Torres Strait Islander terms and spellings may also appear; no disrespect is intended. Please note that the terms "Indigenous Australians" and "Aboriginal and Torres Strait Islander Peoples" may be used interchangeably in this publication. Cambridge University Press & Assessment acknowledges the Aboriginal and Torres Strait Islander Peoples of this nation. We acknowledge the traditional custodians of the lands on which our company is located and where we conduct our business. We pay our respects to ancestors and Elders, past and present. Cambridge University Press & Assessment is committed to honouring Aboriginal and Torres Strait Islander Peoples’ unique cultural and spiritual relationships to the land, waters and seas and their rich contribution to society.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Contents

Contents How to use this resource About the authors

Core focus areas

Chapter 1 The consumer and financial environment

SA PA M P G L ES E

Part 1

x xiv

1.1

Setting the scene: Effie Zahos – from everyday spender to money expert

1.2

What is my role as a consumer?

1.3

How can I be more aware of what I buy?

1.4

How can consumers use credit cards and debit cards to pay for things?

1.5

What other types of payment methods can consumers use?

1.6

How do laws protect me as a consumer?

1.7

Refund, repair or replacement: what option is best for me when what I buy does not work?

1.8

What is the role and importance of organisations that assist consumers?

1.9

How do I identify scams?

1.10 How do I protect myself from scams?

1.11 Why is it so important to make the right decisions when earning, saving and spending?

1.12 Why is it so important to make the right decisions when investing?

1.13 Borrowing to meet your wants and needs: what are your options?

1.14 How can I better understand the borrowing process to make more informed decisions?

1.15 Skills focus: personal financial management through budgeting

1.16 Site study: grocery shopping on a budget

1.17 Superannuation: taking control of my long-term financial future

1.18 Skills focus: what money management tools can I use to achieve my financial goals?

1.19 Where can I turn if I have financial difficulties?

1.20 Investigation: improving the financial literacy and wellbeing of Australians

1.21 Chapter review

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

iii

Contents

Chapter 2 The economic environment

2.1

Setting the scene: understanding the world around you

2.2

How do people decide what to buy when they have limited resources?

2.3

What is scarcity and opportunity cost?

2.4

What are incentives and how do they influence decision-making?

2.5

What are marginal decisions?

2.6

Why do supply and demand affect the availability of goods and services?

102

2.7

How does demand affect the availability of goods and services?

107

2.8

How does supply affect the availability of goods and services?

113

2.9

How do markets find balance?

116

2.10 Skills focus: what determines prices?

122

2.11 How are we connected in our economy?

124

2.12 Site study: shopping centre

132

2.13 Why is economic growth important?

134

2.14 What are the indicators of economic growth?

139

2.15 How does economic growth affect our daily life?

143

2.16 What do governments target to strengthen an economy?

147

2.17 What are public goods and services and how does the government provide them?

154

2.18 Investigation: the invisible help economy podcast

160

2.19 Chapter review

164

Chapter 3 The business environment

167

3.1

Setting the scene: how did Jahin Tanvir become Australia’s youngest CEO?

168

3.2

What goals do businesses aim to achieve?

170

3.3

What types of businesses are there and what makes them different?

174

3.4

How do inputs, processes and outputs keep a business running?

180

3.5

How does hiring the right people impact on business success?

183

3.6

How does competition shape business decisions?

188

3.7

How do businesses create and maintain a competitive edge?

192

3.8

What happens to businesses during booms and recessions?

197

3.9

Why do ethics and social responsibility matter in business?

201

SA PA M P G L ES E

3.10 How can we measure if a business is successful?

206

3.11 Skills focus: how can we measure if a business is successful?

211

3.12 What makes an entrepreneur successful?

214

3.13 How can an entrepreneurial mindset benefit you?

218

3.14 How do entrepreneurs contribute to society?

222

3.15 Case study: what makes Australia’s greatest entrepreneurs successful?

226

3.16 Investigation: how to create a business plan for a cafe or food outlet

228

3.17 Chapter review

232

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Contents

Chapter 4 The legal and political environment

235

4.1

Setting the scene: the legal and political environment – what is it all about?

236

4.2

Why do we have laws and what do they do for society?

238

4.3

How are criminal laws different from civil laws?

243

4.4 What is statute law and how is it made?

248

4.5

What is common law and how is it made?

253

4.6

What is Customary Lore and how is it applied?

256

4.7

Why do courts have a hierarchy and what does jurisdiction mean?

259

4.8

Why do laws change over time?

263

4.9

Skills focus: what cases are heard in Australian courts?

268 273

4.11 How does the Constitution shape Australia’s democratic system of government?

276

4.12 What do the House of Representatives and the Senate do?

280

4.13 Site study: NSW Parliament House

284

4.14 Why does the separation of powers exist and what is the role of the High Court?

286

4.15 How does the High Court interpret the Australian Constitution?

289

4.16 How can you have a say in Australia’s democracy?

293

4.17 How do different voting systems work and why are they used?

297

SA PA M P G L ES E

4.10 What is the purpose of the Australian Constitution?

4.18 How do political parties and independents influence who forms government? 302 4.19 Investigation: other legal and political systems

306

4.20 Chapter review

308

Chapter 5 The work environment

311

5.1

Setting the scene: the work environment – what is it?

312

5.2

What are the different types of work and work arrangements?

314

5.3

How does work contribute to wellbeing and society?

317

5.4

Who are the stakeholders in the workplace and what are their roles?

320

5.5

How has the nature of work changed and what will it look like in the future?

323

5.6

Skills focus: what jobs and skills will be needed in future Australia?

328

5.7

What are the legal rights and responsibilities of employers and employees?

331

5.8

Site study: safe workplaces

336

5.9

What types of employment contracts exist and how do they work?

338

5.10 Why do employment disputes happen and what causes them?

340

5.11 How are employment disputes resolved?

343

5.12 How do people get paid for work?

347

5.13 How do payslips and payment summaries communicate earnings, and what are our tax obligations?

352

5.14 Investigation: positive work environments

356

5.15 Chapter review

358

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Contents

Part 2

Options focus areas

Chapter 6 Our economy

361 Online-only chapter

6.1

Setting the scene: how do we understand the economy?

6.2

How does Australia’s economic performance compare with India’s economic performance?

6.3

What are the effects of demographic changes, such as an ageing population and immigration, on Australia’s economic performance?

6.4

How does the government intervene in the economy to improve economic performance and living standards?

6.5

Why does Australia trade with other nations?

6.6

What does Australia trade and who do we trade with?

6.7

Skills focus: how do governments make decisions to solve economic problems?

6.8

Case study: the value of Aboriginal and Torres Strait Islander Peoples’ Cultural arts in the international market

6.9

Investigation: Australian farmers as global climate leaders

SA PA M P G L ES E

6.10 Chapter review

Chapter 7 Running a business

363

7.1

Setting the scene: what if the next successful business millionaire is you?

364

7.2

Skills focus: what financial terms are used in the business world?

366

7.3

What is a small business and how can you start one?

370

7.4

Why is it important to select an appropriate ownership structure when starting a small business?

375

7.5

How can you choose between starting, buying or franchising a business?

379

7.6

How do location, finance options and laws affect small businesses?

384

7.7

Rules, tax and staff: how can you run a business legally?

390

7.8

How can marketing grow your business?

394

7.9

How do finances drive success?

399

7.10 Site study: how does a real business operate?

408

7.11 Investigation: how do you run a market stall?

411

7.12 Chapter review

414

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Contents

417

8.1

Setting the scene: how did a free game make billions?

418

8.2

Why do businesses promote their goods and services?

420

8.3

How do businesses differentiate their goods and services?

423

8.4

Who do businesses target when promoting and selling their goods and services?

425

8.5

Case study: how does Netflix differentiate its service and target different market segments?

430

8.6

What techniques do businesses use to promote their goods and services?

432

8.7

Case study: how has Nike used promotional techniques to build and maintain a global brand?

436

8.8

Why aren’t all promotional techniques appropriate for every business?

442

8.9

What are the advantages and disadvantages of different promotional techniques?

446

8.10 Skills focus: how to evaluate the effectiveness of promotional techniques

450

SA PA M P G L ES E

Chapter 8 Promoting and selling

8.11 What legal and ethical issues may arise when promoting goods and services? 454 8.12 What laws relate to promoting goods and services to children and young people?

461

8.13 What role do advertising codes and standards play in regulating advertising?

465

8.14 Investigation: current issues in promoting and selling

468

8.15 Chapter review

470

Chapter 9 Investing

Online-only chapter

9.1

Setting the scene: the floating of Guzman y Gomez

9.2

What are the ways to finance my investments?

9.3

What are the ways I can invest?

9.4

What is ethical investment?

9.5

How can I manage risk and return in my investments?

9.6

How do I reduce my risk as an investor?

9.7

How do financial roles, responsibilities and government agencies protect investors?

9.8

Case study: what company is best to invest in?

9.9

Skills focus: can I become a share market detective to figure out how a company is performing?

9.10 Investigation: can you beat the market in the ASX Schools Sharemarket Game? 9.11 Chapter review

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

vii

Contents

Chapter 10 Law in action

475

10.1

Setting the scene: what is law in action and why does it concern you?

476

10.2

What are human rights and how does Australia uphold them?

478

10.3

What are your legal rights and responsibilities as a young person?

485

10.4

What are the roles of law enforcement agencies in Australia and the rights of young people when interacting with them?

490

10.5

What is jury duty and what role does it serve in a courtroom?

494

10.6

In what ways do the courts interact with Aboriginal and Torres Strait Islander Peoples, including Culturally responsive approaches?

499

10.7

What is alternative dispute resolution and how do Aboriginal and Torres Strait Islander Communities resolve disputes?

504

10.8

How are crimes and punishments classified, and what are the consequences of a criminal record?

510

10.9

What is civil law and how do we encounter it in our daily lives?

516

10.10 Case study: why is shoplifting a big issue in New South Wales?

520

SA PA M P G L ES E

viii

10.11

Skills focus: what does data reveal about youth crime in New South Wales? 523

10.12 Investigation: how can I explore the law in action?

526

10.13 Chapter review

528

Chapter 11 Political and community involvement

Online-only chapter

11.1

Setting the scene: being involved

11.2

What types of issues of concern affect the lives of individuals and the community?

11.3

How can individuals and groups influence political processes and decisions on issues of concern, and how effective are these methods?

11.4

The right to stand for public office: what eligibility requirements are needed to become a candidate at different levels of government?

11.5

Case study: what is a young parliamentarian?

11.6

What are the roles and responsibilities of elected representatives and what happens if they do the wrong thing?

11.7

What are the opportunities to become an active participant in the community?

11.8

Skills focus: how do I research my local council?

11.9

What are the benefits of community involvement and how can young people be more involved?

11.10 Investigation: organising a local campaign against graffiti 11.11

Chapter review

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Contents

533

12.1

Setting the scene: why are young Australians so obsessed with travel?

534

12.2

What are the types of tourism available?

536

12.3

What types of businesses exist in the tourism industry and what is their economic contribution?

539

12.4

Travel destinations, planning options and different types of travel: what is best for me?

542

12.5

Case study: how to choose my holiday destination

546

12.6

What do I need to organise before I travel internationally?

548

12.7

Skills focus: how to get ready for my travel

551

12.8

What factors do I need to consider when developing an itinerary?

553

12.9

Why should I check travel advice and travel reviews before deciding where to go?

557

12.10 What financial and legal issues may I have when travelling overseas?

560

12.11

How can I research potential cultural differences to ensure that I am more culturally sensitive?

564

12.12

Where can I turn for assistance if things go wrong while overseas?

567

12.13

Investigation: how to develop my itinerary

572

12.14

Chapter review

576

SA PA M P G L ES E

Chapter 12 The travel consumer

Chapter 13 Towards independence

579

13.1

Setting the scene: why do young adults leave home?

580

13.2

Becoming independent: when is the right time to leave home?

582

13.3

Case study: if I need help living out of home, who can help me?

588

13.4

Managing finances: how much money do I need to move out of home?

591

13.5

Skills focus: what are my financial support options?

598

13.6

What are the types of accommodation available to me?

604

13.7

What are the major purchases required for independent living?

610

13.8

Investigation: what are the steps involved in moving out of home?

620

13.9

Chapter review

624

Glossary Acknowledgements

Index

627 637

Online-only

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

How to use this resource

How to use this resource Syllabus coverage Commerce Transformed NSW Stage 5 is explicitly aligned to the new NSW Commerce Syllabus, covering all Core focus areas and options. Carefully sequenced lessons align to syllabus dot points with embedded real-world skill development.

Lesson structure The content chapters are broken into consistently structured lessons.

SA PA M P G L ES E

“Setting the scene” lessons open each chapter with engaging case studies to introduce the new topic.

Lessons begin with clear learning intentions and video widget success criteria, and are supported by a range of rich real-world case studies, business examples, images, charts and graphs.

reporting

note taking

download word

download pdf

reporting

note taking

scorcher

Contemporary content and active learning

Real-world case studies and business examples show how your learning the world quiz connects to questions around you.

Flexible site studies offer in-person and virtual opportunities to apply and extend your knowledge in practical, real-world situations. Hands-on activities build skills in problem solving and effective communication.

Investigations in every chapter help you consolidate learning and explore topics in more depth.

Writing focus

Every student needs to develop strong skills in creating written texts. Our evidence-based approach to building writing skills, overseen by video widget NSW-based literacy experts, uses key high-impact writing strategies in every chapter, including practical, downloadable Writing focus worksheets and chapter review activities. Additional review questions develop language and sentence structure, auto-marked quizzes include a subject-specific vocabulary focus, and exemplar paragraph-responses in the chapter review model strong writing structure. quiz

questions

scorcher

Links to the Interactive Textbook Writing focus 2.1 Question words

Writing focus worksheets can be completed online or can be downloaded and printed. Other worksheets, question sets, and more can be completed online or downloaded. Videos are embedded within the content.

download word

download pdf

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

How to use this resource

Glossary definitions appear in the margin where the key term first appears in the chapter, and at the end of the book.

Starter activity Lesson starter activities spark student interest at the start of class and often include figures and data as stimulus materials.

Case study

SA PA M P G L ES E

Relevant local and global case studies bring Commerce to life and help you connect key content to real-world contexts.

Activity

A range of activity types support differentiated learning.

Review

End-of lesson reviews include Knowledge and understanding questions and Thinking, researching and communicating tasks, ranging from creative to research and investigation tasks. Auto-marked quizzes provide instant feedback on your progress. Knowledge and understanding questions can be completed online in workspaces. Thinking, researching and communicating tasks combine engaging content with stimulating activities. Access sample responses and results online

Chapter review End-of-chapter activities include Summary notes, Visible thinking routines, Short-answer questions and Writing focus activities including sample paragraph-response questions with annotated model answers, and practice questions geared towards the key literacy approaches required by the HSC. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

How to use this resource

Using the Interactive Textbook

Chapt

Stud

Wri

•

Videos: “Setting the scene” videos link the topic to your life, activate prior knowledge and outline what you will learn in each chapter.

Appo

sente

Usin

1. Id

A co

the p

impr

____

•

Glossary: roll over key terms to view the definition.

2. C

Usin

Sent

Who

•

Chapter summaries: revise chapter content with downloadable chapter summaries.

SA PA M P G L ES E

xii

•

Quiz: complete an auto-marked quiz at the end of every section to quickly check your understanding.

Workspaces: answer Knowledge and understanding questions online by typing your responses. Self-assessment tools enable you to check your answers if your teacher has provided access to suggested responses.

Using the Online Teaching Suite

For your teacher

The Online Teaching Suite is integrated with your teacher’s copy of the Interactive Textbook and includes the powerful Edjin Learning Management System.

Teaching and planning tools • • • • •

Create and view tasks for your class using the Task manager. Project editable chapter summary PowerPoint slides in class. Access teacher notes, Writing focus support documents and suggested responses for all activity questions. Download an editable syllabus grid and teaching plans for each topic. Download optional PBL (project-based learning) guides, including sample teaching plans and support documents.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Wha

Why

servi

Deve

____

How to use this resource

Chapter 1: The consumer and financial environment

Student name:

Writing focus 1.3: Appositives Appositives help vary sentence structure and add information and complexity to a

The Writing focus worksheets

sentence. Using the information under ‘How can I be more aware of what I buy? complete the following activity. 1. Identify the appositive

Writing focus worksheets in every chapter take you through a series of activities to improve your writing skills.

A consumer has an important role in shaping the economy by encouraging innovation, the process of bringing about new ideas, products and services to allow for continual improvements. ___________________________________________________________________ _____________________________________________________________ 2. Create an appositive Using the following information, create a sentence that includes an appositive appositive. Sentence kernel: They interact with businesses

The activities progress from word and sentence, to paragraph and composition building as the level of language, including directive terms, increases.

Chapter 1: The consumer and financial environment

Student name:

Who? Consumers

Writing focus 1.14: Conjunctions (Subordinating – contrasting)

What? A person who uses or purchases goods and services for personal use

SA PA M P G L ES E

Why? Because they are looking to satisfy their wants and needs for goods and Subordinating conjunctions like “although”, “while” and “though” help express services. 'contrast'. Developed sentence: ________________________________________________ Using the information under “Things to consider when getting a loan”, complete the ___________________________________________________________________ following activity. ___________________________________________________________________ ____________________________________ _______________________________

Download individual worksheets from within each chapter in the Interactive Textbook. Your teacher can choose to download all worksheets for the chapter as a workbook.

1. Complete the following sentence stems

a. Although loan interest is the largest expense when borrowing money,

1 __________________________________________________________________.

b. While a lender should abide by the direction of the Australian Financial Complaints Authority,

__________________________________________________________________. c. Though borrowing can be expensive due to interest,

__________________________________________________________________.

2. Rewrite each of your sentences from Question 1 by rearranging the order of clauses to place the subordinating conjunction in the middle of the sentence.

__________________________________________________________________

__________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________

Assessment tools

•

• •

Create customised tests from a bank of questions. Tests are auto-marked in the Interactive Textbook or can be printed and used for homework or assessment practice. Download chapter tests and worksheets, with or without answers. View students’ answers and self-assessment of Knowledge and understanding questions. Student access to suggested responses can be toggled on or off by the teacher.

Reporting tools •

View and export individual student reports or whole class reports. Access in-platform support from the bottom right of your screen.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

xiii

xiv

About the authors

Roset Khair (lead author)

Roset Khair is an educator, published researcher, learning designer and education consultant to organisations offering financial literacy education. She is passionate about financial literacy, having taught it in NSW schools for many years. Roset is Vice President of Economics and Business Educators NSW and is the NSW Affiliate to Business Educators Australasia. She has convened and presented many Commerce and Business Studies courses to teachers around assessment, literacy and creative approaches to financial education. Prior to this she worked in corporate banking and in the legal field.

SA PA M P G L ES E

Roset holds a Master in Education (Learning and Leadership), a Master in Teaching (Secondary), a Bachelor of Commerce (Management), a Diploma in Business (Frontline Management) and a Certificate IV in Financial Services. She has been recognised for her work in education with the 2023 Professional Teaching Council Outstanding Professional Service Award and the 2022 Western Sydney Women Educator of the Year award, and was also awarded 2022 Crescent Awards Educator of the Year for Innovation in Teaching.

Kate Dally

Kate Dally is a highly experienced teacher, author and presenter, and has been teaching since 1990 across a broad range of Social Sciences subjects. Kate has been involved in HSC marking of both Legal Studies and Business Studies and is a former Vice President of Economics and Business Educators NSW. Her varied roles with the NSW Department of Education have included Head Teacher of Social Sciences, Curriculum Advisor, and participant in the overseas teachers exchange program. Kate has also taught teaching methods at the University of Sydney. Kate holds a Bachelor of Arts, a Diploma of Education and Graduate Certificates in Inclusive Education and Asian Studies. She has been awarded a Premier’s Scholarship and is a long-standing author on the Cambridge Legal Studies Stage 6 series. Dr Wendy Mockler Giles has over 25 years’ experience teaching Commerce, Economics, Legal Studies and Business Studies. She currently serves as Virtual Learning Coordinator for the Catholic Archdiocese of Canberra Goulburn and was a NSW Commerce Syllabus Writer for the new syllabus. She has been a Director of Economics and Business Educators NSW for 10 years.

Dr Wendy Mockler Giles

Wendy holds a Doctor of Education from the University of Illinois, and she is a Highly Accomplished Teacher. She has served on the Reserve Bank of Australia Educators Advisory Panel and Women in Economics Network. Her doctoral research on virtual learning demonstrated significant improvements in student academic buoyancy, with her pioneering virtual learning network now serving schools across NSW and ACT.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

About the authors

SA PA M P G L ES E

Wendy has an extensive range of publications and has delivered lectures and professional learning at state, national and international conferences. She believes passionately in opening access through innovation and advocating for rural and regional students. Through her curriculum development, assessment design, and advocacy roles, Wendy hopes teachers and students can see themselves in this new text and find their place in the world through understanding economics. She believes passionately in combining evidence-informed research with practical classroom applications that make learning meaningful and accessible for all.

Tom Spencer is an educator, textbook author and presenter who believes in applying economic decision-making to understand and enhance human wellbeing. With over a decade of experience teaching Economics in secondary and tertiary education, Tom specialises in curriculum writing, assessment design and supporting high-quality teaching practice. He currently serves as a Director of Economics and Business Educators NSW and is a member of the Law Society of New South Wales.

Tania White is an experienced teacher and presenter across Commerce, Legal Studies and Business Studies. She has served as an HSC marker for both Legal Studies and Business Studies and is currently serving as Treasurer and Director of Economics and Business Educators NSW. Tania has convened and delivered extensive professional learning, with a strong focus on effective pedagogy, classroom practice and quality resources. She holds a Bachelor of Policing, a Bachelor of Business and a Graduate Diploma of Education. Her previous careers as a Detective with the NSW Police Force, with a major focus on child protection, and as a small business owner inform her practical, real-world integration of syllabus content into teaching and learning. Tania is passionate about equality in education and is committed to ensuring all students have access to a high-quality education that supports both learning and wellbeing.

Publisher acknowledgements

The authors and publisher wish to gratefully thank the following people for their meaningful contributions: Fatma El Zahraa Mehana, whose expertise was integral to developing the comprehensive suite of digital and teacher support materials. She also provided thoughtful and detailed comments through her peer review of this resource. Alison Quin, who generously shared valuable insights and perspective in her Cultural review of the title. Her expert guidance was instrumental in ensuring the respectful and accurate representation of First Nations content and fostering a Culturally safe and inclusive learning environment for students and educators across NSW. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Tom Spencer

Tania White

SA PA M P G L ES E

Core focus areas

1. The consumer and ﬁnancial environment 2. The economic environment 3. The business environment 4. The legal and political environment 5. The work environment

➜

Image: These consumers in Sydney’s central business district show how everyday spending choices are part of the financial environment.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

The consumer and financial environment

Lessons Setting the scene: Effie Zahos – from everyday spender to money expert

1.2

What is my role as a consumer?

1.3

How can I be more aware of what I buy?

1.4

How can consumers use credit cards and debit cards to pay for things?

1.5

What other types of payment methods can consumers use?

1.6

How do laws protect me as a consumer?

1.7

Refund, repair or replacement: what option is best for me when what I buy does not work?

1.8

What is the role and importance of organisations that assist consumers?

1.9

How do I identify scams?

SA PA M P G L ES E

1.1

1.10 How do I protect myself from scams?

1.11 Why is it so important to make the right decisions when earning, saving and spending? 1.12 Why is it so important to make the right decisions when investing? 1.13 Borrowing to meet your wants and needs: what are your options?

1.14 How can I better understand the borrowing process to make more informed decisions? 1.15 Skills focus: personal financial management through budgeting 1.16 Site study: grocery shopping on a budget

1.17 Superannuation: taking control of my long-term financial future

1.18 Skills focus: what money management tools can I use to achieve my financial goals? 1.19 Where can I turn if I have financial difficulties?

1.20 Investigation: improving the financial literacy and wellbeing of Australians

1.21 Chapter review Teachers access the Online Teaching Suite to:

• plan, sequence and assign directed tasks for students and classes using Task Manager • view student activity reports • provide feedback to students • download a printable “Writing focus” workbook for this chapter.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.1

Setting the scene: Effie Zahos – from everyday spender to money expert Success criteria

In this lesson, you will learn about the importance of talking and learning about money, and the importance of making good financial decisions.

❏ I can identify different strategies I can use to make better financial decisions.

SA PA M P G L ES E

Learning intention

From consumer to money expert

➜

Video 1.1.1 Setting the scene: the consumer and financial environment

savings money put aside for future larger purchases or investments

superannuation savings for retirement that are invested, allowing them to grow over time; most people who work in Australia receive super contributions from their employer, which usually form a large part of the savings consumer an individual who buys or uses a good or service need something essential for survival, such as food, water, clean air and shelter wants something that is not essential for survival but can improve our quality of life, such as a new phone

Effie Zahos is one of Australia’s most trusted and recognised voices on how to manage money. Her clear, no-jargon reporting has been on our TV screens for over two decades. She has helped everyday Australians navigate the often-confusing world of money, breaking down complex topics from budgeting and savings to mortgages and superannuation into practical, actionable information. ➜

Figure 1.1.1 Effie Zahos’s career highlights include being money editor for 9News and editor of Money magazine – a career spanning over 20 years, where she helped build the title to become the number one consumer finance magazine in Australia. Effie is committed to helping everyday Australians navigate the world of money.

Money goes beyond simple mathematics; it’s a mindset It was an early credit-card slip-up that taught Effie that debt doesn’t nibble – it bites! This made her realise that managing money goes beyond simple mathematics – it’s a mindset. You need to understand why you spend the way you do. She recommends starting with the basics; they’re boring but foundational to your lifelong financial wellbeing. This topic on “The consumer and financial environment” is critical to learning these basics, starting with budgeting – know your needs from your wants. Understand interest. And learn one big truth: the world is designed to make you spend. Products are getting more sophisticated, marketers are getting better at playing on our behavioural quirks – everything is curated to get us to swipe, subscribe, consume. If you don’t learn the basics early, that monkey jumps on your back, fast!

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.1 Setting the scene: Effie Zahos – from everyday spender to money expert

What you consume on social media shapes your money habits We live in a world of instant gratification – wanting it now, paying for it later. Press pause. Marketers are literally trained to trigger your impulses. Effie’s rule: sleep on it for 48 hours. Effie recommends that young people curate their social media feed like they curate their budget. Follow educators on financial literacy, not lifestyles. Always ask yourself when on social media: “Who are they? How do they get paid? What’s their motive?” If someone’s advice sounds like a short cut, it’s usually their short cut to your money.

SA PA M P G L ES E

Watch out for scams; technology has made it easy to fall into traps. They’re everywhere. Know your legal rights as a consumer and know where to turn for help. It could save your money, and even your life.

Talk about money with your friends and family

Money only feels awkward when we treat it like a secret. The more we talk, the more we learn – and the less likely we are to repeat each other’s mistakes. The only thing is, don’t just assume they have all the right answers. Read. Then read some more. There’s no short cut – good money habits start with good information. Learn as much as you can by reading and exploring the content in this learning unit; it will shape your lifelong decisions and habits.

Effie’s money advice to her younger self

Effie wishes that someone had taught her younger self that saving and investing are not the same thing – not even close. She assumed that saving was enough; but investing supercharges your wealth. She wishes that exchange traded funds (ETFs) were around when she got her first job as she would have started investing earlier. Her financial philosophy now, after a lifetime of teaching people about money, is: spend less than you earn, invest early (doesn’t have to be a lot, just consistent), even if it’s a small amount, and tune out the noise. And never stop learning about money.

Activity 1.1.1

Think, pair, share 1.

In your workbook, create a KWL table such as the one below.

List all the things you already know about managing your money

List all the things you want to know about managing your money

At the end of studying this chapter, what have you learned about managing money?

Compare your responses with your classmates. How are your responses similar? How are your responses different?

Explain three pieces of advice from Effie Zahos that you think are most important to you. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

scam a dishonest scheme created by criminals to deceive consumers with the purpose of stealing their money or personal information investing the process of putting your money into a new business, an existing business such as by buying shares, or buying other assets such as property in the expectation of earning a profit

Chapter 1 The consumer and financial environment

1.2

What is my role as a consumer?

Success criteria

In this lesson, you will learn about your rights and responsibilities as a consumer.

❏ I can explain the difference between wants and needs and can explain some of my rights and responsibilities as a consumer.

SA PA M P G L ES E

Learning intention

ethical societal and consumer beliefs about what is morally right and wrong

Starter activity 1.

Write down three things you have consumed or purchased in the last 24 hours.

spending money used to satisfy consumer wants and needs

Compare this with two of your peers.

demand when consumers show purchasing interest in a good or service; this may lead to an increase in the price of the product, especially if there is a limited supply

innovation the process of bringing about new ideas, products and services to allow for continual improvements to what can be offered to consumers

Throughout your life you may hold many roles in society, including being your parents’ child, a student, a friend, a sibling, an employee or a consumer. A consumer is a person who uses or purchases goods and services for personal use. This means you have been a consumer for a long time, and will likely continue to be so into the future. It is therefore important that you better understand this role so that you may make more informed, responsible and ethical decisions. As a consumer, you have an important role in shaping the economy. Your spending choices:

• create demand for goods and services • encourage innovation, quality improvement and competition • support community growth and small businesses.

By being informed and thoughtful, you help create a fairer, more efficient marketplace.

Some things to consider to ensure a more informed choice

Are there hidden wants in your needs? Distinguish if these needs have hidden wants within them. For example, you need shoes, but you may not require the latest sports shoes with fancy designs or features. Or you may need to eat, but you will not need to eat a fancy seafood platter to survive. Is it a need or a want? Before you buy anything, identify if what you are about to buy is a need or a want.

Research the product you want to buy, compare the prices across several outlets, check if the product is of good quality, safe to use and good for the environment. Read and understand any special conditions relating to the product carefully so you know your rights or obligations. Ask questions if the information is unclear. What is the seller’s refund policy? How safe is the product? Are there any hidden costs?

➜

Figure 1.2.1 How can we make informed decisions? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.2 What is my role as a consumer?

What does it mean to make an informed choice? You may have limited money but unlimited wants. It is therefore important to be able to identify the difference between your needs and wants. Table 1.2.1 Needs and wants Wants

A need is something that is essential for living.

A want is something that you may desire but could easily live without.

SA PA M P G L ES E

Needs

For example: basic food, shelter, clothing and healthcare.

For example: a mobile phone or the latest designer shoes or luxury holidays.

Know your consumer rights

As a consumer, you have rights. These rights are given to you under the Australian Consumer Law (ACL) and include:

• an acceptable standard of quality and safety for any products and services you buy • accurate information from sellers so that they do not mislead or deceive you in how • •

they promote their product fair treatment by businesses and freedom from unfair practices and scams the remedy of repair, replacement or refund if a good or service does not meet legal requirements.

You need to understand enough about your legal rights so that you can seek remedies when goods or services do not match expectations.

Writing focus 1.2 Question words quality improvement the emphasis of a business on continually trying to improve its product and processes to lead to an improvement in the product and service quality marketplace a physical or online place where many sellers of goods or services come together to sell their goods Australian Consumer Law (ACL) the laws, both Australia-wide and in states, that protect the rights of consumers unfair practices the actions of a business that may unfairly impact a consumer; such practices may include contract terms that are unfair, false and misleading claims, and not delivering products or services that are paid for

Figure 1.2.2 Buyers should always read the fine print before making a purchase, in case they wish to return, refund or exchange the order. ➜

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

SA PA M P G L ES E

➜

Figure 1.2.3 It is the buyer’s responsibility to ensure that an item is of suitable quality before purchasing. This is known as ‘buyer beware’, or caveat emptor.

Act responsibly and ethically As a consumer, you should aim to:

fair trade an approach to business that promotes equity, justice and fairness in how people involved in making the product are treated

• ensure that goods and services you buy are environmentally friendly, fair trade (this • •

means that people involved in the process of making the product are treated and paid fairly), or buy locally or Australian-made products when available not be excessive in your consumption by not spending more than you have or buying more than you need, and understand the consequences of debt be a kind and respectful consumer to business owners and employees in your interaction, and give honest and fair feedback to them when necessary, including when rating businesses online.

By being an ethical consumer, you help protect businesses, employees, the environment, future generations and yourself.

Ordered scrambled eggs only to discover a dead fly on my plate. Asked for a refund, never got one. Wouldn’t recommend this place to my worst enemy! Response from the owner: This is not possible as our cafe hasn’t opened yet. We launch on June 1st, in case anyone was wondering. ➜

Figure 1.2.4 Customer reviews can be helpful to business owners, but only if they are honest.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.2 What is my role as a consumer?

Participate in the marketplace Consumers have one of the most important roles in the economy. How you spend your money has an impact on businesses.

• It allows businesses to know what goods and services are in demand, leading to •

Case study 1.2.1: Bianca and the cost of fast fashion

SA PA M P G L ES E

•

businesses making more of these products. It encourages businesses to develop more innovative products as businesses work to outdo each other. It also leads to an improvement in product quality and fairer prices for the consumer. An increase in competition leads to more small businesses in the local community, which means more jobs.

expenses the costs or money spent to run a business, organisation, or personal life, such as things like rent, bills, salaries, supplies and other necessary items or services

Bianca is an 18-year-old fashionista who loves fast fashion and buying trendy outfits she sees on social media. The low prices often tempt her, but this has led to an overflowing wardrobe and poor savings, and as a university student she is finding it hard to cover her living expenses.

She is also worried about the environmental impact of cheap clothing, which uses a lot of energy and water to make, creates pollution in its manufacturing process, and often ends up in landfill.

Figure 1.2.5 Bianca out shopping. ➜

To be more responsible, Bianca now visits thrift stores, buying second-hand and donating old outfits for others to buy and make use of. She has also started swapping outfits with her friends. She still enjoys fashion but without harming the environment or her financial future.

Bianca’s lesson: being fashionable doesn’t mean spending more, it means shopping smarter.

Review 1.2

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Distinguish between a want and a need. Outline some of your rights under Australian Consumer Law. Justify why it is important to know your rights under the Australian Consumer Law. Outline some of the ways you can act responsibly and ethically as a consumer.

Thinking, researching and communicating 1.

Classify the following items as either wants or needs in a table:

• laptop for school • bread • phone 2.

• internet access • electricity • water

• eyelash curler • shampoo and conditioner • bike.

Read Case study 1.2.1: Bianca and the cost of fast fashion and complete the following questions. a. Recommend reasons why it may be good to buy less clothing. b. Recommend strategies you may use to buy fewer clothes and still remain fashionable. Explain why it is important to ask questions if the information is unclear when buying a product. What are some questions you could ask to make it clearer for you?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.3

How can I be more aware of what I buy?

Success criteria

In this lesson, you will learn about factors that influence your purchasing decisions as a consumer.

❏ I can explain the factors that may impact on my own purchasing decisions and know the importance of comparison shopping.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: write down three places where you usually make purchasing decisions (e.g. at home, in-store, online) and note when these decisions typically happen (e.g. before shopping, during checkout, after seeing an ad).

Pair: share your list with a partner and discuss any similarities or differences in your habits.

Share: be ready to share one interesting insight from your discussion with the class.

A consumer is an important part of the economy. An economy is the system by which all the consumers, businesses and governments interact with one another in relation to money. A consumer has the role of satisfying their wants and needs for goods and services. Each consumer is different, and as such will buy goods depending on their own circumstances and who they are.

Writing focus 1.3 Appositives

What can influence your buying decisions as a consumer?

Table 1.3.1 Factors influencing purchasing decisions Factor

Questions

Convenience

How easy was it to access? Did you as the consumer have to try very hard to find it?

Culture

What social behaviours or norms are particular to where you live or your background? For example, eating Vegemite, or using chopsticks or fingers to eat, or preferring to watch a particular sport because it is popular in your state.

Ethical decisionmaking

How ethical is the business when making the product? How well does it treat its employees, or limit the damage it may make to the environment?

Age

How old are you? Depending on what stage of life you are in, your interests change and this has an impact on what you buy.

Job role

What type of job do you have? Are there particular things that you need to purchase as a result of the type of job you have, such as glasses, particular clothing such as a suit, or tools for the job if you work a trade?

Income level

How much money do you earn? If you have a high level of income, you may choose more expensive and high-quality products.

Advertising

What advertising have you been exposed to?

Customer service Does the business you are dealing with have an excellent level of customer service? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.3 How can I be more aware of what I buy?

Activity 1.3.1

DOC

Test your understanding of factors influencing consumer buying decisions

Download Activity 1.3.1 worksheet ➜

Even the simplest of needs will differ according to the experiences of an individual. Bread is classified as a need, but how individuals satisfy this need is dependent on the experiences and circumstances of the individual.

Figure 1.3.1 Regular sliced bread

SA PA M P G L ES E

Download the Activity 1.3.1 worksheet to explore what factors are considered and why people might prefer different types of breads.

Case study 1.3.1: surf’s up!

Making the right purchasing decision for Aiden

Aiden is 17 years old and wants a new surfboard after his old one was damaged. He has been putting aside savings, and Christmas money he received from his grandparents. He is keen to upgrade to a larger, fibreglass one but it is more expensive than the one he currently has. He has decided to do some research online to compare different features and prices. Although he has seen a few he likes online at a competitive price, most are available through overseas websites. He worries that:

• he would not be covered by the Australian Consumer Law • it may not be the right size for him or of good quality • returning it may be expensive and difficult.

Figure 1.3.2 Aiden and his brand-new, locally sourced surfboard ➜

He decides to also explore the local surf shop near the beach where he surfs. Although the price is slightly higher, he is able to:

• try and see what he likes • receive expert advice from the shop owner • take it home immediately • access a special offer: a discount on a wetsuit with any surfboard purchase. Aiden has decided to buy locally, which also improves the local economy.

Getting the best deal: comparison shopping to make an informed choice When buying any item, it is important to consider your wants, needs and budget to make sure you are making the correct choice. It may be useful to use a table like Table 1.3.2 (on the next page) to assist in your decision-making. You may want to consider the price, the features you need and want, warranties, environmental aspects, customer service, or any other factors. By comparing the features in a visual way, you are more likely to make an informed buying choice. This is known as comparison shopping. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

comparison shopping comparing goods and services provided by one business with another business based on price, quality, features, warranties, customer service, or environmental factors

Chapter 1 The consumer and financial environment

Activity 1.3.2 Which phone would you choose, and why?

Table 1.3.2 Comparing phone options Phone

Price Storage and (AUD) camera

$987 Phone A: Samsung Galaxy S25 $897

Phone C: Google Pixel 9

$847

Special features

256 GB, 12 MP triple camera

Up to 22 hours

Ultra-wide camera, superfast 5G

256 GB, Over Durable features 50 MP camera 25 hours to protect against scratching and damage

2 years

1 year

Compare the three phones in the table and explain which one offers the best value for money. Refer to at least two factors (for example, price, features or battery life) to support your answer.

Assess how useful the comparison table is in helping you make an informed buying decision. Explain one benefit and one limitation of using this method.

Review 1.3 Online quiz

Warranty

256 GB, Up to Great for gaming, 50 MP camera 30 hours Galaxy AI with fast vocal responses

SA PA M P G L ES E

Phone B: Apple iPhone 14

Battery life

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2.

4. 5.

Outline the importance of consumers and the impact they may have on businesses. Refer to the factors impacting on purchasing decisions. Rank the factors from most important to least important for you as someone who may want to buy a phone. Explain how your choices may be different when buying an item such as a phone if you had a much higher income. Refer to Case study 1.3.1: surf’s up! Compare the benefits of buying locally rather than overseas. Refer to an online advertisement you have recently seen. Describe how this advertisement influenced a purchasing decision you made. Describe a time you experienced exceptional customer service and the impact it had on future purchases or in sharing your experience with other consumers. Describe a time you experienced poor customer service and the impact it had on future purchases or in sharing your experience with other consumers.

Thinking, researching and communicating 1.

Research a business that sponsors or supports a charitable or environmental cause. How might its ethical actions impact on your purchasing decisions? Research a business that has not been ethical in its conduct. How might its actions impact on your purchasing decisions?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.4 How can consumers use credit cards and debit cards to pay for things?

1.4

How can consumers use credit cards and debit cards to pay for things? Success criteria

In this lesson, you will learn about the uses and features of a credit card and a debit card.

❏ I can explain the differences between a credit card and a debit card and can make an informed choice about which one is better to use according to my own circumstances.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Write one fact you know about credit cards and one about debit cards.

Identify at least one thing you would like to learn about each.

We all have unlimited wants, but how do we pay for what we actually buy? There are many ways to pay for your goods and wants. Some are more suitable than others, depending on what you are buying and from where, who you are and what your circumstances are. Let’s explore some of these payment options so that we can make the best decisions!

➜

Figure 1.4.1 Contactless payment, like tapping your phone, has become very popular.

Credit card

How does a credit card work?

A credit card is an account provided by a bank with a physical card that allows individuals to use the bank’s money to make purchases. Essentially, it is a type of short-term loan at a very high interest rate. This can be convenient, but it often leads to overspending as it may not feel like ‘real’ money. Young people may find themselves in a lot of financial trouble with credit cards as they will eventually need to pay back the money spent plus interest, which can grow quickly due to compounding – interest charged on top of previously charged interest. Considering that credit cards usually charge high interest rates, some exceeding 20%, some people may find it very difficult to pay off and find themselves in a lot of financial trouble. Despite the risks, credit cards offer some advantages:

• they allow short-term borrowing for purchases • they make online shopping and overseas travel easier • most come with a PIN (personal identification number) for security Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.4 Developing sentences credit card a loan account provided by a bank with a physical card that allows individuals to use the bank’s money to purchase smaller items; it usually has a high interest rate interest the cost of money applied to a loan by the bank

Chapter 1 The consumer and financial environment

• small transactions may not require • • • •

Smart chip Expiry date Card number Security hologram Member name

CVC number

credit rating a score given to individuals who borrow money to rate them as good or bad borrowers; this is used to decide the amount of risk they present to a future lender and could impact on their ability to borrow money in the future or the conditions of the loan contract

➜

SA PA M P G L ES E

cash advance a withdrawal from a credit card in the form of cash; interest is usually payable immediately as a result

a PIN number (even quicker and more convenient) some provide two months interestfree on purchases if the borrowed amount is paid back in full some include insurance on items bought using the credit card some allow a cash advance – however, interest may be payable immediately on cash withdrawals some credit cards offer a rewards program so you may gain points that you can use to buy goods and services (e.g. flights).

Figure 1.4.2 Features of a credit card

Your credit rating may build up your borrowing power

A credit card may also be useful in building up your credit rating. Individuals who borrow money are given a score to rate them as good or bad borrowers using a credit score. The careful use of a credit card, including paying back borrowed amounts ontime and within the interest-free period, may improve your credit score. A higher score makes it easier to borrow larger amounts to buy things such as a home or car more easily in the future. Your rating may also affect whether you are able to rent a property or get a phone on a payment plan in the future, so it is important that you protect your rating.

Legal considerations

You can only get a credit card once you are over 18 years of age as it requires an individual to enter a loan contract, which is not allowed in most cases unless you are an adult. Before deciding if a credit card is right for you, be sure to read the bank’s terms and conditions. A credit card should be used carefully. If misused, it can end up costing you a lot more than the value of the goods you buy with it.

Case study 1.4.1: credit or saving?

Figure 1.4.3 Dylan mows lawns to save money for his Australian holiday. ➜

Dylan has just finished school and has decided against getting a credit card to fund his trip around Australia. He instead has worked on weekends mowing lawns in his suburb to save up, and he will pick up some small jobs such as fruit picking to pay expenses. Although he is keen to travel, he is hesitant to get himself into debt as he has heard horror stories of other young people using their credit card to pay for holiday expenses, and then finding it hard to make repayments afterwards. By choosing to save instead of borrow, he will not feel stressed while he is travelling or when he returns.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.4 How can consumers use credit cards and debit cards to pay for things?

Debit card A debit card is linked to your cheque or savings account and allows you to use your own money to pay for things using EFTPOS (electronic funds transfer at point of sale). Unlike a credit card, you are not borrowing money – you can only spend what is in your account. You may access a debit card before the age of 18. Depending on the bank, this may be as young as 10 years old, as long as you are responsible enough to look after it. Many young people get a debit card when they open a bank account prior to starting their first job.

SA PA M P G L ES E

Case study 1.4.2: first bank account Maya opened her first bank account when she was 13 years old. Her parents set up an automated direct debit each month so she could pay for school lunches and pocket money without needing cash. This has allowed her to build up her experience in managing her own money, and she regularly checks her balance using her internet banking account.

➜

Maya is now 15 years old and about to start a parttime job. Having a bank account with attached debit card means it is easy for her new employer to pay her wage into her account.

Figure 1.4.4 Maya’s first bank account

Review 1.4

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

debit card a card that is linked to your cheque or savings account and allows you to use your own money to pay for things EFTPOS (electronic funds transfer at point of sale) allows electronic payments using a debit card. The money is taken instantly from your bank account and transferred to the seller direct debit a request to the bank by the account holder to make payments regularly from one bank account to another wage payment that is made to employees based on how many hours they have worked, and is therefore likely to fluctuate, such as with a casual job

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Explain what a credit rating is. Copy and complete the following table to identify all the advantages and disadvantages of a credit card.

Advantages of a credit card

4. 5.

Disadvantages of a credit card

Outline the benefits of a debit card. Compare the similarities and the differences between a credit card and a debit card. Define a cash advance.

Thinking, researching and communicating 1. 2. 3.

Define compounding of interest and explain how it may be a problem for a credit card holder. Select either a credit card or debit card and justify which one is best for your situation. Picture yourself as a 21-year-old who owns a credit card and loves to shop. Identify some strategies you may use to delay purchasing products on your credit card. You may choose to share these strategies with your friends. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.5

What other types of payment methods can consumers use? Success criteria

In this lesson, you will learn about various payment methods.

❏ I can explain the features of different payment methods, and can make an informed decision about what to use according to my own circumstances and when to use each one.

SA PA M P G L ES E

Learning intention

Starter activity 1.

In pairs, list as many payment methods as you can in two minutes.

Share your top three with the class.

We know that two of the most common ways to pay for things are credit cards and debit cards, but there are plenty of other ways to pay for your wants and needs depending on your circumstances and what the seller offers.

Writing focus 1.5 Developing sentences

Direct debit and internet transfers

A direct debit involves an automatic payment that is made from your bank account to another account holder. This is often done using internet banking. This is a quick and convenient way to pay for things. However, this can involve a fair bit of risk, especially if you type in the wrong account or you do not know the person you are sending money to, as they may not provide you with the good or service you had hoped for, especially if you pay up-front. A request for up-front payment may also indicate that a scam may be involved; therefore, you should reconsider this as an option unless you know and trust the seller.

Buy now, pay later services

➜

This is a service offered by many stores that allow consumers to buy more expensive goods, such as computers, furniture or whitegoods, immediately take them home and then pay for them later, using instalments over several months or years. This is a convenient option for many consumers; however, this may be an expensive option as this payment method may involve hidden fees and interest, especially if payments are not made within the interest-free period. Late repayments may affect your Figure 1.5.1 Afterpay is one buy now, pay later service credit rating also. offered in Australia.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.5 What other types of payment methods can consumers use?

Some of the more common types of buy now, pay later services include organisations such as Zip Pay and Afterpay, which are often used to buy everyday goods such as clothing and which also allow for a maximum spending limit with an interest-free period and then regular instalments. However, if payments are not made on time, fees and interest can be quite high, making it very hard for people to pay the amount back in full. It is important that consumers are careful in using this type of payment method to make purchases.

Online payment platforms

SA PA M P G L ES E

Online payment platforms provide a safe and convenient way to pay for online transactions. They act as a bridge between consumers and online businesses, helping them to transfer funds safely. Some examples include PayPal, Stripe, Square and Shopify.

Gift cards and vouchers are loaded with money and are often given as gifts to people to spend at a particular business. They may be a physical card or an online voucher and are a convenient way to pay for things. It is important that consumers not accept these as methods of payment when selling something online, such as in an online marketplace, as this may be a scam. It is also important that consumers use these before the expiry date on the card.

Figure 1.5.2 Stripe and Square are two online payment platforms you may use. ➜

Gift cards and vouchers

Cash

➜

Cash is a convenient way to pay for small items, especially if you are buying things face to face, such as in a retail store. However, as we move to a more cashless society, some retail outlets may no longer accept cash payments. This trend is also seen with consumers carrying less cash and paying for goods electronically.

Figure 1.5.3 Digital gift card

Cheques A cheque is a document that orders a bank to pay the amount specified on it to the person nominated on the cheque. The money is drawn from the account of the person requesting the cheque. These were once very common; however, they are less common now, with more people using internet banking.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

cheque a document that orders a bank to pay the amount specified on it drawn from the person who owns it to the person nominated on the cheque

Chapter 1 The consumer and financial environment

Cheque written date Recipient

Amount Amount

SA PA M P G L ES E

Account number

Signature

Cheque number

➜

Figure 1.5.4 Features of a cheque

Money orders

A fast, safe and affordable way to pay for things Australia-wide, a money order can be purchased at any post office in Australia for a few dollars. They operate much like a cheque, providing an authority to pay the nominated recipient the amount listed. These can be mailed by post to the receiver, and contain built-in security features to protect against fraud. Using a money order means you do not need to disclose your account details to the recipient. They are considered a safer option than cheques. Enter the amount in both numeric and written form

Write the recipient’s name on the ‘Pay to the order of’ line Fill in your address in the purchaser section

Sign your name on the signature line

1234567890

PAY: PAY TO THE ORDER OF

Add a memo if needed

MONEY ORDER

MEMO PURCHASER’S SIGNATURE

PURCHASER’S ADDRESS 001234567890 ➜

Figure 1.5.5 You can purchase a money order at your local post office.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.5 What other types of payment methods can consumers use?

Cryptocurrencies Cryptocurrency is a digital currency (money) that has no legal or intrinsic value except what people are willing to pay for it. Cryptocurrencies are widely accepted and can be used to buy or sell things, especially things that are of high value. You can even withdraw some of their value using special cryptocurrency ATMs in selected locations across Australia and the world. Popular cryptocurrencies include Bitcoin and Ether, with many other smaller and less known coins available.

Lay-by

SA PA M P G L ES E

Lay-by was once a popular way to pay for things, and is still available in some department stores such as Kmart and Myer. This payment method involves selecting goods, such as toys, clothes and sporting goods, and then taking the goods you want to buy to the lay-by department in the store and paying a small fee, where they are put away by the store. These are then paid off in instalments over a period of time (sometimes up to six months) until they are fully paid off and you are able to collect them and take them home. This method allows people to pick what they want without getting into debt.

Book-up

More common in rural and remote communities across Australia, this payment method allows account holders with a store to have their purchases recorded on their account, to be repaid later. It is important that people using book-up keep track of their account and make repayments regularly to pay it back so that the amount does not become hard to repay. It is also important that any account numbers and PIN numbers are not shared with others.

Review 1.5

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Identify disadvantages of using buy now, pay later payment methods. Compare money orders and cheques. Identify the similarities and differences. Explain why cash may not be the best payment method in some circumstances. Discuss the advantages and disadvantages of using lay-by to buy things. Identify the risks associated with using a payment method such as book-up.

Thinking, researching and communicating 1.

Bitcoin and other types of digital currency are often used to invest money. Justify why they might not be the most convenient payment method. Recommend three strategies you may use to protect yourself when making direct debits or internet transfers. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.6

How do laws protect me as a consumer? Success criteria

In this lesson, you will learn about laws that protect your rights as a consumer.

❏ I can explain how various laws protect my rights as a consumer, and what I can do as a consumer to protect myself.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Write down one law or rule you believe protects consumers.

Compare your answer with a partner.

Australian Competition and Consumer Commission (ACCC) a government organisation that enforces the Competition and Consumer Act 2010 (Cth), ensuring ethical and legal conduct by businesses, and investigating false advertising and anti-competitive behaviour

Australian Securities and Investments Commission (ASIC) a government organisation whose responsibility is to protect consumers in financial and credit markets, especially in relation to financial products such as loans, insurance, cryptocurrency and superannuation

The need for consumer protection

Consumers can buy goods and services in many ways – in physical stores, online and through social media. This gives the consumer more choice, better service and competitive prices. However, not all businesses treat consumers ethically or fairly, engaging in misleading or illegal practices. For this reason, consumer protection laws are essential in protecting consumers and their rights. The two main consumer protection laws in New South Wales are outlined in Table 1.6.1. Table 1.6.1 Main consumer protection laws in New South Wales Law

Description

Who enforces these laws?

The Australian Consumer Law (ACL) – Competition and Consumer Act 2010 (Cth)

The Australian Consumer Law (ACL) is Australia’s national consumer protection law. It sets out your rights as a consumer and the rules businesses must follow.

• ACCC – handles national

Fair Trading Act 1987 (NSW)

In New South Wales, the ACL works alongside the Fair Trading Act 1987 (NSW). Together, these laws protect consumers and ensure fair trading.

• NSW Fair Trading –

consumer protection and fair trading matters • ASIC – enforces consumer law relating to financial products and services

manages local complaints, investigates issues, runs inspections and enforces the Fair Trading Act 1987 (NSW)

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.6 How do laws protect me as a consumer?

When you buy goods or services in Australia, you automatically receive consumer guarantees. These rights cannot be removed by a business. Writing focus 1.6 Creating topic sentences

Acceptable quality

Right to a remedy

Fit for purpose

SA PA M P G L ES E

Consumer guarantees

➜

Clear title

Match description

Figure 1.6.1 Consumer guarantees

Together, consumer protection laws and organisations aim to protect consumers by ensuring that products are safe, reliable and accurately described. If this is not achieved, they may provide ways to resolve disputes between consumers and businesses.

Case study 1.6.1: Kelvin and the faulty phone Kelvin purchased a mobile phone online for $349. When it arrived, the phone was damaged and it looked like it had already been used. When he emailed the seller, they refused to give him a refund. Kelvin looked up his rights on the NSW Fair Trading website and discovered that under the Australian Consumer Law, he was entitled to a repair, replacement or refund because the product was faulty. He reported the seller to NSW Fair Trading and received a full refund.

➜

Lesson: knowing your consumer rights helps you act with confidence when things go wrong.

Figure 1.6.2 Kelvin makes the most of his broken phone.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Common consumer problems Consumers may face issues such as:

• false or misleading advertising – for example, a phone advertised as waterproof • • • •

that isn’t waterproof unsafe or faulty products – for example, toys with small detachable parts that could cause choking scams and online fraud – for example, fake websites or sellers taking payment without delivering goods unclear pricing or hidden fees – for example, extra costs at the point of payment unethical business behaviour – for example, mistreating workers or false environmental sustainability claims.

➜

Figure 1.6.3 Certain toys can pose a serious choking hazard for babies.

➜

SA PA M P G L ES E

Figure 1.6.4 Prices are not always clearly marked.

➜

Figure 1.6.5 Not all manufacturers are invested in environmental sustainability.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.6 How do laws protect me as a consumer?

Your role as an informed and responsible consumer Being an informed and responsible consumer isn’t just about knowing the laws. As an informed consumer, you should:

• keep receipts and records of •

SA PA M P G L ES E

• •

purchases know your rights to refunds and repairs report scams to Scamwatch report unsafe products to NSW Fair Trading avoid sharing personal or financial details on unsafe sites support ethical and sustainable businesses.

• •

➜

Figure 1.6.6 Be sure to check a seller is reputable and their website is secure before inputting your payment details.

Consumer protection laws – together with organisations such as the ACCC, ASIC and NSW Fair Trading – ensure fairness, safety and honesty between consumers and businesses in the marketplace. By being informed and responsible, you can make confident and ethical purchasing choices.

Review 1.6

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify three common issues that may affect a consumer and what organisation you would turn to for help with fixing the problem. Summarise some preventative steps you can take to protect yourself as a consumer.

Thinking, researching and communicating 1.

Visit the Scamwatch website. Summarise one type of scam commonly affecting young people. Justify the importance of the Australian Consumer Law and organisations that protect consumer needs. Compare the role of the ACCC with that of NSW Fair Trading. Outline how they differ.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Refund, repair or replacement: what option is best for me when what I buy does not work?

1.7

Success criteria

In this lesson, you will learn about your legal rights as a consumer and where to turn if your rights are impacted.

❏ I can explain my legal rights as a consumer in relation to refund, repair or replacement and what organisations can help to achieve my rights.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Rank the options of refund, repair and replacement from most to least preferred.

Explain your choice to a partner.

Writing focus 1.7 Note-making

In most cases, the consumer’s relationship with business is without problems. Consumers seek goods and services, and businesses provide these to the standard expected by the consumer. Sometimes, however, things do not go to plan and consumers will need to seek redress to rectify the issue. Consumer redress involves actions taken by a consumer to fix issues relating to a product when the product does not meet the standards set by the Australian Consumer Law. Under the Competition and Consumer Act 2010 (Cth), consumers have the right to ask for a remedy when a product or service does not meet the expected level of quality. Depending on how serious the issue is, a seller will have to offer the options shown in Figure 1.7.1 to redress the problem.

Refund

Repair

Replacement

➜

Figure 1.7.1 A seller may offer a consumer refund, repair or replacement to rectify an issue with a product.

It is essential that consumers know their rights and responsibilities, including their right to redress, so that they can rectify issues with fairness and confidence.

Your rights as a consumer Consumers in Australia are primarily protected by the Competition and Consumer Act 2010 (Cth), which outlines the responsibilities of businesses when providing goods and services. At a minimum, these should include the following guarantees.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.7 Refund, repair or replacement: what option is best for me when what I buy does not work?

Consumer guarantees for goods

• Acceptable quality: are the goods of acceptable quality, safe to use, durable and • •

SA PA M P G L ES E

•

free from defects? Are goods acceptable in appearance and finish? Fit for a particular purpose: is the product fit for the purpose for which it is sold? If the consumer explains to the seller that they want the product for a particular purpose, and they buy it based on the seller’s claims or expertise, then it must meet that purpose. Match the description: is the description of a product, either verbally or in writing, accurate? Does the product match the sample or demonstration model provided at the time of purchase exactly in terms of quality and condition? Express warranties: has the seller or manufacturer made promises, either verbally or in writing, about the quality, performance or characteristics of goods? For example, is there a money-back guarantee or lifetime warranty? Repairs and spare parts: does the seller or manufacturer offer spare parts over a long period of time if things stop working? For example, do they offer spare parts for a car or fridge that a consumer may reasonably expect to last more than a few years and may need some maintenance in the future? Ownership of the goods: does the seller have full ownership over the product and are they selling it with full ownership, so it can’t be repossessed or claimed Figure 1.7.2 It is reasonable to expect that you could repair or maintain major appliances, rather by anyone else as the than have to buy a new one every few years. owner?

•

➜

Consumer guarantees for services

• Due care and skill: has the service provider carried out the services with an •

•

acceptable level of care and skill? Fit for a particular purpose: has the service provider provided the service to meet the requirements specified by undertaking the service with the expected level of skill and for the purpose intended? For example, it would be expected that a builder be licensed when doing structural maintenance of a property if they were hired to do this work. Services must be supplied within a reasonable time: was the service carried out within a reasonable time period? For example, a bathroom renovation should not take many months to complete. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

When to repair, when to replace, when to refund A consumer has the right to a refund, repair, replacement, exchange, compensation, or the cancellation of a contract if consumer guarantees are not met when purchasing a good or service. Depending on the situation, the type of defect will need to be either classed a minor failure or a major failure. This will dictate how businesses should deal with it. A minor failure can usually be fixed easily in a short period of time, with the seller choosing to refund, replace or repair. This should be done free of charge and in a short period of time. A major failure may be too difficult to fix, or cannot be fixed at all with an obvious failure from the part of the seller. This may include:

SA PA M P G L ES E

• The product is unsafe – for example, a children’s toy that has small parts that may • • •

cause a child to choke. The consumer was given a significantly different product from the product described or shown – for example, a consumer orders a blue dress but receives a red one instead. The product is unfit for its normal purpose – for example, a boat that has holes and sinks in water. The problem has multiple minor problems that continually need fixing – for example, a car that breaks down every week but for a different reason each time.

When you’re not entitled to redress

Businesses do not have to provide a refund, repair or replacement if:

• you simply change your mind • the seller made you aware of the fault before the purchase • you damaged the product or caused the problem. Steps in achieving redress Contact the business

NSW Fair Trading

NSW Civil and Administrative Tribunal (NCAT)

Politely explain the issue to the seller and what remedy you expect.

If the seller does not rectify the issue, turn to NSW Fair Trading, which will provide advice, investigate the complaint and mediate between you and the seller.

If NSW Fair Trading gives a judgment and the seller does not comply, NCAT will make a legally binding decision to resolve the dispute.

Australian Competition and Consumer Commission (ACCC)

The ACCC will become involved if the problem is on a large scale or involves serious breaches of consumer law.

➜

Figure 1.7.3 Steps in achieving redress

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.7 Refund, repair or replacement: what option is best for me when what I buy does not work?

Case study 1.7.1: achieving redress Oliver purchased a new TV from TJ Hoover, an online appliances store. However, when it arrived it would not turn on. He quickly contacted the seller by sending an email, using polite language, with specific information about the problem and requesting that the TV be replaced. He attached a copy of the receipt to the email to make it easy for the online store. Dear Customer Service Officer, I purchased the 106 cm Freedom TV on 25 November (I have attached the purchase receipt to this email). When it arrived, it would not turn on and under the Australian Consumer Law, I am entitled to a replacement. Please advise next steps in how you would like to resolve this. Thank you in advance for your prompt attention in redressing the issue.

SA PA M P G L ES E

Kind regards, Oliver

Review 1.7

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1.

2. 3.

4. 5.

Identify the main consumer law in Australia that protects the rights of consumers. Outline reasons why it is important for consumers to know their rights to refunds, repairs and replacements. Summarise the rights of consumers for redress relating to goods. Summarise the rights of consumers for redress relating to services. Clarify when a consumer is not entitled to redress. Distinguish between a major failure and a minor failure.

Thinking, researching and communicating 1.

Copy and complete the following table. For each scenario, indicate whether the item or service should be refunded, repaired or redone, or replaced.

Item and problem

Type of redress

a. You order a red dress but receive a black one

b. You plug in your new toaster, it starts smoking and you can see sparks

c. You go to the hairdresser and they colour your hair a completely different colour from the one requested

d. You buy chocolate ice-cream from the supermarket but find it’s vanilla when you open the tub e. You order your steak well done at a restaurant, but it arrives rare f. You buy a T-shirt online, but it arrives with some of the stitching undone g. You buy a laptop, but you continually have to take it back for repairs for different issues 2.

You receive your new bedroom furniture from AJ Wicks after ordering it from their online store, but it is missing parts when you try to assemble it and it is in the wrong colour. Write an email to AJ Wicks asking them for redress. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.8

What is the role and importance of organisations that assist consumers? Success criteria

In this lesson, you will learn about the role of various organisations that assist consumers.

❏ I can explain the role of various organisations that help consumers and make decisions about which organisation to approach according to my circumstances.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Has someone you know been ripped off or treated poorly by a business? What did they do to fix the situation?

Share your story with a friend.

What is the role and importance of organisations that assist consumers?

Education Teach consumers about their rights and responsibilities (e.g. CHOICE®, Moneysmart by ASIC and NSW Fair Trading campaigns)

Protection Enforce laws to ensure fair business practices (e.g. ACCC fines companies for false advertising)

Support Help resolve complaints and disputes (e.g. NCAT decisions are legally binding)

Confidence Build public trust in the marketplace (e.g. consumers feel safer buying products)

➜

Figure 1.8.1 How can organisations assist consumers?

Where can I turn if my rights as a consumer are compromised?

Writing focus 1.8 Conjunctions

Being a consumer can be hard work, with so many dangers potentially affecting future financial security. On a typical day, a consumer will access services, buy goods and enter into contracts. Most businesses are legal and ethical in how they treat consumers, but others may offer faulty goods, use false advertising or scam consumers. It is essential that consumers know which government and non-government organisations they should turn to for advice, how to resolve complaints, and even how to resolve a complaint through court action if restitution is not achieved.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.8 What is the role and importance of organisations that assist consumers?

This will include knowing the role and importance of the organisations listed in Table 1.8.1. Table 1.8.1 Where you can turn for help State and federal government consumer protection agencies

Tribunals and courts

Non-government and independent organisations

• NSW Fair Trading • ACCC • ASIC

• NSW Civil and

• Financial Rights Legal

Administrative Tribunal (NCAT) • State and federal courts

Centre (FRLC)

• CHOICE • Scamwatch ®

SA PA M P G L ES E

State and federal government consumer protection agencies These organisations have several roles, including providing advice and complaints services, as well as enforcing consumer law, such as the Competition and Consumer Act 2010 (Cth) and the Fair Trading Act 1987 (NSW).

NSW Fair Trading

NSW Fair Trading is the government organisation responsible for protecting the rights of NSW consumers, through the jurisdiction of the Fair Trading Act 1987 (NSW). It also provides links to other key government websites to help consumers, so it is a good starting point if consumers are uncertain about where to turn for help or advice. Some of its responsibilities include:

• educating consumers and businesses on their rights and responsibilities when • •

buying products and services in New South Wales investigating complaints about products and services, from retail stores and online purchases investigating complaints about housing and property, including regulating the relationship between landlords and tenants in relation to rental properties.

NSW Fair Trading also provides information on:

• renting, buying, selling and renovating property • community gaming activities, such as raffles, lotteries or bingo • raising funds for a charitable purpose • helping consumers in buying and maintaining their vehicles • running your business and becoming a licensed tradesperson.

Australian Competition and Consumer Commission (ACCC) The ACCC is responsible for national consumer protection and fair trading. The ACCC’s main responsibilities include:

• educating consumers and businesses about their rights and responsibilities, •

investigating reports of illegal business conduct, and enforcing consumer laws. checking that businesses are honest with consumers. It does this by checking whether advertising claims are true, accurate and reasonable and that online reviews about the product should be independent and genuine. The ACCC also check that cashback promotions, prizes, gift cards and discount vouchers follow the rules. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

federal related to the central government of a country, as opposed to the government of a specific state or region Scamwatch an organisation that provides information on the latest scams affecting consumers and also provides a place where victims can report scams NSW Civil and Administrative Tribunal (NCAT) a government organisation providing services to help consumers resolve issues or disputes fairly and according to the law up to the value of $100,000; NCAT is a low-cost, informal way for consumers and businesses to settle disputes CHOICE® an independent non-government organisation that tests and reviews products, publishes consumer advice, and lobbies (tries to influence governments in their lawmaking) for stronger consumer rights

Chapter 1 The consumer and financial environment

• protecting and promoting competition by providing general information about •

competition law, investigating anti-competitive behaviour, and enforcing the law when this behaviour occurs. investigating cases where prices are illegally set by a business. Businesses are generally able to set their own prices; however, they are not allowed to collude (work with other similar businesses) in setting prices. They must communicate prices clearly and accurately to consumers prior to purchase. If the business is selling groceries, such as in a supermarket, it must display the unit price for that product – for example, how much the product costs per 100 grams. This allows the consumer to compare similar products. $12.99

JASMINE RICE

$3.99

SA PA M P G L ES E

5 kg

1 kg

26 cents per 100 grams

40 cents per 100 grams

Unit price

➜

Figure 1.8.2 Comparing unit price

Case study 1.8.1: Federal Court fines Optus Mobile Pty Ltd In 2025, the ACCC took Optus to court, where the company admitted to engaging in unconscionable (unfair) conduct when selling telecommunications goods and services to hundreds of consumers. Optus admitted that its sales staff acted unconscionably when selling phones and contracts over a period of four years. In many instances, the consumers did not want or need, or could not use or afford what they were sold, and in some cases consumers were pursued for debts resulting from these sales. Many of the affected consumers were vulnerable, as some had disabilities, were on low incomes, could not understand the contracts as they could not read or understand English, or were First Nations people from remote parts of Australia where there was not enough internet coverage to use the phone. The ACCC asked the Federal Court to impose a total penalty of $100 million on Optus for breaching the Australian Consumer Law.

Australian Securities and Investments Commission (ASIC) ASIC is an independent Australian Government body set up to administer the Australian Securities and Investments Commission Act 2001. Its job is to regulate and hold accountable companies and financial institutions such as financial advisers, credit card providers and loan companies that are unlawful in their conduct. For example, ASIC may investigate and shut down lenders that are charging unfair interest or hiding extra fees. It can also issue fines and force the closure of companies that have acted unfairly. ASIC also provides information to companies and consumers on issues affecting consumers in relation to the financial system.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.8 What is the role and importance of organisations that assist consumers?

Because ASIC holds businesses that are unlawful in their conduct to account, consumers can be more confident to participate in the market and financial system as they know that there are organisations to protect their rights and safety.

Tribunals and courts These organisations are the last line of defence in protecting consumers that have been treated wrongfully by a business.

NSW Civil and Administrative Tribunal (NCAT)

SA PA M P G L ES E

NCAT is a specialist government organisation providing services to help consumers resolve issues or disputes fairly and according to the law. Specifically, NCAT allows consumers to dispute claims totalling less than $100,000. It is a low-cost, informal way for consumers and businesses to settle disputes. Types of cases that NCAT may hear include those relating to faulty goods or services, and rental issues between a tenant and a landlord. All decisions made by NCAT are legally binding; however, if you disagree with a judgment made, you may appeal the decision to a higher court.

Case study 1.8.2: Brent’s faulty game console

Brent bought a game console online that kept glitching in the middle of games. After making sure it wasn’t related to internet issues, he contacted the seller via email, who told him that to have it fixed he needed to bring the console back in person, as they could not accept its return via courier to the store, which was more than six hours away. The seller then failed to reply to any further emails. Brent contacted NSW Fair Trading, which confirmed he was entitled to have the console fixed, replaced or refunded under the Australian Consumer Law. When the seller still refused, Brent took his case to NCAT, which ruled in his favour and ordered a full refund.

State and federal courts

Courts are seen as the last resort for serious consumer law breaches, especially those involving large sums of money or repeated misconduct. Action is usually taken to the Federal Court of Australia or state courts by the ACCC. If a business is found guilty of crimes such as false and misleading advertising, it may be fined millions of dollars or even not allowed to continue trading.

Non-government and independent organisations

These independent, non-government organisations educate, advocate for and support consumers. They often campaign for fairer business practices and provide information to inform consumers in their purchasing choices.

CHOICE® CHOICE® provides a consumer advocacy service, testing and reviewing products and services to increase consumer awareness. This can assist consumers when they are making purchasing decisions. It can also make businesses more critical of their own Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

products, ensuring that they provide value for money and deliver on the promises made about their product so that their product is not highlighted by CHOICE® as misleading consumers, which may affect their reputation. CHOICE® publishes product comparisons and raises awareness about unfair business practices. For example, it may test different brands of dishwashing detergent and publish results showing which is most likely to clean better, thereby helping consumers to choose wisely.

Scamwatch

SA PA M P G L ES E

Scamwatch is run by the ACCC as an independent organisation, providing information about current scams targeting Australian consumers. It provides information on how to identify, avoid and report scams. This allows consumers to check if they are being scammed before they fall victim. For example, if a consumer receives an email with a special offer from an unknown email address that they suspect may be a scam, they can check the Scamwatch website to see what types of scams are current.

Financial Rights Legal Centre

payday lending types of loans that are short-term, high-interest and offered very quickly by lenders

The Financial Rights Legal Centre (FRLC) plays an important role by providing free advice to people with financial or credit problems. It may help consumers with disputes relating to banking, credit cards or insurance providers. For example, if a person signs up for payday lending with a credit provider but then finds themselves unable to meet repayments according to the repayment contract, the FRLC may provide advice and assist in setting up a payment plan.

Media

Media is often used to bring attention to issues relating to business misconduct in relation to consumers. This often forces businesses to act quickly to resolve the matter as it may affect the reputation of the business.

Review 1.8 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Identify the four main roles of organisations that assist consumers. Outline why it is important for consumers to know what organisations assist consumers. Summarise the role of NSW Fair Trading. Outline the role of ASIC.

Thinking, researching and communicating 1. 2. 3. 4.

Compare the role of NSW Fair Trading and the ACCC. What are the differences between them? Justify the importance of ASIC holding businesses to account for unlawful conduct. Explain why the FRLC is important to consumers with low incomes. Explain why CHOICE® may be an important website to visit when deciding what to buy. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.9 How do I identify scams?

1.9

How do I identify scams?

Learning intention

Success criteria

In this lesson, you will learn about various scams affecting consumers.

❏ I can explain the features of different types of scams.

SA PA M P G L ES E

Starter activity Think, pair, share

Examine the following message received on your phone and follow the “Think, pair, share” routine. 1.

Think: identify three signs that suggest the message might be a scam.

Pair: share your findings with a partner.

Share: present one key red flag with the class.

04:19

URGENT: Your bank account has been locked due to suspicious activity. Click here to verify your identity: http://secure-bank-login.com Failure to act will result in account closure.

Delete Message

Scams are a major threat to your financial security

In our digital world, scams have become common, with young people one of the most targeted and vulnerable groups. This is often due to lack of knowledge about what a scam may look like, and if they are scammed, where victims can turn to minimise the impact quickly or to rectify the issue. More than two million Australians have experienced fraud or scams in recent years. That is why it is essential to learn how to identify scams, protect yourself and act quickly to minimise the impact. It is important to note that if you are scammed, you are not alone and that you should seek help and support immediately and not feel ashamed or embarrassed. By learning how to identify, prevent and respond to scam risks, you are able to stay safe and confident as a consumer. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.9 Appositives

Chapter 1 The consumer and financial environment

Types of consumer risks As a consumer it is important that you are aware of different types of risks affecting consumers. Service risk Paying for a service that isn’t delivered (e.g. an online course that is fake)

Financial risk Losing money through poor decisions or scams (e.g. a fake website that disappears after you purchase its fake products)

Identity risk Having your personal details stolen and misused (e.g. a website asks you to enter your personal information so it can share your information or commit fraud in using your name)

Gambling risk Having to pay additional amounts over and over again until you receive a “prize” (e.g. a website that encourages you to have one more turn after making payment to “unlock” the prize)

Sexual risk Sharing personal pictures, often of a sexual nature (e.g. person online asks you to send sexual or vulnerable pictures of yourself, then demand money from you, threatening that otherwise they will share the pictures publicly)

➜

SA PA M P G L ES E

Product risk Buying faulty, unsafe or poor-quality goods (e.g. product is a significantly poorer quality than what is described online)

Figure 1.9.1 The common types of consumer risk

What is a scam?

A scam is a dishonest plan by criminals to trick consumers into giving away their money or information, or giving access to bank accounts. They are quite common and are increasing as consumers continue to use the internet to satisfy their wants and needs. Scammers can be located in Australia or overseas, and may contact consumers through text messages, phone calls, fake websites or social media.

Common types of scams affecting consumers

Investment scams: promises of guaranteed profits or crypto returns (e.g. a message offering “double your money in 24 hours”) Gambling scams: also known as “scambling”, starts initially as an opportunity to win money easily, but then leads to obstacles that make it hard to access any money

Sexual extortion scams: scammers threaten to leak shared pictures of a personal nature with others (e.g. scammer forcing you to pay money, otherwise they will share your sexual pictures with others) ➜

Figure 1.9.2 Common types of scams

Phishing: scammers send fake emails or texts pretending to be from banks or a wellknown business (e.g. a text message saying “Your account is locked – click here to verify”)

Romance scams: scammers create fake online relationships to gain trust, eventually asking for money for emergencies or to pay for flights to meet Charity scams: pretending to collect for real charities (e.g. fake donation links after natural disasters or crowdfunding pages for people going through trials) Online shopping scams: fake stores sell non-existent products (e.g. buying shoes from a website that disappears after payment is made)

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.9 How do I identify scams?

Other types of scams affecting consumers

• Card fraud: one of the most common types of fraud affecting Australians, with more

SA PA M P G L ES E

•

than two million Australians now affected every year. This type of fraud involves the use of credit, debit or EFTPOS card details to make purchases or withdraw cash without the account owner’s permission. Often scammers will access card numbers from third parties and then make small undetected withdrawals to test whether the card works before attempting again for larger amounts. Deceptive design and online manipulation: digital platforms may use behavioural nudges (also known as “dark patterns”) to influence spending, subscription or data-sharing decisions. For example, you might sign up to receive a discount, only to have your information used to send constant offers designed to lure you into spending more. Subscription traps: you may decide to sign up for a new phone plan, gym membership or streaming service under a trial period. These services often automatically renew your purchase and make it seem impossible to cancel to keep consumers tied in. Digital footprints and data profiling: online businesses may track online behaviour and use it for dynamic pricing or targeted marketing. For example, you visit a website selling designer handbags and are then bombarded with advertising while scrolling social media trying to sell you more designer and expensive items. Buy now, pay later schemes: these offer programs that appeal mostly to young people, enticing them to buy now and pay later. Often young people are unaware of the high interest and fee costs until much later on when they find themselves in financial difficulty and having to repay.

• • •

Identity theft

Identity theft is the use of someone’s personal details by criminals stealing or forging documents without permission to pretend they are that person. The criminals will often use these details to scam others by applying for loans and credit cards in the person’s name. Details stolen could include things like your name, date of birth, passwords, bank details or any other identifying details.

➜ Figure 1.9.3

Identity theft has serious consequences, so it’s important to be aware of the steps you can take to avoid it. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Identity theft can cause a high level of emotional stress to the victim because of the damage to reputation, financial loss and impact on credit rating. This type of fraud can be the result of sharing too much personal information on social media, easy to guess or overused passwords, clicking on phishing links, losing your wallet, purse or phone, or even logging into your internet banking using public wi-fi.

Case study 1.9.1: cuckoo smurfing A newly emerging type of scam with an unusual name, cuckoo smurfing usually involves overseas criminal organisations. They will typically transfer a series of deposits, usually all under $10,000, typically after organising with the owner of the bank account to help them. The purpose of this is to launder money (disguising money obtained illegally through criminal activity to appear as lawful). They will borrow your bank account, before forwarding money to their intended end recipient in Australia.

SA PA M P G L ES E

Australian Transaction Reports and Analysis Centre (AUSTRAC) the government organisation responsible for regulating and monitoring the financial sector to prevent and detect serious and organised crime; they may also provide assistance to consumers with money laundering, organised crime and tax evasion

The aim of this approach is to avoid detection by the Australian Transaction Reports and Analysis Centre (AUSTRAC), the government organisation responsible for detecting money-laundering scams. As a way of detecting scams, AUSTRAC requires banks to report on any customers who have deposits or withdrawals of $10,000 or more in a single transaction. This type of scam will often target some of the most vulnerable groups in society. As AUSTRAC and other government agencies work to shut down the scam, the bank account may be frozen or closed. This may impact on the regular income that is being paid into an account, which may result in account owners having difficulties in meeting their own consumer needs. It is therefore essential, if you are approached by scammers to allow them to use your bank account, or you notice unusual transactions on your account, that you report it immediately to your financial institution.

Review 1.9 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Identify why young people are often the most common and vulnerable victims of scams. Discuss ways to protect yourself from identity fraud. Explain the impacts of identity fraud on a victim.

Thinking, researching and communicating 1.

Research subscriptions and lock-in tactics and identify the types of businesses that may be involved in this type of activity. Interview someone who may have been affected by digital footprints and data profiling. Explain the impact this had on them, including examples. Research activity: research three of the most typical scams faced by consumers. a. Outline the issue. b. Summarise three examples of these types of scams from media articles. c. Explain the impact of this scam on the victims. d. Identify ways to avoid this type of scam. e. Identify organisations that may be helpful to you as a scam victim and how they may assist you.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.10 How do I protect myself from scams?

1.10

How do I protect myself from scams?

Success criteria

In this lesson, you will learn about how to protect yourself from various scams affecting consumers.

❏ I can explain what I need to do to protect myself from scams, and where to turn for help if I am scammed.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Complete this sentence: “I used to think scams were easy to spot; now I think …”

Share your response with a partner.

It is essential as a consumer that you are aware of the different types of risks affecting consumers, including product, service, financial, identity, gambling and sexual risks. These risks will at times result in fraud such as phishing, investment, gambling, sexual extortion, romance, charity and other online scams. Other types of scams include card fraud, misuse of digital footprints and data profiling, subscriptions and lock-in tactics, deceptive design and online manipulation, and unfair buy now, pay later schemes. It is very important to note that if you are scammed you are not alone. You are the victim of a crime, and the scammer is a criminal. You should seek help immediately from a trusted and knowledgeable person, such as a parent or teacher. It is also essential that you know what organisations you can turn to for assistance.

➜

Figure 1.10.1 Scams are very common, and chances are you'll encounter one in your life. It's important to know what to check for and how to act if you are the victim of a scam. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.10 Developing sentences

Chapter 1 The consumer and financial environment

Organisations that protect consumers Table 1.10.1 outlines Australian organisations that protect consumer rights. Table 1.10.1 Australian organisations that protect consumer rights Role

Types of frauds that they may assist with

NSW Fair Trading

Handles consumer complaints and provides consumer advice in New South Wales

All types of frauds affecting the individual consumer

Australian Competition and Consumer Commission (ACCC)

Tracks and investigates scams, enforces fair trading laws against businesses

Financial fraud, gambling fraud, buy now, pay later schemes

Scamwatch (run by ACCC)

Provides alerts and education on current scams

All types of scams

IDCARE

Supports people who have had their identity stolen

Identity fraud

Australian Cyber Security Centre (ACSC)

Offers online security advice and incident reporting

All types of online fraud

AUSTRAC

Offers assistance with money laundering, including in relation to gambling scams

Gambling fraud, investment fraud

eSafety Commissioner

Offers support and education regarding online safety risks

All types of online safety risks

SA PA M P G L ES E

Organisation

Australian Cyber Security Centre (ACSC) the government organisation responsible for monitoring and providing advice on cyber security

Organisations providing emotional support

There are also organisations you can turn to for emotional support if you have been the victim of a scam. Beyond Blue All ages. All issues. Phone counselling and online chat available all day, every day. Ph. 1300 22 4636

Kids Helpline 5- to 25-year-olds. All issues. Confidential phone counselling available all day, every day. Online chat available 24/7, 365 days a year. Ph. 1800 55 1800

Headspace 12- to 25-year-olds. All issues. Phone counselling and online chat available 3 p.m. to 10 p.m. AEST, every day. Ph. 1800 650 890

Lifeline All ages. All issues. Phone counselling and online chat available all day, every day. Ph. 13 11 14

➜

Figure 1.10.2 Australian organisations that can provide emotional support to scam victims Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.10 How do I protect myself from scams?

Ways to protect yourself from identity fraud Figure 1.10.3 outlines ways to protect yourself from identity fraud. Don’t click on suspicious links or attachments. If you do happen to click on one unintentionally, shut down your computer immediately and then run anti-virus software when you reboot your computer.

Only shop on secure websites (look for “https://”), the lock symbol, or click on this icon to see how secure the website is.

Check bank statements regularly for unusual activity.

Install trusted antivirus software (be alert to freely available software as these may have tracking software and be the cause of fraud).

Don’t overshare personal information online, such as your date of birth, school you attend or where you bank.

➜

SA PA M P G L ES E

Use strong, unique passwords that are unusual and use uppercase and lowercase letters, symbols and numbers.

Figure 1.10.3 Protection against identity fraud

Case study 1.10.1: phishing scam Sana almost loses all her savings

Sana receives a text message from her bank saying that her account has been suspended and that hackers have tried to access her accounts. The text message looks legitimate, with the proper bank branding and urgent language. In the text message is a link asking her to enter her details to verify them. Panicked, Sana clicks on the link and enters her details. Almost instantly, scammers try to access her banking account with her passwords and login details. Thankfully, Sana set up two-factor authentication on her account when she opened it the previous year. Two-factor authentication, also known as multifactor authentication, involves having more than one alert system for any changes to be made to your account, such as changing a password or transferring money. Typically, the organisation may require two or more proofs of identity to grant you access, such as an email or text message sent to your phone with a code. This code is then required to be input into the real banking system for any transfers or changes to be made. Despite inputting her login details and password into the phishing email, Sana was able to protect herself because she had two-factor authentication. Sana is thankful for setting up the authentication, but she is disappointed in herself for believing that her bank would send her such a link for her to input her details. She knows banks and other reputable organisations will never provide a link asking for you to access their website using your password. If in doubt about a request, you should visit your bank’s website and log in from there. You might also check the Scamwatch website to check if this is a scam that currently affects the community.

Case study 1.10.2: card fraud The scam affecting 1 in 10 Australians every year

According to the Australian Bureau of Statistics (ABS), card fraud is one of the main types of fraud affecting Australians in recent years, with 1 in 10 Australians affected every year. The research also revealed that this was increasing incrementally year on year. Card fraud involves the use of credit, debit or EFTPOS card details to make purchases or withdraw cash without the account owner’s permission. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Australian Bureau of Statistics (ABS) the government agency that provides trusted official statistics on a wide range of economic, social, population and environmental matters

Chapter 1 The consumer and financial environment

It is usually identified by victims checking their bank accounts on a regular basis for transactions that they do not recognise as having made. In most instances, they will report this unrecognised transaction to their bank, which will reissue them a new card with a new card number so that further amounts can’t be deducted by scammers. Scammers are usually based overseas. It is important to be cautious about who you share your card details with. Most of the time, scammers obtain the card owner’s details through fake websites, hidden card readers (also known as skimmers) placed on ATM or EFTPOS machines, or by hacking online accounts. As a consumer, it is important that you regularly check your bank account via internet banking or bank statements. You should also check ATM or EFTPOS machines for unusual additional parts where you swipe your card. You should also not allow the card out of your sight when using it in public, such as in restaurants. Even small, unnoticed charges can quickly add up to major financial loss.

DOC

SA PA M P G L ES E

Download additional case studies:

Banks will usually refund scam amounts after investigating the deductions, provided you have not contributed to the loss, such as by sharing your card number carelessly. This, however, may take several months to happen, leaving you without access to spending money. It can also add stress to your life through having to change cards and follow up with banks to have the issue resolved.

• Gambling scam • Online scam

• Sextortion

Further information on card scams can be found by visiting the Scamwatch website and your bank’s website. You can also find information at “Personal fraud” on the Australian Bureau of Statistics website using the following link: https://cambridge.edu.au/redirect/11705.

Review 1.10 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Describe the types of risks affecting consumers. Identify the people in your life you would turn to immediately if you are scammed. You are unsure if a message you have received is a scam. Identify the organisation that has information on the latest scams. Outline ways you can protect yourself from online and identity fraud.

Thinking, researching and communicating 1. You notice some unusual debits to your account. Outline what steps you need to take immediately. 2. Visit the NSW Fair Trading website. Summarise the types of services it offers to consumers. 3. Research the four types of mental health organisations you may turn to if you have been the victim of a scam and are feeling overwhelmed. Compare the differences between them. 4. Research the role of one or more of the organisations in Table 1.10.1 and discuss your findings with your class. 5. Access the additional downloadable case studies from the Interactive Textbook and list the steps you should immediately take if you are the victim of one of these scams.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.11 Why is it so important to make the right decisions when earning, saving and spending?

1.11

Why is it so important to make the right decisions when earning, saving and spending? Success criteria

In this lesson, you will learn about different types of earnings, ways to save, and how to manage spending.

❏ I can explain ways to increase my earnings and savings and limit my spending.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Identify one consequence of making poor financial decisions.

Share with a partner.

Decisions you make today can have long-term consequences. As a young person, you have the power to lead a financially secure life and have a good lifestyle by making the right decisions about money now. These decisions will largely revolve around earning, saving, spending and investing. Earning

Saving

Spending

Investing

➜

Figure 1.11.1 The key elements of a financially secure life

Earning

Earning money is a consequence of working, entrepreneurship or investments and is the first step in building your financial future. As a young person, you may want to begin with a casual part-time job while at school, working on the weekends and in the school holidays. Your employer will usually pay you a wage according to the number of hours you work every week or fortnight. To increase your earnings, you may want to increase the number of hours, or taking on a better paying job by building your skills and experience. This may involve taking on more responsibility and becoming a shift manager, or learning new skills either on the job or through formal training. Another way you can earn money is by running your own business as an entrepreneur. An entrepreneur is someone that risks their own money to start their own business. This may be either a good or a service. If an entrepreneur wants to sell goods, they may start with selling handmade craft items using an online marketplace, or selling food items at the local market. An entrepreneur may buy equipment and perform a service for others, being paid for their time and effort. For example, they might buy a lawnmower and cut grass for people in their suburb, or start a dog-walking or babysitting service. Being an entrepreneur allows you to choose your own hours, and make decisions on what to sell and how much to sell items for, potentially allowing you to make greater amount of money. Finalapages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.11 Creating topic sentences entrepreneurship the process of identifying opportunities and creating value by starting and growing ventures, often by innovating and taking calculated risks earnings money earned by consumers, usually from working or investing

Chapter 1 The consumer and financial environment

dividend a portion of the profits of a company that is paid to the people who own shares in the company salary fixed annual amount paid in regular instalments, such as fortnightly or monthly, to employees for time worked annual on a yearly basis

Different types of income are outlined in Table 1.11.1. Table 1.11.1 Types of income Type

Example

Wage

Paid per hour (e.g. part-time casual job in a restaurant or retail outlet)

Salary

Fixed annual amount paid in regular instalments, such as fortnightly or monthly (e.g. full-time teacher)

Commission

Based on sales made (e.g. real estate agent)

Investment income

Dividends, rent or interest

Government payments

Youth Allowance, JobSeeker

SA PA M P G L ES E

commission income paid to an employee based on the number and amount of sales made; for example, a real estate agent being paid according to how many houses they sell

Investing is another way to generate earnings and may involve organising your money to generate income for you. Types of income you may earn from investing include dividends, rent or interest.

Saving

Saving involves putting aside part of your income to pay for larger purchases or to invest for the future. Having savings may also protect you from financial emergencies, such as medical bills or to cover living costs if you lose your job. Saving involves putting aside a set dollar amount or percentage every time you are paid. For example, to save for a car, you might put aside 30% of your wage every fortnight into a savings account that does not have card access. Or it may be a set amount that you pay every week regardless of how much you make. For example, putting aside $100 per week for two years will give you $10,400! And this is before you earn interest or dividends if you were to invest it. Before you begin saving, it may be beneficial to set some savings goals and then develop a strategy to achieve them. Short-term savings goals Time period: up to two years Example: a new phone or a new outfit

Medium-term savings goals Time period: up to 10 years Example: a deposit for a home

Long-term savings goals Time period: 10+ years Example: for retirement

➜

Figure 1.11.2 Short-term, medium-term and long-term savings goals

Saving may mean having less money to spend in the short term. However, by saving, you are more likely to feel financially secure as you will have money for emergencies or big expenses. Automate your savings by setting up an automatic transfer the day after payday. Regular deposits will build up over time.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.11 Why is it so important to make the right decisions when earning, saving and spending?

Spending Spending involves making decisions about how you spend the money you earn. Careful spending will allow you to grow your savings and allow you to invest by using your earnings as wisely as possible. Spending wisely involves planning to avoid temptation that leads to decisions that you may regret later. Some smart spending tips include the following.

Differentiating between your needs and wants

SA PA M P G L ES E

A need is something that is essential for living, such as basic food, shelter and clothing, while a want is something that you may desire but could easily live without and still survive, such as a mobile phone or the latest sports shoes.

Avoiding impulse buying

If you see something that you want, delay buying it. This could involve putting it into your online basket and not paying for it for at least 24 hours so that you have time to consider whether it is a wise purchase. For an item in a retail store, you may go home without buying it and plan to return on a later day, so you have time to think about it.

Do your research

You should research before you make purchases by comparing different retailers, similar products, reading online reviews, or even using comparison websites that showcase similar products.

➜

Figure 1.11.3 Learning to differentiate between needs and wants and learning to avoid impulse shopping are important skills to master as soon as possible. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Use a budget planner Often, we do not realise how and where we spend our money. You may want to use an online budget planning calculator, such as the one on the Moneysmart website, which will help you to plan your expenses. By identifying areas of overspending in your budget, you can make decisions to cut back. For example, you may identify that you are spending a lot of money on bubble tea every week, with each purchase costing you about $10. Multiply this by four times a week, and it adds to $40 a week. Multiply this by 52 weeks, and it amounts to in excess of $2080 of spending!

SA PA M P G L ES E

➜

Figure 1.11.4 You could even work on a budget with your friends, to help keep each other on track and avoid unnecessary spending when you spend time together.

Review 1.11

Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Outline why it is so important to make the right decisions when earning, saving and spending. Outline some ways you may earn money. Define entrepreneur. Discuss the benefits of being an entrepreneur. Justify why it is important to have savings.

Thinking, researching and communicating 1.

Copy and complete the following table in your workbook. Create at least one savings goal for each category in the table, using the first one as an example.

Savings goal

Identify an item you want to save for

How much will How will you it cost you? achieve this?

Example: short term, up to two years

New game console

$360

$30 per month over 12 months. $30 × 12 months = $360

Short term, up to two years Medium term, two to 10 years Long term, 10+ years 2. 3.

Create a list of ways to reduce your expenses. You may want to ask your friends for their suggestions also. You may want to increase your earnings by starting your own business as an entrepreneur. Identify types of businesses you may want to start as a young person.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.12 Why is it so important to make the right decisions when investing?

1.12

Why is it so important to make the right decisions when investing? Success criteria

In this lesson, you will learn about the different features of investing.

❏ I can explain the power of compounding, the relationship between risk and reward, and understand inflation, the importance of diversification, and the types of income I can earn from investing.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: write down as many types of investments as you can think of.

Pair: compare your list with a partner and add any new ideas you learn from them.

Share: present one type of investment to the class.

So far, we have learned about the importance of making the right decisions when earning, saving and spending. After being careful and wise with your decisions for some time, you may find that you have some savings put aside and may want to have your money work for you by using it in a skilful way so that it continues to grow. Investing is using money to buy assets that grow in value over time, such as shares, property, gold and other investments that generate more money over time. Investing allows you to grow your wealth and ultimately your financial security. It should be the next step after earning, saving and carefully spending.

The power of compounding

➜

It is important to remember that the earlier you start investing, the more you will have over the long term through compounding. Compounding is simply money that earns a return and is then reinvested into making more money. For example, if you were to start with $1000 and place it into an investment that earns you a return on average of 5% every year, you could grow your wealth as Figure 1.12.1 The earlier you start investing, the sooner you’ll see results from compounding. illustrated in Table 1.12.1 on the next page. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.12 Note-making assets something a business or individual owns shares a part of a business sold to an investor, making them a part-owner of the business property investments involving land, such as houses, units or factories

Chapter 1 The consumer and financial environment

Table 1.12.1 Compound investment growth over time Number of years Growth amount in that year added to your balance

Balance of your investment at the end of the year

$0.00

$1000.00

$51.16

$1051.16

$62.46

$1283.36

$80.16

$1647.01

$102.88

$2113.70

$132.03

$2712.64

$169.44

$3481.29

SA PA M P G L ES E

$217.45

$4467.74

Risk versus return

risk the chance that something may go wrong in a financial or business situation

risk versus return risk is the uncertainty that an investor may possibly lose the money invested; return is the money generated by taking the risk

inflation the rate at which prices for goods and services rise over time despite no added value to the product, leading to the same amount of money buying less over time diversification an investment technique that involves spreading out risk between different types of assets such as shares, cryptocurrency, property and gold

Investing is an essential part of financial security; however, it does have an element of risk, or uncertainty, as you may possibly lose the money you originally invested hoping that your money increases over time. It is therefore important that you research and understand the types of investment options available to you and the risks and opportunities involved in each. You can then make a decision that you are comfortable with, and fully understand the risk versus return. This will form your “risk appetite”, which is the level of uncertainty you are comfortable with. Generally, the riskier the type of investment, the higher the potential to make more money; however, this also means there is a higher risk of potentially losing your original amount. For example, cryptocurrency is seen as a high-risk investment as it is driven by supply and demand in the market. However, we have seen over the last two decades small investments in cryptocurrency grow the wealth of investors beyond most other investment types. We have also seen people completely lose all their original investment amount.

Inflation

The thought of investing can be scary, but not investing may also have consequences. Money can lose value over time through inflation. Inflation is the rate at which prices for goods and services rise over time, leading to your money buying less. For example, 20 years ago, $10 may have allowed you to buy a burger, chips and drink, whereas the same meal with exactly the same ingredients will cost you a lot more today. This is simply because money will often lose value over time, so it is important that you invest so that your money continues to grow at a faster rate than inflation.

Diversification Have you ever heard the saying “Don’t put all your eggs in one basket”? This concept is very relevant to investing, and is known as diversification. No matter how careful you are, investing comes with risk. You should consider spreading out your investments between different types of assets and even within the same type of asset, different businesses or properties. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.12 Why is it so important to make the right decisions when investing?

For example, this may include having a mixture of investment across different types of assets, such as starting a business, shares, cryptocurrency, property and gold. If you are investing in an asset type such as shares, you may want to invest in lots of different companies, across different industries, and across different countries. By diversifying, even if one of your investments led to loss of money or very low returns, others may provide good returns, giving you some safety.

Income sources from investments

The second source of income from an investment is the capital growth. This is when an investment grows in value over time as it may be highly sought after by other people in the market. For example, shares will increase in value because as a company grows bigger and investors see that it may provide good returns, they want to purchase shares in it.

➜

SA PA M P G L ES E

There are two ways to potentially make money from an investment. The first one is from the income it generates for the owner. For example, if you invest in a property and rent it out, you will make an income from that rent. Similar to this is investing in shares. When you invest in shares, you are essentially becoming a part-owner of a business, meaning you are able to earn money from the profits made by that company from the goods or services it sells, which is distributed to owners as a dividend.

Figure 1.12.2 The share market

Case study 1.12.1: investing and diversifying

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Video 1.12.1 Dividends from shares ➜

Jaafar receives $1000 in birthday money gifts for his 21st birthday. He decides to buy shares with this money. Having learned how to invest in school, he knows the basics of share investing and the importance of diversifying his investment. He decides to invest in four different companies using an online trading account that he opens through his bank, which allows him to purchase shares through the Australian Securities Exchange (ASX). He studies the market for a while, looking at graphs to see their past growth, reads about the companies he is interested in, and then decides to purchase shares in four companies: one that produces medical equipment, one that operates supermarkets, another company based in the US share market that produces cars, and the last a technology company that is relatively new to the market and is considered higher in risk but may provide him with high returns. Jaafar wants to reinvest any dividends received into buying more shares. He hopes that this, along with a growth in share prices over time, will allow him to grow his wealth.

Chapter 1 The consumer and financial environment

Types of investments Table 1.12.2 outlines different types of investments, stating the potential return and risk level for each type of investment. Table 1.12.2 How risky are different types of investments? Investment type

Description

Potential return

SA PA M P G L ES E

Savings account A very safe option where you deposit money into a bank Low account and earn interest on the amount of money in it. Good for short to medium savings goals as you can earn a small amount of interest and still access your money whenever you need it for emergencies.

exchange traded funds (ETFs) a type of investing where investment experts put together several types of company shares as a portfolio for investors to invest in

Risk level Very low

Term deposit

Medium A safe investment where you lock in a fixed amount of money for a fixed period of time for a fixed amount of return in the form of interest. The rate of return is usually less than what you could potentially earn through other investment types.

When you buy shares, you are buying a part of a company. Companies are listed on the Australian Securities Exchange (ASX) so that they can raise money to allow their business to grow. Investors can purchase these shares with the hope of receiving a dividend (a share of the profits) and capital growth (growth in the value of the shares/company).

High

Medium to high

Exchange traded funds (ETFs)

ETFs are portfolios or collections of different shares or assets, which are put together by investment experts. They are traded in a similar way to shares through the ASX. They provide a convenient way to begin trading, with portfolios offering a wide variety of shares, and the investment experts continuing to manage the portfolio.

High

Medium to high

Gold and precious metals

Gold, silver, diamonds, platinum and other minerals are Medium seen as a safer type of investment when there is political and economic instability. Investors may purchase gold bars, nuggets or ETFs. Some people may purchase jewellery as an asset; however, the workmanship may be factored in, meaning the price may be higher when purchasing.

Low

Property

High Property is considered a great investment due to its high returns over time in both capital growth and potential income from renting it out. However, due to the high cost of buying property, it may be very difficult to enter the market. You will need to spend time and money maintaining it, and it may take some time to buy and sell it. If you do not have the funds, you may have to borrow money and pay interest.

Medium

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Low

1.12 Why is it so important to make the right decisions when investing?

Table 1.12.2 Continued Description

Potential return

Risk level

Cryptocurrency

Beginning in 2009, cryptocurrency is a digital asset that is made up of blockchain, a type of coding. It is decentralised as it does not belong to a particular country like normal currency. It grows in value based on the supply and demand in the market. It is considered high risk and with potentially high returns as its growth in value is driven by how much people are willing to pay for it.

Very high

Art and collectables

Investing can include buying things such as rare jewels, furniture, artefacts, sculptures, collector cards, vintage cars and other special items. This involves a lot of time and skill as you need to research widely and the items may be too expensive to even get started. Making returns relies on you keeping the item for a long period and that someone will want to buy it in the future.

Very high

SA PA M P G L ES E

Investment type

Review 1.12

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Explain why investing is so important. Refer to Table 1.12.1. Identify how much you would have after 20 years. Describe the two types of returns you may earn on an investment. Explain why it is important to understand risk versus return before making an investment decision. Define inflation. Discuss what is meant by “Don’t put all your eggs in one basket”.

Thinking, researching and communicating 1.

Justify why compounding is so important to building wealth. Select two types of investments outlined in in Table 1.12.2 and compare them. Explain which type of investment is better for you and why. Using an online compound interest calculator such as the one on the Moneysmart website at https://cambridge.edu.au/redirect/11706, calculate how much you would have if you started with $2000 and had a rate of 6%. What balance would you have after 20 years?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.13

Borrowing to meet your wants and needs: what are your options? Success criteria

In this lesson, you will learn about the risks of borrowing to fulfil your wants and needs, and the different loan options available to lenders.

❏ I can explain the advantages and disadvantages of borrowing, and the features of different loan types.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Write your first reaction to the idea of borrowing money.

Then note what you need to know, what excites you, and what worries you.

As consumers we have many wants and needs but limited money to be able to afford them. At times, we may have to make the decision to borrow money to fulfil those wants and needs. Making the decision to borrow money is not an easy one, as it may have long-term consequences if you do not fully understand what your responsibilities are as a borrower. The law also provides many rights to protect borrowers, but it is important that you understand these before making important decisions that impact on your financial future.

Borrowing

Writing focus 1.13 Conjunctions

Entering into a financial agreement to borrow allows you to use predicted future income to meet current wants or needs. Borrowing allows you to have access to money now, with the condition that you will repay that money, plus interest, according to the legal loan agreement you have with the lender. Borrowing money can be expensive. You will have to repay the original amount borrowed, plus interest and any extra fees and charges a financial institution may charge to lend you the money. This may impact your future lifestyle as a portion of your income goes towards paying your loan for the term (length of time) of the loan. It is therefore important, before you decide if this is the right decision, that you consider the reasons why you are borrowing.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.13 Borrowing to meet your wants and needs: what are your options?

Am I borrowing to fulfil a want or a need?

SA PA M P G L ES E

Before you borrow, you may want to deeply reflect on your reasons as to why you want the loan. Does it fulfil a want or a need? A need is a basic necessity required to survive and may include things like food, education, shelter, medical needs, clothing or even a car if it allows you to earn an income and public transport can’t fulfil your needs. A want is a desired good or service that enhances your life but can be lived without and may include a fancy car, designer clothing, the latest mobile phone, a holiday or a jet ski.

➜

Figure 1.13.1 Borrowing money to go on a luxury holiday may seem like a good idea at the time, but it could have serious long-term implications for your financial health.

We all have wants, but is there a way we can avoid borrowing to fulfil those wants? For example, can we buy a cheaper, more practical car? Can we delay buying the latest phone and instead use our existing one for as long as possible? Do we need a designer outfit or can we wear something we already own again? Can we delay going on holidays until we have saved up the money?

By choosing to ask ourselves questions that reveal if we are fulfilling a need or a want, we are better able to consider if we are really making the right decision to borrow, perhaps preventing future financial difficulties.

What are the advantages and disadvantages of borrowing? Borrowing can have benefits, such as allowing the purchase of expensive items sooner, helping you manage emergencies, improving your credit rating if you are consistent in making repayments on time, and allowing you to invest in assets that appreciate in value, such as property. Borrowing can also have disadvantages, such as having to repay more than you borrowed. For example, if you were to borrow $10,000 over 10 years at a rate of 6% per annum, you would need to repay the principal amount of $10,000 plus an additional $3226.88 in interest repayments. Taking out a loan may lead to long-term debt for many years to come or financial stress. This may in turn lead to missed payments on loans, which could affect your credit rating. It is essential to consider whether entering into a loan is best for you and your circumstances.

Types of loan options There are many types of loan options, depending on the type of organisation, what you are buying and your financial situation. Each organisation will have different conditions about what you can use the money for, interest rates, fees, and loan terms and conditions. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Different types of loan options are outlined in Table 1.13.1. Table 1.13.1 Types of loan options Description

Examples

Bank

A financial institution that offers a wide variety of financial products. They generally are careful with who they lend money to as they are cautious in their risk approach. Types of loans offered include home loans, personal loans and credit cards.

Commonwealth Bank (CBA), National Australia Bank (NAB), Westpac, ANZ Bank

Financial institutions

Credit unions and building societies are smaller in size than banks, usually offering a smaller range of loan types to community-based members, such as home or car loans.

Newcastle Permanent, Police Credit Union, Teachers’ Credit Union

Retailers

A retail store that provides small loans that offer buy now, pay later or store credit

Afterpay, Zip Pay, store cards

Credit cards

A line of credit offered by a bank or financial institution that you can use at a variety of retailers, including online, that allows you to borrow up to a limit. They are convenient to use but usually have a high interest rate and penalty fee for late payments.

Visa, Mastercard, American Express

Family/friends

Informal loans either with a verbal or simple written agreement. If you borrow money from family or friends, it is best to write down the amount borrowed, the date and the loan terms, and then have both borrower and lender sign in agreement of the conditions.

Parents lending money for a laptop

SA PA M P G L ES E

Lender type

Payday lenders Short-term, high-interest loans that can be offered very quickly to a borrower

Wallet Wizard, Flash Money, PayExpress, Nimble

Review 1.13 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Outline why understanding the difference between needs and wants is so important to the borrowing process. Identify some of the consequences of borrowing money on your lifestyle. Identify some of your own needs and wants. Of the ones you have listed, which ones would you consider taking out a loan for and why? Discuss the advantages and disadvantages of borrowing money. Explain the relationship between principal and interest.

Thinking, researching and communicating 1.

Investigate the differences between a payday lender and a bank. Which one would be a better option for someone purchasing a car, and why? Discuss some of the advantages and disadvantages of borrowing from friends or family. What should you do to protect both parties? Research some of the credit unions available to people in your community. Giving reasons, recommend why they may be a better option than a bank. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.14 How can I better understand the borrowing process to make more informed decisions?

1.14

How can I better understand the borrowing process to make more informed decisions? Success criteria

In this lesson, you will learn about loans available to consumers.

❏ I can explain things to consider when getting a loan, including the costs of borrowing, the process of borrowing, and what to do if I am unable to meet the required repayments on time.

SA PA M P G L ES E

Learning intention

Starter activity

Think, puzzle, explore 1.

Think: what do you already know about borrowing money and loans? Write down your ideas.

Puzzle: what questions or puzzles do you have about borrowing? What do you wonder about interest rates, repayments or loan types?

Explore: how might you find answers to these questions? List possible sources or strategies (e.g. websites, talking to a bank, reading brochures).

Things to consider when getting a loan

If you have made the decision to get a loan, you need to understand the conditions of the loan by knowing the language used in loan contracts so that you can make the right decision about what loan type suits you.

➜

Figure 1.14.1 Is a loan right for you?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.14 Conjunctions

Chapter 1 The consumer and financial environment

Table 1.14.1 lists some of the words used in loan contracts to describe the requirements. Table 1.14.1 Some of the words used in loan contracts Meaning

Principal

The original amount of money borrowed

Interest rate

The percentage charged for borrowing the money

Variable interest rate

The interest rate can go up or down, depending on the rates set by the Reserve Bank of Australia (RBA).

Fixed interest rate

The rate of interest to be charged is set by the bank at the beginning of the loan term and remains unchanged throughout the loan term. This may impact on how quickly you are allowed to pay off the loan, as there will usually be a set schedule of repayments that you need to stick to, and if you decide to pay more you may have to pay an early payment fee.

SA PA M P G L ES E

Loan condition

account-keeping fees ongoing fees on a bank account or loan by a financial institution

Loan term

How long you have to repay the loan

Repayment frequency

The amount and timing of the loan (e.g. weekly, fortnightly or monthly)

Fees and charges

Application fees, late fees and account-keeping fees

Security or collateral

Some loans (like car loans) require you to offer an asset that can be taken if you don’t repay, such as the car itself.

Credit history

The lender checks your financial record before approving the loan. If you default on a loan, this may affect your credit rating. This means you may find it difficult in the future to get another loan from another provider, or even rent a property or get a phone plan as providers of these will also look at your credit rating.

Costs of borrowing

Borrowing can be expensive due to the interest that is charged by the lender; however, there may also be other costs applicable that you need to be aware of to make an informed decision. It is essential that you compare different loan types from different lenders to decide which is best for your circumstances. By law in Australia, all finance providers must provide the comparison rate as well as the interest rate. The comparison rate is the true annual cost of a loan, including all fees. It is important that you consider this when making a decision about what loan to take. Table 1.14.2 shows some of the costs associated with borrowing.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.14 How can I better understand the borrowing process to make more informed decisions?

Table 1.14.2 Some of the costs associated with borrowing Explanation

Example

Simple interest

Charged only on the original amount borrowed

A $1000 loan at 10% per annum = $100 interest per year.

Compound interest

Charged on both the original amount and previous interest

A $1000 loan at 10% per annum = $100 interest in the first year, but then apply interest on the principal and interest left the second and subsequent years. Therefore, if none of the loan is repaid, in year 2 it would charge interest on $1100, and continue to increase the following years by adding the principal and interest to the loan amount.

SA PA M P G L ES E

Type

Account-keeping Charged for having the fees account with the financial institution

This can range from a few dollars per month to thousands of dollars per year.

Late payment penalties

Charged when you fail to make the agreed repayments on time

This can range from a few dollars per time up to around $50.

Early repayment fees

Charged if you pay off your Not all loans have this condition; however, loan earlier than agreed to if they do, this will be stipulated in the loan contract. This may also be dependent on in the loan contract whether your loan has a fixed or variable interest rate, with a variable rate loan less likely to charge an early repayment fee.

Process of applying for a loan

All lending to consumers is governed by the National Consumer Credit Protection Act 2009 (National Credit Act). This law outlines the requirements that banks and financial institutions have to follow when they lend money. When they offer a loan, a lender must not suggest a credit contract to a borrower or assist a borrower to apply for a credit contract if the credit contract is unsuitable for the borrower. To become a borrower, you must fill in an application form. This is a form provided to you by the lender that includes important information that they will use to decide how risky you are as a borrower and if you can be a borrower, or if there are any special conditions they need to add to the loan contract to make the loan less risky, such as security or collateral. The loan provided must meet your needs and be affordable. Requirements in an application form may include:

• your full legal name • your full home address • all your income sources, including wages and salary, investment income such as •

dividends, or government welfare payments all your monthly expenses, such as rent, other loan repayments, food, utilities, entertainment, education or anything else

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

simple interest interest based on the principal amount only, and does not include the effect of compounding compound interest interest calculated on both the original amount of money and the interest it has already earned

Chapter 1 The consumer and financial environment

• a full list of your assets, including property, cars, shares and other investments • your signature and date confirming that all details provided in the application are correct and true.

➜

SA PA M P G L ES E

These requirements are meant to protect you as a borrower, so it is important that you are truthful and disclose all the required details.

Figure 1.14.2 A typical business loan application

Where to turn for help if you can’t make repayments

Australian Financial Complaints Authority (AFCA) a free and independent dispute resolution organisation that can make binding decisions on matters affecting borrowers relating to complaints about financial products and services, including loans, insurance, bank deposits, investments and financial advice, as well as superannuation

Sometimes, a borrower may be unable to afford to make the payments on a loan. If this happens to you, you must take immediate steps to ensure that your credit rating is not impacted, and that the situation does not get worse through the addition of late payment fees and other legal consequences. Steps in seeking help may include: 1. Notify your lender that you are struggling to make payments. Lenders have 21 days to respond to your request for help by reviewing your loan conditions, pausing repayment requirements on your loan, or assisting in another way. 2. If you are unhappy with the lender’s reply, you should contact the Australian Financial Complaints Authority (AFCA). AFCA is a free, fair and independent dispute resolution scheme that assists borrowers who have complaints about financial products and services, including loans, insurance, bank deposits, investments and financial advice, as well as superannuation. AFCA can make binding decisions relating to a complaint made by a financial firm, including awarding compensation for losses suffered because of a financial firm’s error or inappropriate conduct. 3. If a lender does not abide by the direction of AFCA, then you may consider tribunals and court action as a last resort to resolve the complaint.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.14 How can I better understand the borrowing process to make more informed decisions?

SA PA M P G L ES E

You may also want to seek financial counselling to help you better understand your rights and requirements as a borrower if you are in financial distress. The Financial Rights Legal Centre provides information to assist borrowers who are struggling, including links to various organisations they can access for free.

➜

Figure 1.14.3 It is important to know when to seek professional help and where to find support if you cannot keep up with repayments.

Review 1.14

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Outline why maintaining a good credit history is important to a consumer. Explain why it is important to avoid making late loan repayments. Summarise some of the requirements of the National Consumer Credit Protection Act 2009 (National Credit Act). Explain why the loan application form is important to the borrowing process. Define the role of AFCA and how it helps consumers.

Thinking, researching and communicating 1.

Visit the Financial Rights Legal Centre website and identify some of the organisations that provide free financial counselling in New South Wales. Compare a variable interest rate loan with a fixed interest rate loan. Identify which one may have a penalty for paying it off early. Justify the importance of considering the comparison rate when making a decision about what loan you should take. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.15

Skills focus: personal financial management through budgeting

Learning intention

Success criteria

In this lesson, you will learn about budgeting and its importance in achieving financial goals.

❏ I can explain the importance and required features of developing a personal budget.

SA PA M P G L ES E

Starter activity 1.

Write one reason why budgeting is important.

Share your answer with a partner.

What is personal financial management?

Managing your money is a lifelong journey of learning and effort. Effective financial management allows you to achieve your life goals by allowing you to meet your financial needs at all stages of your life, including into the future. Technology has made it easier for us to manage this process by allowing us to access and organise information easily and through tools such as online budgeting calculators and internet banking. It has also given us access to new ways to grow wealth, such as running an online business, managing our money through online investing platforms, finding a job so that we can earn, or paying our expenses conveniently. Unfortunately, technology has also exposed us to things that risk our financial wellbeing, such as scams and fraud. Although technology has presented us with new challenges such as fraud, it has also given us new payment methods, or even new types of wealth, such as cryptocurrency. Personal financial management includes:

• earning income • spending wisely • saving regularly • investing for the future • protecting your wealth.

Why is good personal financial management so important? Personal financial management is the process of organising your money through earning, spending, saving and investing to achieve your life goals. To achieve these goals, you will need to earn money, restrict your spending, put aside savings, and then invest your money so it can grow quicker. As you go through different stages of your life, your goals will change. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.15 Skills focus: personal financial management through budgeting

For example, you may want to move out of home and travel internationally in your twenties, buy a house and have children in your thirties, and then retire in your sixties. All of these goals require skilful management through planning and budgeting. In addition to being able to manage money, you should also be aware of how you protect yourself, including knowing how to avoid scams and identify poor investments, and how insurances may help you to protect your wealth.

SA PA M P G L ES E

Having poor financial management can have a detrimental effect on your lifelong wellbeing. It can lead to excessive debt, stress, not achieving your goals, and limited independence and freedom in how you want to live your life. Effective management of your money allows you to stay in control of your money, achieve short- and long-term goals, reduce your financial risks, and build your wealth.

Budgeting: the key to managing your money

A budget is a plan for managing your money and includes tracking your income and expenses over a period of time. It allows you to see clearly what you are earning, what you are spending and how much you are saving. From this, you are able to track your income and expenses, and identify areas where you can reduce your spending so you can put more into your savings and plan for your future by investing. You can use the following steps to create your budget.

1. Earnings: make a list of all earnings, including how much, where, and how often you receive them. This should include any wages or salary, pocket money from parents, government payments and money from investments. 2. Fixed expenses: work out your regular expenses, which are usually based on regular and ongoing needs, such as rent or board payments, phone bills, grocery costs, medical expenses, insurance costs and transportation costs. 3. Debt expenses: identify existing debt expenses, such as personal loans and credit card repayments, and how often you need to pay them. 4. Unexpected expenses: this could include things you did not factor into your budget, such as an unexpected visit to the dentist, car repairs, a sick pet, a fridge that stops working or a parking fine. 5. Plan your spending: decide how much you have available to spend on wants, such as fashion, entertainment, gifts and hobbies. 6. Plan your saving: decide how much you will save regularly. You may want to set up a direct debit and transfer the savings amount straight to your savings account before you start spending. 7. Re-evaluate your budget: are there opportunities to earn more money? Have you underestimated your fixed expenses? Have you had a lot of unexpected expenses that you need to put more money aside for? Have you been going out socially more often? Are you spending too much on wants? Are there opportunities to save more money?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Once you have taken these steps, you should be able to see where you can make adjustments to your budget so that you may increase your surplus to allow you to have more to invest and grow your wealth.

Activity 1.15.1 Ray’s budget

The following is a budget that Ray created to track her expenses. From this budget, she was able to identify clearly her earnings, spending, her goals and how much she has left over after all expenses.

Ray’s budget: 2027 Earnings

Frequency

Amount ($)

Annual aggregated amount ($)

SA PA M P G L ES E

Wages from part-time job

Fortnightly

$635.00

$16,510.00

Dividends

Quarterly

$70.00

$280.00

$50.00

$2600.00

Dog walking (small business) Weekly

Total

$19,390.00

Fixed expenses

Board payments to parents

Weekly

$50.00

$2600.00

Phone plan

Monthly

$65.00

$780.00

Car insurance & registration

Annual

$1500.00

Petrol

Weekly

$25.00

$1300.00

Total

$6180.00

Debt expenses

Credit card repayments

Monthly

$40.00

$480.00

Personal loan for car

Monthly

$200.00

$2400.00

Total

$2880.00

Discretionary spending Eating out with friends

Weekly

$80.00

$4 160.00

Birthday/Christmas gifts

Annual

$500.00

Morning coffee

Daily

$5.50

$2007.50

Gym subscription

Fortnightly

$30.00

$780.00

Dentist fee – wisdom tooth removal

Annual

$700.00

Total

$8147.50

Annual budget summary Amount ($)

Savings goals

Total income

$19,390.00

Bali holiday at end of year

$2000.00

Total expenses

$17,207.50

Surplus (after holiday)

$182.50

Budget surplus/(deficit)

$2182.50

Amount ($)

➜

Figure 1.15.1 Ray’s budget for 2027

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.15 Skills focus: personal financial management through budgeting

All questions refer to Figure 1.15.1. 1.

a. C alculate how much Ray would save per year if she ate out less often and reduced her eating out expenses by 50%. b. Explain the benefits of reducing debt to Ray.

a. Ray would like to increase her earnings without working additional hours. Refer to her existing earnings and recommend how she may do this. b. Refer to Ray’s discretionary spending and identify at least one item she may completely eliminate, and an alternative to this.

a. C alculate as a percentage how much of her earnings Ray puts towards fixed expenses, debt expenses and discretionary spending.

SA PA M P G L ES E

Demonstrate the percentages in a pie graph using Excel. Identify which of the b. areas of spending is the highest.

Review 1.15

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Outline why effective personal financial management is so important. Discuss the advantages and disadvantages of technology as part of personal financial management. Identify the five areas you should be aware of as part of the personal financial management process. Explain the consequences of poor personal financial management.

Thinking, researching and communicating

Refer to Ray’s budget in Figure 1.15.1. 1.

Figure 1.15.2 Ray worked out a budget to suit her lifestyle, her needs and her savings goals. ➜

Propose ways Ray can increase her earnings. Ray wants to reduce some of her expenses so that she has more money to invest. Identify at least three ways she can reduce her spending. Ray currently has $182.50 in surplus after paying all her expenses. She is undecided as to whether to purchase shares or pay off her debt. Recommend which is better for her to do and why. Clarify the formula Ray used to work out her budget surplus or deficit.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.16

Site study: grocery shopping on a budget

Learning intention

Success criteria

By the end of this site study, you will be able to organise a limited budget by understanding your wants and needs, know how to compare prices for similar products using supermarket unit pricing, and make decisions based on price and value. These skills will allow you to be more analytical, choosing goods based on price and needs rather than by want.

❏ I can explain how comparison shopping works, using unit pricing to compare similar items to make informed decisions. ❏ I can identify the difference between wants and needs. ❏ I can describe the relationship between price and value, using calculations.

SA PA M P G L ES E

What is a site study?

A site study is an investigation of a real or virtual place to understand how budgeting decisions happen in everyday life. It allows you to practise real-life skills so that you can make better decisions in the future.

Budgeting is a skill for life!

By the end of this site study, you will be able to juggle the family budget like a boss! Armed with a shopping list and a tight budget, you will need to feed yourself for an entire week. This is one of the greatest skills you can have as a young adult living on your own, so it’s time to start practising now! You will learn how to:

• differentiate between wants and needs • make skilled decisions about what will fill your belly for longer while giving you •

maximum nutrition calculate things down to the last dollar to get the best value for your money.

Figure 1.16.1 Supermarkets can really test your skill in differentiating between wants and needs. ➜

You can do this challenge either as an online activity or via an in-person challenge at your local supermarket. You may also want to challenge yourself further and ask your parents if you can manage the grocery budget for the entire household for the week! So, let’s get started and see if you can meet the challenge!

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.16 Site study: grocery shopping on a budget

Site study activity 1.16.1 Feed yourself for a week Your challenge

You have been given a budget of $120 for the week (your teacher may adjust this if needed) and will need to buy for yourself the following meals for the week:

• 7 × breakfasts • 7 × lunches • 6 × dinners (your parents are taking you out on Saturday night!) • 1 snack per day • 1 dessert for the week. Your rules

SA PA M P G L ES E

• You must eat at least one protein source per day; this can be either meat, chicken,

cottage cheese, eggs or vegan alternative. • You must eat at least two types of fruits per week, with at least two pieces per day. • You need to have at least two serves of two types of vegetables per day. • You can buy a maximum of one type of drink. Hints and tips

• Consider buying fruits and vegetables that are in season, or even frozen or canned

vegetables. • Aim to buy products at the lowest unit price. For example, you may have two types of canned baked beans. One may be cheaper at $1.00 but only have 100 grams, whereas another may cost $2.50 but have 400 grams. You need to ask yourself which one will give you greater value for money. • Choose foods that will fill your belly for longer and not have you hungry all the time. • Keep asking yourself if what you are buying is a want or a need. • Don’t shop when you’re hungry! The challenge 1.

Plan your meals – what will you eat at every meal and how much? For example, your average loaf of bread has 16 slices – have you bought enough?

You are to find at least three of the selected products that have a sale ticket or discount as part of a weekly special.

One item must be promoted using psychological pricing tactics. This is where a product is priced at $0.99 instead of $1.00, for example, so consumers perceive it to offer better value.

You are to comparison-shop by recording the average price per unit for each of your chosen items – for example, $3.00 per 100 grams for lollies.

Identify three tricks that supermarkets use to make you spend more money.

Rate yourself 1.

On a scale of 1–10, with 1 being easy, what was the difficulty of this challenge?

On a scale of 1–10, with 10 being extremely successful, how successful do you think you were?

Write down your reflections in your workbook: a. What lessons did you learn from this challenge? b. What would you do differently next time?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.17

Superannuation: taking control of my long-term financial future Success criteria

In this lesson, you will learn about superannuation, including its importance and features.

❏ I can explain the importance of superannuation, and make general decisions about what type of superannuation fund may address my needs.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: write down three things you already know (or think you know) about superannuation.

Pair: share your ideas with a partner and add any new points you learn from them.

Share: present one interesting idea to the class.

What is superannuation?

Writing focus 1.17 Developing sentences

Superannuation is simply money you have put aside throughout your working life for your retirement when you no longer work. Your employer will put aside some of your earnings for when you retire by sending it to your superannuation fund. This money is then invested by the superannuation fund in a variety of ways, such as in shares, property and cash, which will earn you further income that is compounded over a long period of time. Compounding is where the amount you earn in an investment is then reinvested again, and again, so that it continues to grow, leading to even greater earnings. This is a very powerful tool that allows you to grow your wealth ready for retirement.

How does superannuation work?

➜

Video 1.17.1 The power of super

There are two main ways that money can be put into your super for you. Table 1.17.1 How superannuation works Superannuation guarantee

Voluntary contributions

• Your employer, on your behalf and

• You can choose to pay extra money into

as part of your earnings, puts aside a minimum amount (currently 12%) into a superannuation fund. • This type of payment is compulsory if you are 18 or over, or under 18 but working more than 30 hours per week.

your super fund. • Adding money earlier helps take advantage of compounding. • Extra contributions may also reduce the amount of tax you pay or make you eligible for government co-contributions.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.17 Superannuation: taking control of my long-term financial future

Choosing the right superannuation fund for you One of the first things your employer will ask you to do when you start working is nominate a superannuation fund. If you do not nominate a superannuation fund, they will recommend a fund or nominate one for you. How much money you have at retirement will be affected by how successful your superannuation fund has been in investing your money. Table 1.17.2 outlines things you should consider when choosing your superannuation fund. Table 1.17.2 Things to consider when choosing a superannuation fund This is usually expressed as a percentage over the last 5–10 years.

Fees

These are expressed as a percentage or dollar amount. You should aim to find a superannuation fund that has lower fees.

Risk versus return

You will need to decide how much risk you may want to accept in how your money is invested. Usually, the higher the risk, the higher the potential reward. As a younger person, you may be able to accept more risk, as you have time to recover if you do have some losses. Most people choose to be more careful as they get older by choosing less risky investment options.

Services and insurance

Your superannuation fund may offer you additional services, such as financial planning advice or insurances at a cost, just in case you die or are permanently disabled, to support you or your family.

SA PA M P G L ES E

Fund performance

It is important to know your options and to regularly review them, because you can change your options as you become more knowledgeable or your circumstances change.

Common options provided by superannuation providers Growth This usually has the highest level of risk with the highest possible return over a 10-year period. They will invest in a wide variety of share types and property, both in Australia and overseas.

Balanced This has a high level of risk with solid returns, with investment in a wide variety of share types and property, both in Australia and overseas. They may also invest a small percentage in cash assets, which are generally less risky.

Cash This is usually the lowest level of risk with the mildest of returns. They will invest in mostly cash assets, meaning that there are fewer fluctuations.

Conservative This has a medium level of risk with good returns. Investments are diversified between shares, property and a greater percentage in cash-based investments, which are generally less risky.

Ethical This choice of fund will have a mix of investment types, with a focus on investing in ethical companies and investment types that do not harm people or the environment through what they produce.

➜

Figure 1.17.1 Common options provided by superannuation providers Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Protecting your superannuation The Australian Taxation Office (ATO) oversees superannuation requirements. It is important to monitor your superannuation regularly. Some tips to do this include the following.

Check that your employer is making contributions

SA PA M P G L ES E

Your employer is required by law to deposit your superannuation contributions into your superannuation account at the same time they pay your salary or wages. If they have not done this, follow up by speaking to your employer and if this situation is not corrected immediately, contact the ATO.

Checking the performance of your superannuation fund

Use the ATO’s comparison tool at https://cambridge.edu.au/redirect/11707 regularly to see how your fund is performing in comparison with other funds in terms of performance and fees. You may also review your superannuation through your myGov account.

Be wary of scams

There are scammers who will promise you high returns if you invest your superannuation with them. Do your own research on any offers using reputable websites and information sources such as the ATO, ASIC and Scamwatch websites.

Unresolved complaints

Unresolved complaints can be made to the Australian Financial Complaints Authority (AFCA).

Other important tips for managing your superannuation

• Try to make additional contributions • • •

➜

Figure 1.17.2 Remember to check the performance of your super fund to ensure it is still the best choice for you.

early on in your working life to benefit from compounding. Give your superannuation fund your tax file number so that you minimise the amount of tax withheld. Use a comparison website regularly to see if you are getting the best deal. Consolidate your superannuation by having all of your superannuation savings in one account, as having lots of superannuation accounts means you are paying fees to each fund provider. Organise through your superannuation fund to roll these over into one account to make it easier for you to manage.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.17 Superannuation: taking control of my long-term financial future

• Nominate your superannuation beneficiaries. This is done by telling your •

superannuation fund who should inherit your superannuation savings in the event that you die. This can be changed throughout your life as your relationships change. Decide if you need additional insurances and services as part of your superannuation, as these may be costing you a lot of money in additional fees.

Case study 1.17.1: superannuation accounts

SA PA M P G L ES E

Xavier O’Halloran is the CEO and founding Director of Super Consumers Australia, a not-for-profit organisation that helps educate and advocate on behalf of consumers on matters relating to superannuation.

His guidance to young people is to keep track of your super and be careful of creating duplicate accounts when you start a new job. In 2025, there were four million duplicate superannuation accounts in Australia, with consumers with more than one account being up to $50,000 worse off.

➜

He also recommends that young people regularly track and manage their super to Figure 1.17.3 Xavier O’Halloran ensure that they’re not being affected by scams, contributions are being made by your employer, and your super is performing. A small effort now means you can have a better retirement later on!

Review 1.17

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define superannuation. Distinguish between the superannuation guarantee and voluntary superannuation contributions. You come across a scam targeting superannuation. Identify where you might report this. Summarise the four things you should consider when comparing superannuation funds.

Thinking, researching and communicating 1.

Refer to Figure 1.17.1. Justify which of the investment types suits you and why. You should refer to risk and return as part of your response. Refer to the important tips for managing your superannuation. Research and then create a poster highlighting the importance of personal financial management strategies relating to superannuation. Visit the Super Consumers Australia website. Explain how this organisation may be useful to consumers.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.18

Skills focus: what money management tools can I use to achieve my financial goals? Success criteria

In this lesson, you will learn about money tools such as financial records, spreadsheets, budgeting apps and bank statements.

❏ I can explain the importance and features of financial records, spreadsheets, budgeting apps and bank statements.

SA PA M P G L ES E

Learning intention

Starter activity

In pairs, list as many money management tools or apps as you can in two minutes.

Effective management of your financial goals is hard work and goes beyond just budgeting, saving, spending and investing. It is important to check if you are meeting your financial goals. This involves setting your financial goals, and then tracking your progress in achieving your goals. There are many tools available to help you plan and achieve your goals. These tools help you stay focused by helping you avoid overspending and highlighting where your money goes. By being consistent in using these tools, you will create habits that build your financial future.

Financial tools

Financial records

Spreadsheets

Budgeting apps

Bank statements

➜

Figure 1.18.1 The financial tool types available to consumers

Financial records It is important to keep accurate financial records that show your financial activities. This could be a folder that you keep either physically or online that includes important receipts with proof of income and expenses, such as payslips and bills, statements from finance providers, or even receipts to show where you are spending your money. By keeping good financial records, you are able to provide proof of income and expenses for tax returns and loan applications. It also allows you to detect and have proof of any errors or unauthorised transactions in your banking. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.18 Skills focus: what money management tools can I use to achieve my financial goals?

Activity 1.18.1 Payslip First step: managing your earnings

Did you know that it is a legal requirement for employers to provide a payslip to an employee within one working day of payday, even if an employee is on leave? A payslip can be given to you either electronically or in hard copy. It must contain the following information:

• employer’s and employee’s names • employer’s Australian Business Number • pay period • date of payment • gross and net pay • if the employee is paid an hourly rate:

SA PA M P G L ES E

•• • • •

the ordinary hourly rate the number of hours worked at that rate the total dollar amount of pay at that rate any loadings (including casual loading), allowances, bonuses, incentive-based payments, penalty rates any deductions from the employee’s pay, including any superannuation contributions paid for the employee’s benefit. WELL-PAYING JOB PTY LTD AUSTRALIA (ABN 1234 5678 123) PAYSLIP FOR THE WEEK ENDING 19.04.2026 – 26.04.2026 (Last name, First name) Employee ID: 12345678

Status: Full-time Title/Award: Well Pay. Agreement Pay Date: 27.04.2026 Description Weekday Base Rate Additions/Deductions First Aid Supervisor Laundry Allowance TAXABLE GROSS AMOUNT Tax NET PAY Paid to: ABC Bank Acct No. 2134 8594 BSB. 123-456 SUPERANNUATION Superannuation guarantee: Crescent Wealth Acct. 1234 5678 Leave Entitlements Days Entitled Total 8 3,692.31 Sick Leave (non-vesting) $ 33 Annual leave $ 15,320.77 – 0 Long-service leave $ Total Leave Entitlements (to-date) $ 18,923.08

Quantity

1 1

Rate

Hours

Amount $

2,600.00

$ $

235.16 98.24

$ –$ $ $

2,933.40 625.71 2,307.69 2,307.69

293.34

5.879 2.456

10.00%

YEAR-TO-DATE (FY2025/26) Gross Pay Tax Additions/Deductions (after tax) Net Pay Superannuation Payments (employer contribution) Superannuation Payments (salary sacrifice)

$ 129,069.60 –$ 27,531.14 $ – $ 101,538.46 $ 12,906.96 $ –

➜

Figure 1.18.2 Example of what a payslip may look like with all elements required by the Fair Work Ombudsman

Use your numeracy skills: how to read payslips and budgets

All questions refer to Figure 1.18.2. 1. a. C alculate the amount this person would earn in a 40-hour week if they were to get a pay rise of $2 per hour. b. Calculate the percentage of tax this person is paying based on their gross pay. 2.

The payslip contains an error, showing this person is being underpaid their superannuation guarantee entitlements. a. Identify the correct rate of superannuation this person should be paid. b. Calculate the difference amount between what they are currently being paid and what they should be paid, in dollars. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

a. Identify how much this person earns per day. b. Investigate how many days a person who works in Australia as a full-time salary earner is entitled to receive as a minimum in annual leave and sick leave entitlements.

a. Propose ways this person may earn additional money through this job and beyond. b. Outline how additional superannuation contributions will likely impact on this person’s financial future.

Spreadsheets

SA PA M P G L ES E

This could be as simple as a spreadsheet that you create yourself that shows your income, expenses and savings. Some examples of spreadsheets include programs like Microsoft Excel or Google Sheets, which help you record, calculate and analyse financial data. Spreadsheets can easily calculate expenses and savings, and create charts to show spending patterns. Figure 1.18.3 is an example of Jane’s 2027 budget spreadsheet. Jane is saving to buy her first apartment and has projected that she will need a deposit of $50,000. Her spreadsheet is easy to adjust and customise, keeping her accountable and focused on her savings goal. From this spreadsheet she can plan out her income and expenses, and determine where her actual spending is exceeding her planned budget. She can use this information to make adjustments to her spending. She can also use this information to create a graph within seconds to show her progression towards her savings goal.

➜ Figure 1.18.3 Jane’s 2027 budget spreadsheet. This spreadsheet is

available to download in the Interactive Textbook. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.18 Skills focus: what money management tools can I use to achieve my financial goals?

Budgeting apps There are many tools you can use to track your income, spending and investments. Some banks and financial institutions will provide this within your internet banking platform; however, you may want to use other commercially available budgeting apps.

➜

SA PA M P G L ES E

Budgeting apps often provide real-time tracking of your spending if you link them to your internet banking. Although linking it to your internet banking is convenient, you should decide if this is safe to do by Figure 1.18.4 Popular budgeting applications include Buddy, Frollo, checking privacy settings and ensuring Goodbudget, PocketSmith, WeMoney and You Need A Budget (YNAB). the selected app uses secure data encryption. Some features of these apps may include visual progress charts, automatic categorisation of spending, and spending alerts and reminders when you overspend. They may also provide additional information on budgeting, saving and investing.

Bank statements

Provided by your financial institution, a bank statement is a list of all your transactions over a set period (usually a month, a quarter or biannually). It will have the following elements:

• account balance • deposits/credits (money in) • withdrawals or payments/debits (money out) • fees or interest charged.

It is important to regularly check your bank statements to detect any unauthorised transactions, keep track of your budget and identify expenses that are no longer necessary, such as gym membership you have not used for a long time, and check that expected income is being paid correctly.

Activity 1.18.2

Apply your budgeting skills

How can I organise my money by using money tools such as a budget planner? Key question: how can knowing and understanding earning, spending, saving and investments help me have a better financial future? Task: using the Moneysmart budget planner at https://cambridge.edu.au/redirect/11709, put together your budget. 1.

Calculate your household family income, or that of a case study provided by your teacher, using the Moneysmart budget planner.

Calculate your household family expenses, or that of a case study provided by your teacher, using the Moneysmart budget planner. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Present your budget as a pie graph using the Excel option on the Moneysmart budget planner page.

Either with a classmate or parent (if the family budget option was selected), discuss your budget. Explain ways you may increase your earnings. Recommend strategies to decrease your spending. Identify the likely impact this will have on your savings.

Activity 1.18.3 Real-world application of a budget

Key question: how can we control our unlimited desire for wants while fulfilling our needs to secure our financial future?

SA PA M P G L ES E

Task: watch an episode of Teenage Boss or Teenage Boss: Next Level on ABC iview, then respond to the questions below. Note: Your teacher may nominate a particular episode for the class to watch, or you may choose one that is relevant to you. From the episode: 1.

Identify all the factors that impact on the purchasing decisions of the teenage boss featured in the episode.

Explain how the desire for unlimited wants can affect a household budget, using examples from the episode. Recommend practical strategies to help manage these desires.

Create an infographic or short video for the teenage boss in the episode, recommending strategies to improve their management of the household budget.

Review 1.18 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Outline why using planning tools to organise your money may be beneficial in organising your budget. Identify the types of financial records you may keep and reasons why. Explain the importance of regularly checking your bank statements.

Thinking, researching and communicating 1.

Investigate one type of budgeting app and discuss its features. Extension activity: you can download a copy of Jane’s spreadsheet from the Interactive Textbook.

a. Using the spreadsheet, create a line graph demonstrating Jane’s savings over the year. b. Identify areas where Jane can reduce her spending. c. Identify reasons why Jane’s income may have changed in some months. d. Identify after how many years Jane will have over $50,000 if she sticks to her budget.

XLS

Download Jane’s budget spreadsheet

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.19 Where can I turn if I have financial difficulties?

1.19

Where can I turn if I have financial difficulties? Success criteria

In this lesson, you will learn about what to do and where you can turn if you are experiencing financial difficulties.

❏ I can explain the features of financial difficulty and what to do and where I can turn if I am experiencing financial difficulties.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Write down one place or person you could go to for financial help.

Share with a partner.

Financial difficulties

Financial difficulties are when a person finds themselves in a situation where they cannot meet their financial obligations when they fall due. For example, you receive your phone bill but don’t have the money to pay your bill before the due date. This can happen for many reasons, such as the loss of a job or not enough casual hours worked, unexpected expenses such as medical bills or car repairs, high cost of living such as groceries costing more than you planned, too much debt and interest making it hard for you to keep up, or even poor budgeting or overspending leaving you little money to deal with expenses. This can be very stressful, impacting on your financial decision-making. If you experience financial problems, it is important that you recognise them early so that your situation does not get worse. Warning signs could include regularly paying bills late, borrowing to pay off debts, borrowing to pay for everyday expenses, debt collectors contacting you, poor credit rating making it difficult to borrow money at all, and fighting with people you care about because of money. If you find yourself experiencing any of these warning signs, it is essential that you take proactive steps to fix the situation.

Options for addressing financial difficulties There are many options available to you if you find yourself in financial difficulty. The option that is best depends on your situation, income and level of debt.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 1.19 Note-making

Chapter 1 The consumer and financial environment

Hardship variations The National Consumer Credit Protection Act 2009 (National Credit Act), which includes the National Credit Code (NCC), stipulates that consumers have a legal right to hardship variations to their credit contract if they find themselves in financial difficulty. Possible variations may include:

• temporarily reducing or pausing repayments • extending the loan term (e.g. if originally you had to pay it back within one year, they •

may give you an additional year) postponing payments for a short period.

By contacting the lender early, you may avoid the situation getting worse or ruining your credit rating.

SA PA M P G L ES E

Financial counselling

Financial counselling may be a helpful source of unbiased, free and confidential support if you are in financial difficulty. Financial counsellors, who are trained professionals, help people understand and manage their financial problems. They may assist by:

• negotiating with creditors on your behalf • helping you create a budget or repayment plan • explaining your rights in a lending contract • linking you to legal or emergency support.

➜

Figure 1.19.1 Financial counselling might be appropriate if you need more support.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.19 Where can I turn if I have financial difficulties?

Some ways to access a financial counsellor include:

• Moneysmart (ASIC) – see the “Choosing a financial adviser” page • National Debt Helpline – 1800 007 007 • Mob Strong Debt Help – 1800 808 488 (for First Nations Peoples) • Financial Rights Legal Centre • Financial Counsellors’ Association of NSW (FCAN) • The Salvation Army “Moneycare” (NSW). Case study 1.19.1: financial assistance

SA PA M P G L ES E

Caleb has been struggling financially for a while since suffering a sports injury that has made him unable to work. Previously, he had several casual jobs that allowed him to earn a good income. Caleb has fallen behind in his personal loan repayments. Also, he has several credit cards that have been used to their limit and he is unable to make the minimum repayments on them. He is no longer able to afford the rent on his apartment or the electricity and water bills. His friend recommends that he see a financial counsellor. The financial counsellor helps him consolidate his several credit card debts into a new loan at a cheaper interest rate over a longer period of time. The counsellor also helps Caleb contact his personal loan provider to ask for hardship provisions by pausing repayments. The counsellor helps Caleb apply for Centrelink hardship payments to enable him to pay his rent so that he does not become homeless. The counsellor also puts Caleb in touch with several charities to help him with everyday expenses such as food. Caleb is relieved that he is able to now cover his basic needs. He looks forward to returning to work as soon as he can and is reassured that his situation will not impact on his credit rating, or lead to homelessness.

➜

Figure 1.19.2 Caleb is struggling to keep up with his financial commitments since his injury.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Legal assistance Sometimes your financial issues go beyond money and require legal advice to be resolved. These legal issues may include unfair contracts, debt recovery processes, or harassment from debt collectors. Legal providers may assist by providing legal information, advice and referrals, including issues tied to debt, fines, housing, consumer issues or credit. Some legal services such as Legal Aid may be means tested, meaning you need to have a low income. Some ways to access legal assistance relating to your financial issues include:

• Legal Aid NSW/LawAccess NSW • Community Legal Centres (CLCs) • NSW Civil and Administrative Tribunal (NCAT).

SA PA M P G L ES E

You may also access information on legal matters by visiting the State Library of NSW website at the following link: https://cambridge.edu.au/redirect/11711.

Government and charity assistance

Financial hardship can affect your ability to pay for your basic needs such as food, shelter, electricity and other essentials. There is assistance available through various Centrelink government payments. There is also support through various charities, such as St Vincent de Paul, Salvation Army and National Zakat Foundation, which are able to assist with food, shelter or in paying for essentials such as electricity and water.

➜

Figure 1.19.3 Local foodbanks could be one source of assistance during times of financial hardship.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.19 Where can I turn if I have financial difficulties?

Avoiding unsafe options

SA PA M P G L ES E

It is important to be alert and not accept options that promise quick fixes to pay off debts but can make things worse. Such unsafe options may include payday loans that are high in interest, unlicensed debt consolidation companies that help you consolidate your debts with high fees, or gambling or online investment schemes that offer you returns that are too good to be true.

➜

Figure 1.19.4 Even in times of financial hardship, it’s important to make safe and smart choices and not risk further damaging your financial future.

Review 1.19

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Outline reasons why someone may fall into financial hardship. Identify some of the warning signs that indicate you are in financial difficulty. Explain the impact that hardship provisions within the National Credit Act may have on a person experiencing financial hardship.

Thinking, researching and communicating 1. 2.

3. 4.

Investigate where you can access a financial counsellor and outline their services. Refer to Caleb’s scenario in Case study 1.19.1: financial assistance. Outline the ways the financial counsellor assisted him in sorting out his financial issues. Define loan consolidation. Outline how this may be useful in reducing financial difficulties. Compare financial counselling with legal assistance.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

1.20

Investigation: improving the financial literacy and wellbeing of Australians

Learning intention

Success criteria

In this project, you will

❏ I can investigate and communicate information about financial literacy using reliable sources and data. ❏ I can produce an education campaign to improve financial literacy in Australia by improving the financial wellbeing of one group.

• investigate the extent to which

Australia’s lack of financial literacy is affecting Australians • analyse reasons why some people’s financial literacy is inadequate • recommend solutions and strategies that may be used to improve financial, economic and legal literacy in Australia • construct a marketing campaign to improve the financial literacy of one group.

SA PA M P G L ES E

Your challenge: create a financial literacy campaign

Read the article “Financial illiteracy: The hidden threat to Australia’s economic future” at the following link: https://cambridge.edu.au/redirect/11712. Think about the data given in the following quote from the article. While Australia ranked in the top 10 countries for financial literacy, financial illiteracy remains widespread here, with statistics suggesting around 8.5 million adults, or about 45%, are financially illiterate. There’s also a significant gender gap, with 63% of Australian men demonstrating basic financial literacy, compared with just 48% of women. These patterns are even more pronounced in young people, with 28% of teenage boys showing financial literacy, compared with just 15% of teenage girls – both very worrisome numbers. I. Dobrescu and A. Motta, “Financial illiteracy: The hidden threat to Australia’s economic future”, BusinessThink, UNSW, 3 November 2024.

This project focuses on investigating a current issue related to financial literacy in Australia. Imagine you have been employed by Ecstra Foundation, a government-funded not-forprofit organisation dedicated to improving financial literacy for all Australians. Your job is to devise a marketing campaign to improve the financial literacy of one target group.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.20 Investigation: improving the financial literacy and wellbeing of Australians

Use the links below to learn about Ecstra Foundation’s work and impact:

• Ecstra Foundation website: https://cambridge.edu.au/redirect/11713 • Ecstra Foundation 2024 Impact report: https://cambridge.edu.au/redirect/11714. Starting your research: what area of financial literacy needs greater attention and education in the community? Choose an issue from this chapter that you would like to learn more about, such as:

• dangers of payday lending,

SA PA M P G L ES E

• •

credit cards and buy now, pay later schemes superannuation organisations that assist consumers the borrowing process the budgeting process: earning, saving, spending, investing scams.

• • •

Select a target market for your financial literacy campaign Research the chosen financial literacy issue in relation to one of the following groups:

Figure 1.20.1 Ecstra Foundation empowers people to make informed money decisions through education, community connections and advocacy. ➜

• teenagers • women • the elderly • people with disability • migrants • First Nations people. Focus question

How does this financial literacy issue affect consumers, and how can it be improved?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

Developing the campaign Create a marketing campaign artefact to improve the financial literacy of this group as your target market. Your campaign artefact should bring attention to the extent of the issue and what can be done to improve it. Your final work should clearly communicate your findings and educate the target group about the issue. Your artefact could be:

• a podcast • a website • an advertisement • a short video • a poster • a presentation to that group.

SA PA M P G L ES E

To prepare your campaign, you will need to:

• investigate the extent of the issue, including current data and the impacts that poor • • •

financial literacy may have on this group interview people who are part of the group requiring additional financial literacy support on how to best meet their needs recommend solutions and strategies that may be used to improve this financial literacy issue produce an artefact that tells their story and engages them in wanting to learn more about the topic. How you engage the target group should be content-rich, interesting, attention-grabbing and relevant to them so that they are keen to learn more.

Your final portfolio of work will include:

• research with data explaining the impact poor financial literacy has on the • • • •

selected group interview recordings/transcripts with questions and answers recommendations of the solutions and strategies that may be used to improve this financial literacy issue completed learning artefact reflection on how well your campaign met the needs of the target group, such as their feedback.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.20 Investigation: improving the financial literacy and wellbeing of Australians

Task 1: investigate how the issue affects your chosen group Research how this financial literacy issue affects your chosen group. This may include:

• researching online to find data about the group’s financial situation • interviewing people in this group using a survey you have developed. Develop your recommendations for solutions and strategies that could improve financial literacy for your target market.

SA PA M P G L ES E

Task 2: research your chosen topic of financial literacy from this chapter Research your chosen topic area widely and refine the information you collect so it is relevant to your campaign.

Figure 1.20.2 A student presents her marketing campaign to help classmates to build stronger financial literacy skills. ➜

Task 3: produce your marketing artefact to communicate your findings

Develop your marketing artefact to communicate the issue and present it to your target market. It should inform the target group about the issue and encourage improved financial decision-making. Make sure to use relevant Commerce terms in your completed work. A podcast or presentation should not be longer than five minutes, a video no longer than three minutes.

Task 4: reflect on your campaign

Write down your reflection on how well your campaign communicated your findings and met the needs of the target group. Collate information such as feedback you received from your presentation and any comments from your interviews.

Taking it further: communicate your ideas

Try another way to share your findings. Here are some ideas:

• Create a short podcast and present a live two-minute elevator pitch to share • •

your findings. Use your research and interviews to suggest one practical solution to a community issue by writing a letter or email to your local member of state or federal parliament. Present your findings to your school principal to show how financial literacy education may be improved at your school.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

elevator pitch a short description of a product or business idea, especially one given to a possible investor

Chapter 1 The consumer and financial environment

1.21

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

• Auto-marked questions for fast feedback and fun practice • Self-assessment tools to track your progress, review answers (if enabled by the teacher), and flag questions for extra help • Downloadable worksheets for class or homework revision

Summary

SA PA M P G L ES E

DOC

Summary notes

Download chapter summary

What have you learned about being a consumer and the financial environment? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Consumer rights and protections Payment options and types

Consumer protection agencies

Scam protection for consumers Investing for financial security Borrowing money and loans

Personal finance management Superannuation

Money management tools

Visible thinking routine Connect, extend, challenge

This exercise in visible thinking asks you to think about how the concepts in this chapter have expanded your understanding of how the financial environment works. Using the question prompts, write a paragraph explaining what you previously knew about the topic and connecting what you now understand about the topic to your own experiences. 1.

Connect: how does what you learned in this chapter connect to what you already knew about being a consumer and managing your finances?

Extend: what new ideas have extended or deepened your thinking?

Challenge: what is still challenging or confusing? What questions do you now have?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

1.21 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Describe the role of consumers in the economy.

Identify one benefit of comparison shopping.

List two ways you can be an ethical, responsible consumer.

Describe how a credit card works.

Summarise how a buy now, pay later service works.

Outline the role of the Australian Consumer Law (ACL).

Identify two organisations that help protect consumer rights.

Define identity theft.

Describe the difference between a wage and a salary.

10.

Define what is meant by the principal of a loan.

11.

Recall two types of fixed expenses.

12.

List two warning signs of financial hardship.

SA PA M P G L ES E

➜

Figure 1.21.1 Fans watch Franz Ferdinand play at the Sydney Opera House. This is a good example of a want rather than a need, demonstrating the choices we all have about how we spend money.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

• student and class activity reports • a test generator to create custom assessments • built-in feedback tools • editable downloadable support material • a downloadable and printable “Writing focus” workbook for this chapter. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 1 The consumer and financial environment

DOC

Download single paragraph model

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Discuss the role of consumers, including their responsibilities. Model answer: Consumers are central to the market because their choices shape demand and influence business decisions, and they have responsibilities to make informed, lawful and ethical purchases. A consumer is a person who buys or uses goods and services, and responsible consumers compare options, read key information such as price and warranty terms, and understand their basic rights before they buy. Acting responsibly also means being honest when returning goods, using products safely and for their intended purpose, recognising misleading claims, and considering the social or environmental impacts of what they buy. These responsibilities sit alongside consumer rights in the Australian Consumer Law, which sets guarantees and prohibits misleading conduct, while store policies explain how refunds or exchanges work in practice. For example, when choosing a phone plan, a consumer should check the total cost, contract length, data allowances and any fees, rather than relying only on advertising. By exercising their rights and meeting these responsibilities, consumers help create a fair, efficient and safe marketplace for everyone.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Linking sentence: reconnects to the topic sentence using the language of the question

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments

Examples: provide credibility and illustrate the argument

Structured-response questions 1.

Outline three types of scams affecting consumers and describe the role of two organisations that protect consumers.

Explain how consumer protection laws and organisations can assist consumers.

Discuss the various payment methods that consumers have access to.

Extended-response questions 1.

Justify the importance of planning tools such as budgets in managing earnings, saving, spending and investing. You should use real-life examples in your response.

Outline the borrowing process and explain where you can turn if you experience financial difficulties.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

The economic environment

Lessons Setting the scene: understanding the world around you

2.2

How do people decide what to buy when they have limited resources?

2.3

What is scarcity and opportunity cost?

2.4

What are incentives and how do they influence decision‑making?

2.5

What are marginal decisions?

2.6

Why do supply and demand affect the availability of goods and services?

2.7

How does demand affect the availability of goods and services?

2.8

How does supply affect the availability of goods and services?

2.9

How do markets find balance?

SA PA M P G L ES E

2.1

2.10 Skills focus: what determines prices?

2.11 How are we connected in our economy? 2.12 Site study: shopping centre

2.13 Why is economic growth important?

2.14 What are the indicators of economic growth?

2.15 How does economic growth affect our daily life?

2.16 What do governments target to strengthen an economy?

2.17 What are public goods and services and how does the government provide them? 2.18 Investigation: the invisible help economy podcast 2.19 Chapter review

Teachers access the Online Teaching Suite to: • plan, sequence and assign directed tasks for students and classes using Task Manager • view student activity reports • provide feedback to students • download a printable “Writing focus” workbook for this chapter.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

2.1

Setting the scene: understanding the world around you

Learning intention

Success criteria

In this lesson, you will learn about economic thinking.

❏ I can describe how economists use economic thinking to make sense of the world.

SA PA M P G L ES E

Making economic decisions

➜

Video 2.1.1 Setting the scene: the economic environment

Economics isn’t complicated. In this chapter you’ll find out that economics is a small set of ideas that you can use over and over. These principles are simple but powerful, and when you learn how to use them, you will have greater insight into just about any problem you have to solve. It can sharpen your thinking about your career choices, what sports you play, even dating. Economics is about making choices that improve your wellbeing and happiness, not just how much money you have to spend!

Economics is the study of how society uses its limited resources to satisfy unlimited needs and wants through the production and consumption of goods and services. Any time you make a choice between different options, you are making an economic decision.

Writing focus 2.1 Question words

➜

Figure 2.1.1 A community market shows the economic environment in action. People’s income, prices and choices shape what stalls sell and what shoppers buy, and even the establishment of the market itself. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.1 Setting the scene: understanding the world around you

Economic thinking The most important skill to learn in economics is to use economic thinking. Changes in financial and trade policies introduced by governments show why widespread economic understanding matters. When people understand how trade barriers work, they can better analyse the impacts on their lives. For example, economic thinking about keeping prices and our quality of life stable would suggest to people how trade can:

• increase a country’s gross domestic product (GDP) • create economic growth so that everyone who wants a job has a job • make it possible for us to consume goods and services that we cannot produce ourselves.

SA PA M P G L ES E

Economic thinking helps you understand your everyday choices and what is happening in Australia and around the world.

gross domestic product (GDP) the total production of goods and services in the economy, which indicates the size of an economy economic growth the increase in the size of a country’s economy over a period of time, usually a year

➜

Figure 2.1.2 [L to R] Danielle Wood (Chair of the Productivity Commission), Jenny Wilkinson (Secretary to the Treasury) with Prime Minister Anthony Albanese and Michele Bullock (Governor of the Reserve Bank of Australia). Given that female students make up about one-third of secondary pupils studying economics and 40% of students enrolled in economics courses at university, the appointment of these three women is groundbreaking. Women like these bring not only their expertise and experience but also diverse perspectives to managing the Australian economy.

Activity 2.1.1

Think, pair, share: what does an economist do?

Watch the video at the link (https://cambridge.edu.au/redirect/12150) and then answer the following questions. Write your answers before discussing in a “Think, pair, share” exercise with a peer. 1.

According to the video, what are some characteristics of a career in economics? Describe what the economists say about the variety in their profession.

The video says that economists use data and that economics helps you understand the world. Based on this, what skills do you think an economist needs, and why might these skills be valuable across different career paths?

The video explains that economists work on big issues that affect people’s lives. What new problems might economists need to address in the next 10–20 years, and what skills will they need to solve these challenges?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

2.2

How do people decide what to buy when they have limited resources? Success criteria

In this lesson, you will learn about three influences on economic choices: scarcity, incentives and marginal decision‑making.

❏ I can explain the difference between a need and a want. ❏ Using an example, I can explain how I use limited resources to satisfy my unlimited needs and wants.

SA PA M P G L ES E

Learning intention

Starter activity

Set-up: It is Friday afternoon. You have 15% battery left on your phone, no charger, and you are out until midnight. You can only do three things with your phone before it dies. The options:

• Text your parents (safety) • Organise a rideshare home (convenience) • Take photos at the party/event (memories) • Stream music for two hours (entertainment)

• Check social media updates (FOMO) • Use GPS to find the party location (practical) • Call your best friend about weekend plans (social)

The process: 1.

2. 3.

Select your three top choices. Compare your choices with a partner and see how they differ. Take a class poll and tally the most popular and least popular choices. Explain the hardest trade‑off you would have to make and why.

You just experienced scarcity. Your phone battery was limited, so you couldn’t do everything you wanted. Your decisions were driven by incentives: what you valued most in that moment, whether it was safety, staying connected or having fun. When you were deciding between your third and fourth choices, you made a marginal decision. You were deciding whether that extra action was worth giving up something else you also wanted.

Think economics

Writing focus 2.2 Transitional phrases

Economists begin with considering the individual decisions people make every day. They observe how, when everyone’s choices are combined, economic forces form that change and shape our lives. The way we shop, work and spend money affects the major economic events that impact our lives, such as inflation, unemployment and interest rate changes. Understanding what affects our decisions begins with a few key concepts:

• scarcity • incentives • marginal decisions. These principles are part of your economic toolkit for the economic way of thinking. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.2 How do people decide what to buy when they have limited resources?

To show how we use these principles to make decisions every day, we are going to use a problem that took economists over 100 years to solve: the diamond–water paradox. It asks the question: If water is so essential in our daily lives, why are diamonds usually more valuable than a bottle of water?

Understanding the diamond–water paradox reveals how the three fundamental principles – scarcity, incentives and marginal decisions – affect how people make choices.

When is water more valuable than diamonds?

SA PA M P G L ES E

If your mum works for the Snowy Hydro in Tumut or your family grows canola in Temora, you may already have an understanding of the value of water. You may have seen the floods in Lismore and experienced how powerful and destructive floodwater can be for a community. Water can bring a great cost, maybe more than a handful of diamonds! Water is an essential part of our lives as we need it to stay alive. In economics, we describe water as a need and diamonds as a want. Even though we like the look of diamonds, unlike water we can survive without them. So, if water is so essential in our daily lives, why are diamonds usually more valuable than a bottle of water? We can use economic thinking to find out.

need something essential for survival, such as food, water, clean air and shelter want something that is not essential for survival but can improve our quality of life, such as a new phone

The diamond–water paradox

In 1776, Adam Smith laid the foundational principles of classical economic theory in his groundbreaking work The Wealth of Nations, introducing concepts that continue to shape economic thought today. Among many contributions, Smith identified a puzzling observation that would become known as the diamond–water paradox, highlighting the difference between something’s value when you use it and when you exchange it for something else. Smith famously wrote:

Figure 2.2.1 Adam Smith, circa 1765: Scottish political economist and philosopher (1723–1790) ➜

Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

This paradox – why something essential to life costs so little while something largely decorative costs so much – challenged economists for nearly a century and ultimately led to new ways of understanding how we value goods.

What this paradox teaches us The diamond–water paradox reveals three fundamental principles that economists use to understand how people make choices:

SA PA M P G L ES E

➜

Figure 2.2.2 The diamond–water paradox is one of the first economic conundrums articulated by eighteenth-century economist Adam Smith.

• scarcity: why rare things often cost more than essential things • incentives: how costs and benefits influence decisions • marginal decisions: why we value the next unit of something differently depending on how much we already have.

By looking at why diamonds usually have a higher price than water despite being far less useful for our survival, we can unlock these core concepts that explain countless economic decisions in our daily lives. These principles provide insight into just about any decision you will make and will help you make the best choice. Economics is everywhere and you can apply economic thinking to just about everything!

Review 2.2 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Define need and want and provide one example of each from the text. What is the diamond–water paradox and who first identified it? Identify the three fundamental economic principles that the diamond–water paradox helps explain. According to the text, what was Adam Smith’s main contribution to economics and when did he publish his most famous work?

Thinking, researching and communicating 1. 2.

Evaluate whether the diamond–water paradox applies to other essential versus luxury goods in today’s economy. Provide two examples and explain why they do or do not fit the paradox. Write a persuasive letter (200–250 words) to your school principal or a local sporting facility arguing for or against installing water‑bottle refill stations. Use economic reasoning – such as costs, benefits, incentives and decision‑making factors – to support your position.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.3 What is scarcity and opportunity cost?

2.3

What is scarcity and opportunity cost? Success criteria

In this lesson, you will explore scarcity and how it influences people’s decisions.

❏ I can explain how scarcity forces us to make choices about how to use limited resources to meet our unlimited wants and needs. ❏ I can outline how individuals, businesses and governments make economic decisions using the concept of opportunity cost.

SA PA M P G L ES E

Learning intention

Starter activity

What’s the trade-off?

Opportunity cost is what you have to give up when you choose something. It is the trade‑off for making your choice. What are the opportunity costs of each of the following choices? 1.

2. 3.

You have three hours free this evening. If you spend them gaming, what other things won’t you have time for tonight? Should you take the weekend shift at your part‑time job or go to your friend’s birthday party? What would you gain and lose with each choice? Should you go to university or some other study right after high school, or take a gap year to work and travel? What opportunities does each choice open up, and which ones does it close or delay? Should you stay in your hometown close to family and friends after graduation, or move to a bigger city for better job opportunities? What would you be trading in each scenario? Should you hire your best friend to work in your business? What might you gain in trust and loyalty, but what could you potentially lose if things don’t work out?

Your answers are your own because it is your life and you can make your own choices. Economic thinking can help you make better decisions by unpacking your reasoning so that your decisions help you make your life better.

Scarcity and opportunity cost

The diamond–water paradox is the perfect way to understand scarcity, one of the most important ideas in economics. Scarcity exists because:

• we can’t have everything we want • there are not enough resources, time or money • our wants and needs are unlimited. This is called the economic problem. This means every choice we make involves giving something up, and that is where opportunity cost comes in. It is the value of the next best thing you miss out on when you make a choice. This applies to individuals, businesses and governments. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 2.3 Transitional phrases scarcity when something is scarce, there isn’t enough to satisfy all of our wants economic problem how we use our limited resources to satisfy our needs and unlimited wants opportunity cost what you give up when you choose something else

Chapter 2 The economic environment

Why diamonds cost more than water, even though water keeps you alive Let’s break this down. Water is everywhere. Turn on the tap and you can access as much as you want. Because water is so abundant, getting more of it does not require you to sacrifice much. The opportunity cost is very low – you do not have to give up your new phone or your weekend plans to get a drink of water.

SA PA M P G L ES E

However, diamonds are rare. Hidden deep underground, accessing them requires serious effort and resources. Deciding to buy a diamond involves making a massive trade-off. That $2000 diamond ring means giving up other things of high value, such as a holiday to Bali, concert tickets or that laptop. The opportunity cost is enormous. Even though water is literally essential for survival and diamonds are just shiny rocks, diamonds cost more because of scarcity. When something is scarce, obtaining it means sacrificing more alternatives. When something is abundant, the sacrifice required to get it is minimal.

The real-world test

Want to see how scarcity and opportunity cost work together? Think about the following scenarios.

➜

1. Concert tickets: why would you pay $400 to see Taylor Swift at Accor Stadium when you could stream her music for free on Spotify? Scarcity! That concert happens once. If you don’t go, you miss out on the experience forever. The opportunity cost of not going – the regret, the FOMO, missing out on an unforgettable night – feels huge. So, you’re willing to sacrifice $400, and whatever else you could have bought with it, to be there. 2. Limited edition sneakers: a basic pair of Kmart runners costs $30. Limited edition Nike Dunks can go for $500+. Same basic function of covering your feet, but massively different opportunity costs. When only 500 pairs drop in Australia, buying them means giving up a lot more, but for some people, owning Figure 2.3.1 A young fan shows her ticket to Taylor Swift’s first Sydney concert. The Eras Tour something that rare is wasn’t just a cultural hit – it generated billions of dollars and boosted local economies wherever it went. worth the sacrifice.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.3 What is scarcity and opportunity cost?

Water in different places In Sydney or Newcastle, water is abundant, so the opportunity cost of drinking another glass is basically zero. But imagine you are hiking in the Blue Mountains, and you have run out of water. Suddenly, a bottle of water becomes incredibly valuable. You would probably trade your expensive sneakers or your phone for it in a heartbeat! When scarcity increases, the opportunity cost of not having water climbs sharply. Scarcity forces us to think about trade-offs. Every time we choose something scarce, which is usually expensive, we are saying:

SA PA M P G L ES E

The opportunity cost of not having this is too high, so I am willing to give up all those other things to get it.

That is why diamonds cost more than water, why concert tickets sell out in minutes, and why you probably think twice before spending $500 on sneakers but might do it anyway if they are rare enough!

Activity 2.3.1

Research how climate change or environmental factors have affected the value of water in different Australian regions. What does this tell us about scarcity and economic value?

Review 2.3

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

In your own words, define the following terms: c. opportunity cost. a. scarcity b. the economic problem Explain why diamonds typically cost more than water despite water being essential for survival. How does the location or situation change the value of water? Provide an example from the text. Using scarcity and opportunity cost, explain why Taylor Swift concert tickets can cost $400 even though you can stream her music for a small fee. Justify your position.

Thinking, researching and communicating 1.

Compare the opportunity costs faced by a student choosing between a casual part-time job versus unpaid volunteer work. How does scarcity of time affect their decision-making process? Research the Labubu doll trend and analyse how Pop Mart uses scarcity marketing techniques. Examine the opportunity costs this creates for young consumers and explain why people are willing to pay premium prices for these collectables. Write a 250–300-word podcast script for a segment called “Teen Money Dilemmas”, where you are the host discussing this listener question from a student in regional New South Wales: “I got offered a traineeship at my school after graduating, which would set me up financially and I can stay at home with mum who needs me, but I also got offered a job mixing for a travelling music festival, which will take me all over the country and I get to see great bands. My mum’s not well, though. What should I do?” Use economic concepts to guide your advice while maintaining an engaging podcast tone, referencing trade‑offs and opportunity costs in your advice.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

2.4

What are incentives and how do they inﬂuence decision-making? Success criteria

In this lesson, you will explore how incentives influence decisions.

❏ I can explain how prices create incentives. ❏ I can use the sunk cost trap to argue against making poor decisions.

SA PA M P G L ES E

Learning intention

Starter activity

“I used to think … Now I think …”

Reflect on what you have been learning and fill in the blanks. 1.

2. 3.

4. 5.

6. 7.

I used to think needs and wants were _______________. Now I think _______________. I used to think that scarcity was _______________. Now I think _______________. I used to think things were expensive because _______________. Now I think _______________. I used to think buying something only cost _______________. Now I think _______________. I used to think economists _______________. Now I think _______________. I used to think smart decision‑making meant _______________. Now I think _______________. I used to think economics was _______________. Now I think _______________.

Incentives matter

Writing focus 2.4 Developing sentences

The principle that incentives matter means that people respond predictably to rewards and costs, and the diamond–water paradox demonstrates how different incentives shape production and consumption decisions. This idea helps to answer two big questions:

• What goods and services get produced? • How should our resources be allocated?

Diamonds sell for high prices in the market, so there are strong incentives to find and mine them. Diamond miners are willing to travel to remote locations, dig deep into the earth and invest in expensive equipment because the potential reward is enormous. The high price signals to producers: ‘Society values this highly, so produce more if you can!’ However, water is cheap and usually easy to access. Its low price provides little financial incentive for people to invest heavily in its production or conservation. The low price signals: ‘Water is readily available, so there’s no urgent need to produce more!’

The incentives matter principle Prices create incentives that guide what gets produced and how resources are allocated:

• high prices incentivise production and conservation • low prices suggest abundance and reduce the incentive to produce more or use carefully. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.4 What are incentives and how do they influence decision-making?

➜

Figure 2.4.1 Costs and benefits are the incentives that influence your decisions. Before making a choice, evaluate what it will cost you and what benefits it will give you. Only choose something if the benefits are at least the same as the cost.

SA PA M P G L ES E

Opportunity cost and incentives

Opportunity cost helps explain why producers focus their efforts on goods and services that earn higher prices: A diamond miner chooses to spend time searching for diamonds rather than doing other work because the opportunity cost of not mining or missing out on potentially high earnings is greater than the opportunity cost of their time in other activities. A water supplier in an area with abundant water has little incentive to expand because the opportunity cost of investing in water infrastructure or what else that money could earn exceeds the potential returns from selling cheap water.

• •

The real-world test

Want to see why incentives matter?

➜

1. Consider limited-edition sneakers like Nike Dunks or Air Jordans. When a special colourway drops in limited quantities, some pairs resell for $500–$1000 on apps like eBay or Facebook Marketplace, even though regular sneakers cost $100–$150. Why? The scarcity creates strong incentives. People will queue for hours at sneaker stores, enter online raffles, or pay resellers huge mark-ups because the high resale price signals that this is rare and valuable so you need to get it if you can! Meanwhile, basic school shoes sit on shelves at Kmart for $30 because there’s no scarcity and thus no incentive to compete for them. 2. Similarly, think about streaming services versus going to the cinema. Netflix costs about $20/month for unlimited access to thousands of shows and movies, but a single trip to the movies costs $15–$25 just for the ticket, plus more for snacks. The cinema creates an incentive through scarcity because you can only see the latest blockbuster on the big screen for a Figure 2.4.2 You can only see the latest blockbuster on the big screen for a limited time, so there is an incentive to head to the limited time, so you are willing to pay more cinema rather than stream it at home. per viewing than you would for streaming. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

Water in different places When water becomes scarce – such as during droughts or in desert regions – its price rises dramatically. The higher price creates new incentives:

• people conserve water more carefully • companies invest in new water sources • consumers are willing to pay more, reflecting water’s increased value. During the Millennium Drought (1997–2009) and more recent droughts, many Australian cities implemented water restrictions. The scarcity changed incentives:

SA PA M P G L ES E

• households installed rainwater tanks (responding to government rebate incentives) • people took shorter showers • washing cars with hoses was banned • fines (up to $500) for breaking water restrictions created a strong incentive to conserve. When water became scarce, people’s behaviour changed because the incentives changed.

➜

Figure 2.4.3 Drought makes us change how we use water, and governments often introduce incentives to help people save it.

Don’t fall for the sunk cost trap!

sunk cost a cost that cannot be recovered

It is easy to make the mistake of letting money or time that you have already spent influence your decisions. Say you bought a $40 ticket to a concert, but on the day, you are feeling sick and it is pouring rain. Do you drag yourself there because “I already paid for it”? That $40 is gone whether you go or not. It is a sunk cost. The real question should be about opportunity cost: will going to the concert now feeling terrible, in the rain, be worth more than staying home and resting? The money is already spent, so it should not factor into your decision. While it feels like you are wasting money if you don’t go, you are actually just avoiding wasting more time and energy on top of your initial spend. Choose the option with the lowest opportunity cost. Smart decision-makers focus on future costs and benefits, not past spending that they are not able to get back.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.4 What are incentives and how do they influence decision-making?

Activity 2.4.1 What would change your mind?

Here are three scenarios for you to apply economic thinking. A supermarket introduces a 15-cent charge for plastic bags. Before the charge, 80% of shoppers used plastic bags. After the charge, only 20% do. What costs and benefits did shoppers weigh up when deciding whether to bring reusable bags? Why did this small financial incentive change so many people’s behaviour? What does this tell us about how incentives work?

You paid $20 for a movie ticket. Thirty minutes in, you realise the film is terrible and you’re not enjoying it at all. Your friends text asking if you want to grab dinner instead. Should the $20 you already spent influence your decision to stay or leave? Calculate the true costs and benefits of staying versus leaving right now. Why do people often stay in situations like this even when leaving would make them happier?

SA PA M P G L ES E

You’ve spent $800 on a phone that’s become frustratingly slow after 18 months. A new phone costs $1200, but your current phone could last another year if you tolerate the slowness. Repairing it costs $300 but won’t make it much faster. List the costs and benefits of each option (keep it, repair it or replace it). Should the $800 you already spent affect your decision? What incentives might push you towards each choice, and which decision makes the most sense going forward?

Review 2.4

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Explain what the principle “incentives matter” means and how it relates to the diamond–water paradox. Define sunk cost and explain why falling for the sunk cost trap leads to poor decision-making. How do prices create incentives in the economy? Identify one example from the text. Explain how the Millennium Drought changed incentives and behaviour around water use in Australia.

Thinking, researching and communicating 1.

Analyse why global streaming platforms like Netflix have limited incentives to prioritise Australian content, despite government quotas. Consider the economic factors that influence their content investment decisions. Research how surge pricing works for rideshare services like Uber during peak demand periods. Analyse how this creates incentives for both drivers and passengers and explain the economic principles involved. Write a 250–300-word advice blog post titled “Don’t let sunk costs ruin your life”, aimed at teenagers. Use relatable examples and economic concepts to explain why past spending should not influence future choices.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

2.5

What are marginal decisions?

Success criteria

In this lesson, you will explore how marginal decision‑making affects whether you keep consuming something.

❏ I can describe how marginal decisions are made by comparing extra benefits and costs.

SA PA M P G L ES E

Learning intention

Starter activity

Watch the video of Bruce Bogtrotter in Matilda the Musical at the following link: https://cambridge.edu.au/redirect/11684. In the video, Bruce Bogtrotter is forced to eat an enormous chocolate cake as punishment in front of the whole school. At first, eating the cake might seem enjoyable, but as he continues, each additional bite becomes harder.

Figure 2.5.1 Bruce Bogtrotter in Matilda the Musical Describe how the costs and benefits of “one more bite” change as Bruce eats more cake. Why does he keep eating despite the increasing difficulty, and what does this tell us about how immediate versus future consequences affect our decisions? ➜

Marginal decisions

Writing focus 2.5 Developing sentences

marginal benefit the benefit of one additional unit

The principle of making decisions at the margin states that people make choices by comparing the additional benefits of one more unit against the additional costs. The diamond–water paradox asks us to think about decisions at the margin, meaning the next unit we might obtain. We do not choose between all the water in the world versus all the diamonds in the world. Instead, we choose between one more glass of water or one more diamond. For most people in developed countries, with access to plenty of water, the benefit of one additional glass of water, or the marginal benefit, is quite small. However, you probably do not own any diamonds. The benefit of obtaining your first diamond, the marginal benefit, could be quite high as it might bring you joy, serve as an investment or be a meaningful gift. Economic decisions are made at the margin by weighing the additional benefit of one more unit against its additional cost. The marginal benefit of water is low when it is abundant, while the marginal benefit of a diamond is high when you have none or very few.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.5 What are marginal decisions?

Opportunity cost and marginal decisions When deciding whether to spend $5 on a bottle of water or save that money towards a $2000 diamond, you are weighing opportunity costs at the margin. The $5 spent on water means giving up $5 towards the diamond. Since you already have access to water, the marginal benefit of one more bottle is quite low. In this situation, giving up some water to save money towards the rare diamond may seem reasonable, while spending money on excess water and giving up the chance to own the diamond may seem wasteful.

SA PA M P G L ES E

Water in different places

Figure 2.5.2 When you are thirsty, you appreciate being able to drink water, but as your thirst is quenched, the marginal benefit of another bottle of water decreases. ➜

If you were dying of thirst in a desert, however, the marginal benefit of water would skyrocket. You would gladly trade a diamond for a bottle of water because the additional benefit of that water for your survival would far exceed the additional benefit of the shiny stone. This shows that when making marginal decisions, people compare the additional benefit of one more unit with its opportunity cost, and that this depends entirely on context and circumstances.

Activity 2.5.1 What’s next?

Making decisions at the margin helps us make decisions about quantities. To do this, you need to break your choice into smaller marginal decisions. For example, “How many pairs of shoes shall I buy?” becomes “Should I buy one more pair of shoes?” Unpack the economic thinking of marginal decisions.

Go online to read Shel Silverstein’s poem “The Clock Man” (2011), or go to https://cambridge.edu.au/redirect/11685 to listen to a reading.

In the poem, the same question is asked three times, but the answer changes dramatically. 1.

Using the concept of marginal decision-making, explain why the value of “one extra day” increases so much across the person’s lifetime. What does this tell us about how we make decisions about spending our time when we feel we have plenty of it versus when it becomes scarce?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

The real-world test This type of thinking helps to explain many everyday decisions. The first slice of pizza when you are hungry provides enormous satisfaction and gives you a high marginal benefit, but the fifth slice when you are full might make you feel worse, with a low or negative marginal benefit. Similarly, your first textbook for a class is essential and has a high marginal benefit, but buying a second copy of the same textbook provides almost no additional benefit, a low marginal benefit, even though both books are identical.

SA PA M P G L ES E

100

➜

Figure 2.5.3 Even though every slice of pizza is the same as each other, your enjoyment changes with every slice, usually decreasing. In economics, this is called diminishing marginal utility. Here are some other examples:

1. Think about buying food at the school canteen. A meat pie when you are starving at recess might be worth every cent of that $5. But if you have already eaten lunch and someone offers you another pie for $5, you would probably say no because the marginal benefit of that second pie when you are already full is much lower than the first one. 2. Or consider your mobile phone data. Your first gigabyte of data each month is essential as you use it for messaging friends and looking up homework. You would pay quite a bit to ensure that you have it. But once you have already used 20 gigabytes and your carrier offers you another gigabyte, the marginal benefit is much lower because you have already done most of what you need to do.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.5 What are marginal decisions?

101

Summarising economic thinking Once you begin thinking like an economist, you begin to see the world differently. You have learned how three principles work together: 1. Scarcity means whether something is rare or abundant. 2. Incentives guide how people respond to scarcity through costs and benefits. 3. Marginal decisions explain how we make choices based on the next unit, not the total.

SA PA M P G L ES E

➜

Figure 2.5.4 Use your economic thinking toolkit Together, these principles reveal that economic value is to make better decisions. Think about incentives, not just about total usefulness or importance, but about recognise opportunity cost, don’t fall for the sunk cost the relationship between scarcity, the incentives created trap, and make your decisions at the margins. by prices, and the decisions we make at the margin when choosing between alternatives. Understanding opportunity cost, that is, what we give up when making choices, helps tie all three principles together and explains why we are willing to pay more for something rare and decorative than for something abundant and essential.

Review 2.5

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify the three key economic principles shown in the diamond–water paradox.

Explain why water usually costs less than diamonds, even though water is essential for survival.

Explain in your own words why the sunk cost trap leads to poor decision-making. Provide an example from your own life where you might have fallen into this trap.

Outline why toilet paper became difficult to buy during the COVID‑19 pandemic in Australia. Describe how changes in consumer behaviour contributed to the shortage.

”Smart decision-makers focus on future costs and benefits, not past spending that they are not able to get back.” Are there any situations where considering past spending (sunk costs) might be rational?

Thinking, researching and communicating 1.

You have $50 and three hours of free time on Saturday afternoon. You’re deciding between:

• going to a concert (ticket costs $40, takes three hours) • working a shift at your part-time job (earns $60, takes three hours) • studying for Monday’s exam while hanging out with friends at a cafe (costs $15, takes three hours). Calculate the opportunity cost of each option and explain which choice you would make using economic thinking.

Compare and contrast how the three economic principles (scarcity, incentives and marginal decisions) work together to explain why limited-edition sneakers can sell for $500+ while basic school shoes cost $30. Your answer should address all three principles and how they interact.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

102

Chapter 2 The economic environment

2.6

Why do supply and demand affect the availability of goods and services? Success criteria

In this lesson, you will learn how to use economics to explain parts of daily life. You will also see how economic behaviour is influenced by the operation of markets.

❏ I can describe how markets bring together buyers and sellers.

SA PA M P G L ES E

Learning intention

Starter activity

Name, describe, act

Reflect on what you have learned so far about economic thinking. 1.

2. 3.

Name: recall the names and make a list of all the principles for economic thinking that you can remember. Describe: for each of the things you have named, add a description. Act: for each of the things you named, explain how they act. What are they doing? What is their function? How do they add or contribute to the whole?

Think economics Economics is a social science, which means it is an analysis of humans by humans. It could also be described as the science of making good choices. Our decisions are not just economic ones; they are part of what makes us human.

➜

Figure 2.6.1 Empty supermarket shelves from panic-buying during the COVID-19 pandemic in 2020

All the decisions we make daily create markets where buyers and sellers come together. In these markets the forces of demand and supply interact, but they are not always playing by the same rules. That’s what also makes economics very messy!

When we study something as complex as human social behaviour, we have to simplify and create models. But remember to not get trapped into thinking the models explain everything, as you will see with some of the following examples! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.6 Why do supply and demand affect the availability of goods and services?

103

What is a market? Case study 2.6.1: great toilet paper crisis of 2020 In March 2020, Australians began panic-buying toilet paper like it was made of gold. Supermarket shelves were empty. People were getting into actual fights over 24-roll packs. People were stockpiling enough toilet paper to last until 2030. Meanwhile, toilet paper manufacturers were working overtime, probably wondering what on earth happened to turn their product into the hottest commodity since the iPhone.

Writing focus 2.6 Appositives

In economics terms, we had a massive shortage. More people wanted more toilet paper than was available. Normally, prices would shoot up (when something is scarce, it gets more expensive). Supermarkets didn’t want to look like they were profiting from a crisis, so they kept prices the same and limited how much you could buy instead. This created long queues, empty shelves, and some truly chaotic scenes involving shopping trolleys. The market was trying to send a signal: “We need more toilet paper!” Eventually, manufacturers ramped up production, people calmed down, and within a few weeks, normality returned. Markets have a weird way of sorting themselves out, even when things get totally irrational. A parallel can be seen in the 2026 fuel crisis linked to war in the Middle East, when fears about petrol shortages changed buyer behaviour even though supply had not yet been affected.

➜

Figure 2.6.2 People left shopping outlets with trolleys full of toilet paper during the COVID-19 panic of 2020 Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Video 2.6.1 A shortage of toilet paper, and a world changed forever ➜

SA PA M P G L ES E

So, what actually happened? In normal times, toilet paper markets are incredibly boring. Supply is steady, demand is predictable (everyone needs it, no one is panic-buying it) and prices barely budge. But when the COVID-19 pandemic hit and people got scared, something fascinating happened: demand skyrocketed while supply stayed the same.

104

Chapter 2 The economic environment

markets places or systems where buyers and sellers exchange goods and services

Consumers

Market

Producers

Money

SA PA M P G L ES E

goods and services goods are tangible items (like cars, food or electronics) that are produced, sold and owned, while services are intangible activities or skills (like haircuts, banking or healthcare) provided by one party to another

When economists talk about markets, they are not talking about the local supermarket chain or your local farmers’ market (although those count too). A market is where people who want goods and services, the consumers, meet people who have goods and services to sell, the producers, and they figure out a way to exchange. It could be physical, like a shop. It could be digital, like Facebook Marketplace, eBay or Amazon. It could even be informal, like when you trade your lunch for your mate’s chips.

Buyers of goods and services

Goods and services

consumer an individual who uses a good or service

➜

producers businesses or people who make or provide goods and services

Sellers of goods and services

Figure 2.6.3 A basic overview of a market

Think about it: every time you buy a coffee, stream a song, or scroll past an ad on Instagram, you’re participating in a market. Money flows one way, stuff (or services, or entertainment, or data about your browsing habits) flows the other way. Markets are everywhere, all the time, running in the background of pretty much everything you do.

When markets get shut down

Sometimes governments decide that certain markets should not exist at all. After the Port Arthur massacre in 1996, the Australian Government introduced strict gun control laws that restricted the buying and selling of firearms and launched a buyback scheme. The government purchased firearms from owners at set prices. This is a perfect example of how markets are not neutral or natural forces. They exist within rules that societies create. The government decided that the social costs of an unrestricted firearms market (mass shootings, gun violence) outweighed the benefits of people being able to freely buy and sell weapons, so they heavily regulated it, dramatically reducing the supply of guns available. Andrew Leigh, an Australian economist, showed that in the decade before the buyback, Australia averaged more than one mass shooting a year. In the decade after the buyback there was not a single mass shooting in Australia. Measures like this are not enough on their own to keep us safe, however, as the terrible incident at a Hanukkah celebration in Bondi Beach showed. The Bondi atrocity was the largest terrorist act on Australian soil and has prompted nationwide discussions on fighting extremism and antisemitism and renewed efforts for gun control.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.6 Why do supply and demand affect the availability of goods and services?

SA PA M P G L ES E

This raises an interesting question. If markets are just people exchanging stuff they want, why don’t we let markets exist for everything? Why can’t you pay someone to take your HSC exams? Why has the Australian Government passed the Online Safety Amendment (Social Media Minimum Age) Act 2024? This law introduced a mandatory minimum age of 16 for accounts on certain social media platforms, and parents cannot give their consent to let under-16s use these platforms. Society has decided some markets create more harm than good, so we restrict or ban them entirely. Markets need rules.

➜

Figure 2.6.4 Thousands of handguns handed in for the gun amnesty and the gun buyback scheme following the Port Arthur massacre

Plot twist: you’re a producer

You are on both sides of the market. You are not just a consumer; you are a producer too. For example:

• when you scroll through TikTok, you are producing views and engagement data that • • •

the platform sells to advertisers when you create content, even just funny comments on posts, you are producing entertainment that keeps people on the platform longer if you get a part-time job, you produce labour that a business needs when you study and develop skills, you are investing in your future ability to produce valuable work.

This raises an important question: who creates value in an economy? Is it the workers who make stuff? The entrepreneurs who organise production? The investors who provide money? The consumers who create demand? The answer is: all of them, simultaneously, in an endlessly complex dance of interdependence. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

105

106

Chapter 2 The economic environment

A cafe does not create value because a barista makes coffee. It creates value because:

• someone invested money to start the business • an entrepreneur organised resources and took a risk • workers apply their labour and skills • suppliers provide beans, milk and equipment • customers show up willing to pay • the government provides infrastructure and legal frameworks.

SA PA M P G L ES E

➜

Figure 2.6.5 A cafe works because many people and resources come together to make the market function.

Remove any one of these pieces, and the whole thing falls apart. Value creation is collaborative, even when it does not feel that way.

Review 2.6 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Explain what happened in Australia during the 2020 toilet paper shortage. Describe how demand and supply changed during this time. Identify the three fundamental economic questions that markets answer. Explain why the Australian Government restricted the firearms market in 1996. Describe the decision using economic reasoning about costs, benefits and market outcomes. Copy and complete the table to match the following terms with their definitions: Value creation, Market, Producer, Consumer.

Term

Definition

Someone who wants and purchases goods and services

The collaborative process involving investors, workers, suppliers, customers and government Where people who want goods/services meet people who sell them to exchange Someone who makes or provides goods and services for sale

Thinking, researching and communicating 1.

Analyse why supermarkets chose to limit quantities rather than raise prices during the 2020 toilet paper shortage. Discuss the economic and social factors that influenced this decision and evaluate whether this was an effective market response. Research another example of a market that has been restricted or banned by government regulation. Investigate the reasons for the restriction and the methods used to limit the market, and evaluate the effectiveness of these measures in achieving their intended social outcomes. Write a 300–400-word extended response arguing either for or against the statement: “Social media platforms should be treated as markets where user data is explicitly bought and sold, with clear pricing and user consent.” Use economic concepts from the lesson to support your argument and consider both the benefits and drawbacks of your position. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.7 How does demand affect the availability of goods and services?

2.7

107

How does demand affect the availability of goods and services? Success criteria

In this lesson, you will learn about the law of demand.

❏ I can prove why the demand curve slopes downwards. ❏ I can explain how price factors and non‑price factors affect individual and market demand.

SA PA M P G L ES E

Learning intention

Starter activity

Scan the QR code to watch Video 2.7.1 on supply and demand to answer the following questions.

What are the laws of supply and demand? Explain how changes in supply and demand impact the prices of goods and services. Explain how markets work to allocate resources in the economy.

Video 2.7.1 Supply and demand

➜

The demand curve

When you walk into a supermarket and see your favourite breakfast cereal on sale, you are more likely to buy it. You might even buy multiple boxes. This everyday observation reflects one of economics’ most fundamental principles, which is the law of demand. The law of demand states:

• as the price of a good or service falls, the quantity demanded rises, and • as the price of a good or service rises, the quantity demanded falls, assuming all other factors remain constant.

What does this relationship actually look like?

Demand

• price is shown on the vertical axis • quantity demanded is shown on the horizontal •

Quantity

Figure 2.7.1 The demand curve. An easy way to remember this is DEMAND: DOWN TO THE DIRT! ➜

axis the demand curve typically slopes downwards from left to right, illustrating the inverse relationship between price and quantity demanded.

Price

We can visualise this relationship using a demand curve, which is a graphical representation showing the relationship between price and quantity demanded:

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 2.7 Appositives law of demand when prices go up, people usually buy less; when prices go down, people usually buy more

Chapter 2 The economic environment

Consider the breakfast cereal market.

Demand

• When a popular brand prices its

8.00 6.00 Price ($)

•

cereal at $6 per box, consumers might purchase 10,000 boxes per week in a given market. If the price drops to $4, that same market might demand 15,000 boxes.

4.00 2.00

Plotting these points on a graph and connecting them shows the characteristic downward-sloping demand curve. This is not just theory but is observable in real markets every day. Let us look at a more dramatic example of a commercial space flight.

0.00

5,000 10,000

15,000 20,000 25,000 Quantity

➜

Figure 2.7.2 The demand curve for a breakfast cereal

SA PA M P G L ES E

108

Figure 2.7.3 Richard Branson during Virgin Galactic’s Unity 22 spaceflight livestream

➜

When Virgin Galactic and Blue Origin began offering trips to space in 2021, prices exceeded $250,000 per seat. At these stratospheric prices, demand was limited to wealthy enthusiasts and celebrities. As technology improves, prices are expected to fall to perhaps $50,000 or even $10,000. In coming decades, the quantity demanded will increase substantially. The same inverse price–quantity relationship holds, whether we are discussing cereal or space travel.

Individual demand versus market demand

It is important to distinguish between individual demand and market demand:

• individual demand is the quantity one person wants to buy at various prices • market demand is the sum of all individual demands in a market. For example: if Yasmin wants to buy two boxes of cereal per month at $4 each, and Marcus wants three boxes at the same price, and we add up every consumer’s individual demand, we arrive at the market demand curve. Market demand is simply the sum of all individual demand curves, giving us the total quantity demanded at each price point.

Factors affecting demand While price is crucial, it is not the only factor influencing how much consumers want to buy. Economists identify several key factors that determine of demand, as outlined in Table 2.7.1.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.7 How does demand affect the availability of goods and services?

109

Table 2.7.1 Key factors that determine demand Description

Income

When your income rises, you typically demand more goods and services. That generic cereal you bought as a student might be replaced with premium organic brands once you land your first job. For most goods, demand increases with income. However, for some goods called “inferior goods”, such as instant noodles or used furniture, demand may decrease as income rises and people switch to higherquality alternatives.

Population size and composition

A city experiencing population growth will see increased demand for housing, groceries, transportation and entertainment. Similarly, demographic changes such as an ageing population will shift demand towards healthcare services and away from elementary schools.

SA PA M P G L ES E

Factor

Consumer tastes and preferences

Preferences are powerful demand drivers. Social media influencers, celebrity endorsements, health trends and cultural shifts constantly reshape what consumers want. The explosion in demand for plant-based meat alternatives reflects changing tastes driven by health, environmental and animal rights concerns.

Prices of related goods

Prices of related goods can affect demand in two ways. Substitutes are goods that can replace each other, such as Coca-Cola and Pepsi, or butter and margarine. When the price of one substitute rises, demand for the other increases as consumers switch. Complements are goods consumed together, like coffee and milk, or smartphones and apps. When the price of one complement falls, demand for the other rises because the overall package becomes more affordable.

Technology

Technology can change demand preferences. For example, streaming services reduced demand for DVDs while creating demand for smart TVs and fast internet. Electric vehicles are shifting demand from petrol to charging infrastructure and batteries.

Changing weather patterns

Weather events can influence market demand. Heat waves boost demand for air conditioning and cold drinks while reducing hot food sales. Storms and bushfires create spikes in demand for generators, bottled water and emergency supplies.

Expected future prices Predicted prices can influence current demand. If you expect fuel prices to spike next month, you will fill your tank today. If you anticipate a sale on electronics during Black Friday, you will wait to make your purchase, reducing current demand.

Humans are not perfectly rational

These factors connect to a broader debate about human decision-making. Traditional economics often assumes homo economicus – a perfectly rational, calculating individual who maximises their utility. Real humans are far more complex. We are influenced by:

• emotions • social pressures • habits • cognitive biases • ethical considerations. Figure 2.7.4 Buying decisions aren’t always rational – social pressure, trends and emotions often drive demand.

➜

Understanding these psychological and social factors enriches our analysis of demand.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

110

Chapter 2 The economic environment

How does the demand curve change? This distinction is crucial and often confuses students:

• a change in price causes a movement along the demand curve • changes in other factors cause the entire curve to shift. D1

Price

D D2 De ma nd

SA PA M P G L ES E

Looking back at our cereal demand curve (Figure 2.7.2), when the price drops from $6 to $4, we move down along the existing curve. This represents a change in quantity demanded. The relationship itself hasn’t changed; we are simply at a different point on it. However, if a health study suddenly declares that this cereal prevents heart disease, then consumer tastes will change and they will want more at every price. The entire demand curve shifts rightward (D1 in Figure 2.7.5). Or suppose a recession reduces incomes; the curve shifts leftward as people demand less at every price point (D2 in Figure 2.7.5).

D1 D D2

Quantity

Figure 2.7.5 A demand curve shifts right when demand increases (D → D1) and left when demand decreases (D → D2), even when price remains the same. ➜

recession a period of economic decline when overall spending and business activity fall, often leading to slower growth and higher unemployment

Rideshare supply and demand

Understanding this distinction matters for policy and business. When demand for ride-sharing increases, perhaps due to people leaving a sporting match, the entire demand curve shifts to the right as more people simultaneously want rides. Rideshare apps’ controversial response is to raise prices, creating a movement along this new, higher demand curve.

➜

Figure 2.7.6 The cost of your rideshare home is an example of the demand curve changing.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.7 How does demand affect the availability of goods and services?

111

The invisible hand at work How do millions of independent decisions by consumers and producers coordinate to ensure that grocery stores stock the right amount of cereal? Economist Adam Smith’s metaphor of the “invisible hand” describes how prices signal information and incentivise behaviour.

SA PA M P G L ES E

For example, when demand for roses increases before Valentine’s Day, prices rise. These higher prices signal to producers to supply more while simultaneously rationing the available roses to those who value them most. This price mechanism, which responds to shifts in demand, coordinates incredibly complex economic activity without anyone needing to oversee the entire system.

Introduction to price elasticity

Not all demand curves are created equal. Some goods show highly sensitive demand when prices change, while others show remarkably stable demand. This responsiveness is measured by the price elasticity of demand. It is how responsive demand is to price changes and helps businesses set optimal prices and governments predict the effects of taxes or subsidies. Understanding demand is fundamental to analysing markets, predicting economic outcomes and making informed decisions as consumers, business owners or policymakers. The simple downward-sloping line on a graph represents millions of human choices that are influenced by prices, incomes, expectations and the complex psychology of real human beings.

Activity 2.7.1

Graphing the demand curve 1.

Using the data in Table 2.7.2 for monthly demand for streaming service subscriptions in a local market, construct a demand curve on graph paper. Plot price on the vertical axis and quantity demanded on the horizontal axis.

Table 2.7.2 Streaming service subscriptions Price per month ($)

Quantity demanded (subscriptions)

$20.00

5000

$15.00

8000

$10.00

12,000

$5.00

18,000

Once you have plotted your curve, predict what would happen to the market if the price was set at $25.

Would this represent equilibrium or non-equilibrium? Explain your reasoning.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

price mechanism how prices change to match supply and demand price elasticity of demand how much the amount people buy changes when the price of something goes up or down equilibrium a state where things are balanced and not changing because opposing forces are equal

112

Chapter 2 The economic environment

Review 2.7 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding

3. 4. 5.

Define the law of demand and explain why the demand curve slopes downwards. Distinguish between individual demand and market demand, providing an example. List and briefly explain three factors that affect demand other than price. Explain the difference between a movement along the demand curve and a shift of the demand curve. For each scenario below, determine whether it would cause a movement along the demand curve or a shift of the entire demand curve. Explain your answer and indicate the direction of any shift (left or right). a. The price of electric vehicles decreases by 15%. b. The government introduces a $5000 tax credit for electric vehicle purchases. c. A viral documentary highlights environmental concerns, changing consumer attitudes. d. Petrol prices double due to international supply disruptions. e. A recession reduces average household incomes by 10%.

SA PA M P G L ES E

1. 2.

Thinking, researching and communicating 1.

Analyse how Adam Smith’s concept of the “invisible hand” operates in the Valentine’s Day rose market and evaluate whether this mechanism effectively coordinates economic activity. Research a real-world example of how prices respond to changes in demand. This could be concert tickets, hotel rooms during a major event, seasonal produce or ride-sharing services. Using your research findings from the previous question, write a one-page investigative report that uses subheadings to organise a logical sequence of sections. Here are some suggestions for your sections:

• What caused demand to change? • How did prices respond? • What happened to the quantity exchanged? • What were the consequences? In your investigative report:

• include at least one relevant graph or diagram

Figure 2.7.7 How does the “invisible hand” affect the price of roses around Valentine’s Day? ➜

to support your explanation • use adverbs and adverbial phrases to connect, sequence or contrast ideas between sentences (such as “however”, “as a result”, “furthermore”) • use words such as “should”, “could” or “might” to suggest actions and strategies to address issues shown in your real-world example. For example, “The federal government should consider laws to prevent businesses from charging extra transaction fees in peak times.”

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.8 How does supply affect the availability of goods and services?

2.8

113

How does supply affect the availability of goods and services? Success criteria

In this lesson, you will learn about the law of supply.

❏ I can show why the supply curve slopes upwards. ❏ I can explain how price factors and non‑price factors affect individual and market supply.

SA PA M P G L ES E

Learning intention

Starter activity

Hinge question: streaming services

A popular streaming service currently charges $15 per month and has 100,000 Australian subscribers. Market research shows that if it reduced its price to $10 per month, the streaming service would gain 50,000 new subscribers. 1.

Which statement best describes this scenario?

➜

A. The demand curve has shifted right because more people want the service. B. The demand curve has shifted left because Figure 2.8.1 How would a reduction in price affect your decisions the company changed its pricing strategy. about which streaming services you would subscribe to? C. This violates the law of demand because quantity increased when something else changed. D. This shows a movement along the demand curve – lower prices lead to higher quantity demanded.

The supply curve

Supply is the quantity of a good or service that producers are willing and able to sell at different prices over a period of time. It is about what sellers want to offer to the market. Consider a bakery that normally supplies 100 loaves of bread a day at $4 each. During a local festival, people are willing to pay $6 per loaf. Now it becomes worth your time – you may decide to increase production to 200 loaves to take advantage of the higher price. This shows the law of supply. The law of supply states that:

• as price increases, the quantity supplied increases • as price decreases, quantity supplied decreases, assuming all other factors remain constant.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

market research the process of researching what is happening in the business environment so that a business owner can make informed decisions law of supply as price rises, quantity supplied increases; as price falls, quantity supplied decreases

114

Chapter 2 The economic environment

The supply curve is a graphical representation showing the relationship between price and quantity supplied.

• Price is on the vertical axis • Quantity is on the horizontal axis • The supply curve typically slopes

Price

Writing focus 2.8 Creating topic sentences

Supply

upwards from left to right, illustrating that higher prices equals more supply.

Quantity

SA PA M P G L ES E

➜

Figure 2.8.2 The supply curve. An easy way to remember this is SUPPLY TO THE SKY! Supply

8.00 6.00

Price ($)

Higher prices mean more profit, so businesses want to produce more. Lower prices mean less profit, so businesses produce less. For example: when strawberry prices are high in winter ($8 per punnet), farmers work hard to grow as many as possible. When prices drop in summer ($4 per punnet), farmers may look at other crops they can also grow.

4.00 2.00

0.00

5,000

10,000

15,000 20,000 25,000 Quantity

➜

Figure 2.8.3 The supply curve in more detail

Individual supply versus market supply

Individual supply is how much one business will supply at different prices, while market supply is the total amount all businesses will supply at different prices. For example, if smoothies are $8 each, and:

• Joe’s Juice Bar supplies •

Figure 2.8.4 Strawberries are a seasonal product. When growing conditions are more difficult, such as when there is cold weather and frosts, producers supply fewer strawberries, so they must increase the price of the strawberries to cover their basic costs. ➜

•

80 smoothies Sarah’s Smoothie Shack supplies 60 smoothies Fresh Fruit Haven supplies 100 smoothies

then the market supply is 240 smoothies. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.8 How does supply affect the availability of goods and services?

115

Activity 2.8.1 Draw your own supply curve

You run a lawn mowing business called “Green and Clean”. 1.

Draw a supply curve using the data in Table 2.8.1, which shows your pricing preferences.

Table 2.8.1 Price per lawn Lawns mowed per week

SA PA M P G L ES E

Price per lawn ($)

Explain why your supply curve slopes upwards.

If the price rises from $40 to $60, describe what happens.

Analyse what would happen to your curve if you bought a faster mower.

Review 2.8

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define supply and explain the law of supply using the bakery example from the text. Identify the three key features of a supply curve and explain what each axis represents. Using the strawberry example, explain why producers supply different quantities at different prices throughout the year.

Thinking, researching and communicating 1.

Analyse how the introduction of $2 milk by major Australian supermarkets affected dairy farmers’ willingness to supply milk, using the law of supply to explain the consequences for the industry. Research how generative AI technologies are affecting the supply of creative services (such as graphic design, copywriting or music composition) and analyse whether this supports or challenges the traditional law of supply. Write a 200-word explanation, for a friend who missed class, describing what happens to blueberry supply when farmers reduce pesticide use due to new health regulations, while consumer demand for berries increases due to health trends.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

116

Chapter 2 The economic environment

2.9

How do markets ﬁnd balance?

Success criteria

In this lesson, you will learn about how markets keep moving to equilibrium.

❏ I can apply the laws of supply and demand to new situations. ❏ I can explain how different economic systems use markets differently to provide people with their needs and wants.

SA PA M P G L ES E

Learning intention

Starter activity

See, think, wonder

Watch the video at the following link: https://cambridge.edu.au/redirect/11686. 1.

2. 3.

See: what do you see? Think: what do you think about that? Wonder: what does it make you wonder?

A balancing act

Writing focus 2.9 Transitional phrases

➜

Ever wondered why these theories of supply and demand don’t always match what happens in the real world? Welcome to one of the most fascinating tensions in economics: the divide between economic theory and market practice. Economists love their models. They create elegant graphs with smooth curves that perfectly predict Figure 2.9.1 Markets are a balancing act where prices should land. They assume rational buyers, perfect information and markets that adjust instantly. It is beautiful, logical and tidy, but step into a real marketplace and things get messy. Traders, business owners and consumers don’t always behave rationally. Information is incomplete. Prices can be sticky. Markets take time to adjust. Cultural factors, emotions, panic, greed and even the weather can throw everything off course. This does not mean that economic theory is useless – far from it. The theories give us a powerful framework for understanding market forces. But they are maps, not the territory itself, and as you will see, understanding where theory meets reality helps us make sense of everything from grocery prices to global food crises.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

117

2.9 How do markets find balance?

What is market equilibrium?

Supply

Price

Market equilibrium is the point where the quantity of goods that suppliers want to sell exactly matches the quantity that consumers want to buy. At this magical price point, the market “clears”, with no surplus or shortage. Think of it like a seesaw finding perfect balance.

Demand

• Too high a price? Sellers have leftover stock. • Too low? Buyers are fighting over limited supplies.

Equilibrium

➜

SA PA M P G L ES E

Equilibrium is where everyone walks away satisfied (or at least, where the market stops moving).

Shifting equilibrium

Q* Quantity

Figure 2.9.2 Market equilibrium

Equilibrium is not static. When supply or demand changes, the entire equilibrium point shifts. Let us explore what happens.

Changes in demand

Supply

• At the old price, there’s now a shortage. • Prices rise to ration the limited supply. • Higher prices encourage producers to supply more. • New equilibrium: higher price, higher quantity.

➜

Real example: when smartphones became popular, demand exploded. Prices initially rose, but as manufacturers ramped up production, the market found a new equilibrium with both higher prices (compared with basic phones) and massive quantities sold.

Price (%)

When demand increases (the curve shifts right):

P2 P1

D1 Q1 Q2 Quantity

Figure 2.9.3 Changes in demand

Changes in supply

Demand

Price (%)

When supply decreases (the curve shifts left):

• Suddenly there is less product available. • Prices jump as buyers compete for limited goods. • Higher prices reduce quantity demanded. • New equilibrium: higher price, lower quantity.

Real example: when drought hits wheat-growing regions, supply shrinks. Bread prices rise globally as the reduced harvest is rationed through higher prices.

P2 P1

Q2 Q1 Quantity ➜

Figure 2.9.4 Changes in supply

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

Economic systems and equilibrium Different economic systems handle supply, demand and equilibrium differently. Each offers distinct answers to fundamental questions.

• Who decides what to produce? • How are prices set? • Who gets what? Capitalism ➜

Figure 2.9.5 Strengths and weaknesses of capitalism

Strengths

Efficient allocation

Inequality

Innovation incentives

Market failures

Consumer choice

Public goods underprovided

Responsive to changing preferences

Can ignore social costs

Weaknesses

Capitalist economies rely heavily on market equilibrium. Private ownership and free exchange let supply and demand find price naturally. Government’s role is minimal: protect property rights, enforce contracts, prevent fraud.

SA PA M P G L ES E Socialism

➜

Figure 2.9.6 Strengths and weaknesses of socialism

Reduced inequality

Less efficient allocation

Universal services

Reduced innovation incentive

Protection of workers and consumers Long-term planning

Bureaucracy Difficulty calculating optimal prices without market signals

Weaknesses

Socialist economies feature significant government ownership of productive resources and intervention in markets. Rather than letting pure equilibrium rule, governments adjust prices and production to achieve social goals such as equality and universal access to necessities.

Strengths

118

Communism

In pure communist theory, markets and equilibrium pricing disappear entirely. Central planners determine production and distribution. “From each according to ability, to each according to need” replaces market exchange. In practice, historical communist states struggled without market pricing signals. How many shoes to produce? What crops to prioritise? Market equilibrium provides automatic answers through prices. Without it, planners often guessed wrong, leading to chronic shortages or surpluses.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.9 How do markets find balance?

Case study 2.9.1: when planning ignores equilibrium Sometimes the most dramatic lessons about market equilibrium come from disasters that happen when governments try to override natural and economic balance. China’s “Great Sparrow Campaign” of 1958–62 provides a chilling case study. What happened?

SA PA M P G L ES E

In 1958, Mao Zedong launched the “Four Pests Campaign” to eliminate rats, flies, mosquitoes and sparrows. Sparrows were targeted because they ate grain seeds, and Mao calculated that each sparrow consumed 4.5 kilograms of grain annually. Simple logic suggested that fewer sparrows would mean more grain, which would provide more food.

Figure 2.9.7 Chinese poster reading “Exterminate the four pests”, 1958 ➜

The campaign was massive. Citizens were mobilised to bang pots and pans, preventing sparrows from landing until they dropped from exhaustion. Nests were destroyed. Eggs were broken. Sparrows were shot. Within a year, the sparrow population was decimated.

It seemed like a triumph of central planning over nature. The ecological collapse

Mao’s planners had ignored a crucial fact: sparrows did not just eat grain seeds, they also ate insects – lots of insects. The locusts, in particular, had been kept in check by sparrow predation. With sparrows gone, locust populations exploded. Locusts are voracious. They descended on fields in swarms, devouring entire crops. The ecosystem had an equilibrium, a natural balance between predators and pests. Central planning had disrupted it. Market equilibrium shattered

What happened to food markets? 1.

Supply collapsed: crop failures meant dramatically less grain available. The supply curve shifted sharply left.

emand remained constant: people still needed to eat. The demand curve stayed D where it was.

rices skyrocketed: in a free market, the new equilibrium would involve much higher P prices as limited food was rationed to those who could pay most.

ut prices were controlled: Mao’s government set official prices below equilibrium. B This created massive shortages. At the artificially low price, quantity demanded far exceeded quantity supplied.

lack markets emerged: when official markets could not clear, illegal markets B appeared where food sold at true equilibrium prices, which were sometimes 10- or 20-times official rates.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

119

120

Chapter 2 The economic environment

The human cost

The results were catastrophic. Combined with other disastrous Great Leap Forward policies, the sparrow campaign contributed to the worst famine in human history. Estimates suggest 15–45 million people died between 1959 and 1961. Those who could pay black market prices survived. Those who could not pay higher prices starved. The government tried to prevent equilibrium from functioning, but market forces persisted underground. Price controls meant that instead of high prices rationing scarce food, starvation did the rationing. Lessons for understanding markets

This tragedy teaches several crucial lessons about equilibrium:

• Equilibrium exists in nature too as ecosystems have balance. Disrupting it has

SA PA M P G L ES E

consequences that ripple through to economic markets. Supply shocks are devastating. When supply suddenly collapses, equilibrium prices rise sharply. This is painful but serves a function. Price controls create worse problems. Preventing prices from reaching equilibrium doesn’t eliminate scarcity. It just changes how goods are rationed. Black markets emerge. When official markets can’t reach equilibrium, underground markets will. You can’t legislate away supply and demand. Central planning has limits. Even with the best intentions, planners lack the knowledge that market prices naturally encode.

• • • •

In 1960, China imported sparrows from the Soviet Union and removed them from the pest list, but the damage was done. The attempt to override natural and economic equilibrium had led to one of history’s greatest famines.

DOC

Activity 2.9.1 Class debate

Download Activity 2.9.1 worksheet

Market solutions can lead to improved efficiency.

Market forces can lead to environmental problems.

Figure 2.9.8 What do you think happens to the price of groceries in a market economy? ➜

efficiency using resources in the best possible way to produce the maximum output with minimal waste

Now that you understand market equilibrium theory and its realworld complexities, it is time to grapple with two fundamental debates in economics. These questions don’t have simple answers, which makes them perfect for classroom discussion, small‑group arguments, or a whole‑class debate.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.9 How do markets find balance?

121

As you prepare these debates, use these prompts to strengthen your arguments:

• Use specific examples and evidence, not just theory. • Acknowledge valid points from the opposing side. • Connect back to market equilibrium concepts from this chapter. • Consider different stakeholders: consumers, producers, workers, future generations. • Question assumptions: what counts as efficiency? Who decides? Detailed instructions and examples of affirmative and negative cases are available in the downloadable resource, which you can access in the Interactive Textbook.

SA PA M P G L ES E

These debates matter beyond the classroom. The questions you are wrestling with shape real policy decisions about climate change, inequality, regulation and economic systems. Your generation will help answer them.

Review 2.9

Online quiz

Thinking, researching and communicating

Knowledge and understanding

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define market equilibrium and explain what happens when supply or demand shifts in a market. Compare the strengths and weaknesses of capitalist and socialist economic systems in handling market equilibrium. Explain why black markets emerge when governments try to control prices below equilibrium. Identify three lessons about market equilibrium demonstrated by Case study 2.9.1: when planning ignores equilibrium.

Thinking, researching and communicating 1.

Analyse why governments may intervene in markets when prices move away from equilibrium. Use examples to support your answer. The Australian Taxation Office reported in 2025 that, “Despite the efforts of the Illicit Tobacco Taskforce, illicit tobacco is still increasing. We estimate approximately 25% (1741 tonnes) of all tobacco for sale in the 2023–24 year was illicit.” (Source: https://cambridge.edu.au/redirect/11687). Research how Australia’s high tobacco taxation policy creates market distortions that fuel the illegal tobacco trade, and what contemporary economists argue about the unintended consequences of government intervention in tobacco markets.

➜

Figure 2.9.9 The banning of smoking from many sites has not eliminated demand.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

122

Chapter 2 The economic environment

2.10

Skills focus: what determines prices?

Success criteria

In this lesson, you will explore the relationship between supply and demand with reference to price and non‑price factors.

❏ I can explain how economic forces push and pull prices towards their equilibrium.

SA PA M P G L ES E

Learning intention

Starter activity The three whys

Watch The Logic of Life: How economics can get you a date at the following link: https://cambridge.edu.au/redirect/11688.

Not all markets put a price on goods and services. In the video, Tim Harford explains how his research shows that people adjust their expectations based on market conditions. 1.

➜

Why might this matter? Why might it matter to people around you (family, friends, city, nation)? Why might it matter to the world?

Figure 2.10.1 Is dating about romance or economics?

Think economics

Did you know the price of Coca-Cola was the same for more than 70 years? From 1886 to 1959, Coca-Cola famously sold for just 5 cents in the United States. This price remained unchanged for years despite wars, economic depressions and inflation. This remarkable pricing anomaly challenges the assumption that prices are solely determined by the forces of supply and demand, revealing that real-world market behaviour is far more complex than simple economic models suggest. Coca-Cola’s pricing was influenced by vending machine technology, contractual agreements, marketing psychology and company strategy. These are factors that traditional supply and demand curves fail to capture.

➜

Figure 2.10.2 An early Coca-Cola ad from 1910. Coke stayed at 5 cents for over 70 years, showing prices aren’t set by supply and demand alone.

This example reminds us that in the social science of economics, no model or theory is perfect, and understanding price determination requires us to look beyond textbook diagrams to the messy reality of human decision-making and business strategy.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.10 Skills focus: what determines prices?

Review 2.10 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

123

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

SA PA M P G L ES E

In Sydney, petrol costs $1.85 per litre, but in Broken Hill (800 kilometres away), the same petrol costs $2.15 per litre. a. Calculate the price difference. b. Using supply and demand concepts, explain why people in regional areas pay more for fuel even though they often have to travel greater distances. A popular gaming console has a demand of 5000 units at $500, but the manufacturer only supplies 3000 units at this price. a. Calculate the size of the shortage. b. Explain what will likely happen to the price, and why. A basket of groceries costs $120 in a regional town with one supermarket, but the same basket costs $95 in a city suburb with four competing supermarkets. a. Calculate the price difference and the percentage increase regional shoppers pay. b. Explain how competition (or lack of it) affects supply and prices in regional areas. At Bondi Beach on a summer weekend, parking costs $8/hour and it takes 45 minutes to find a spot (500 cars competing for 100 spaces). At Pambula Beach, parking is free and immediate (20 cars, 200 spaces available). a. Calculate the surplus of parking spaces at Pambula Beach and account for why this may be happening. b. Explain how low demand and high supply create advantages for regional residents. A regional town of 8000 people has only two doctors, while a city suburb of 8000 people has 15 doctors. a. Calculate how many patients each doctor serves on average in both locations. b. Using supply and demand analysis, explain why regional residents often wait weeks for appointments while city residents wait days. High-speed internet in metropolitan areas costs $75/month for unlimited data. In remote areas, satellite internet costs $140/month for limited data. a. Calculate the price difference. b. Explain why the cost of supplying services to low-population areas affects prices, even though demand for internet is high everywhere.

Thinking, researching and communicating 1.

Real-world price determination case studies Key question: what factors beyond supply and demand curves determine the prices we pay? Task: research one of following case studies: • concert ticket pricing and scalping • prescription drug prices • Uber surge pricing • housing prices in your local area. For your chosen case: a. Identify all the factors that determine prices, that is, not just supply and demand, but also government regulation, emotional factors, technology, market power, social influences and ethical considerations. b. Create an infographic or short video to explain how your case demonstrates that every decision is an economic decision with trade-offs and opportunity costs for both buyers and sellers.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

124

Chapter 2 The economic environment

2.11

How are we connected in our economy? Success criteria

In this lesson, you will explore the circular flow model to understand the Australian economy.

❏ I can demonstrate connections between each sector in the circular flow model and show how changes in each sector could impact other sectors and the whole economy.

SA PA M P G L ES E

Learning intention

Starter activity

Watch the video of Selena Gomez in the 2015 film The Big Short at the following link: https://cambridge.edu.au/redirect/11689. In the clip, Selena Gomez was playing blackjack while people made side bets on her hand. When she lost, everyone at the table lost too. Now think about this: in our economy, we’re all sitting at the same table as Selena Gomez. We might not realise it, but we’re all making “side bets” on each other’s economic decisions every single day. Complete the following sentences.

After watching this clip, I now understand that the economy is like _______ because _______.

One thing that surprised me about our economic connections is _______.

Figure 2.11.1 Selena Gomez on The Tonight Show in 2015 ➜

Think economics

Writing focus 2.11 Transitional phrases

circular ﬂow model a framework to show how money, goods and services move between households and businesses in an economy

Economists use models to help us understand the complex workings of the economy. One of the most important models is the circular ﬂow model, which shows how money, resources and products move between different parts of the Australian economy. Think about buying a coffee: your $5 becomes the barista’s wages, who spends it at the grocery store, which pays the shelf-stocker, who buys an app – and around it continues. Everyone keeps the economy moving by earning and spending. Economists often disagree on how active governments should be in keeping the economy moving. John Maynard Keynes spotted the problem that when people get scared and stop spending, the whole system starts suffering, so he said governments should step in and spend to restart the flow.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.11 How are we connected in our economy?

125

Friedrich Hayek (winner of the 1974 Nobel Prize in Economic Sciences) completely disagreed. He argued that government interference is like forcing the wrong pattern in the Game of Life, and recessions and downturns in economic activity are necessary for fixing economic mistakes.

SA PA M P G L ES E

Of course, the circular flow model is just a simplification of real life. Real economies are messier, with international trade, different types of money, inequality and countless other factors that simple models leave out. They are useful for understanding basic connections, but we should not rely on them too heavily or think they tell the whole story.

➜

Figure 2.11.2 The headline was “Wall Street reels as major financial companies face crisis”. Traders on the floor of the New York Stock Exchange, 15 September 2008, when in morning trading, US stocks suffered a steep loss after news that Merrill Lynch & Co. was selling itself to Bank of America Corporation and the financial firm Lehman Brothers Holdings filed for bankruptcy.

Follow the link for more information: https://cambridge.edu.au/redirect/11690.

Understanding the circular flow of income

At its most basic level, the circular flow model shows the relationship between households and businesses (or firms). Households provide businesses with resources such as labour, land and capital. In return, businesses pay households income in the form of wages, rent and interest. This creates one flow in the circle. The second flow occurs when households use their income to purchase goods and services from businesses, which generates revenue for firms to continue operating. Income

Economic resources Output

Household sector

Expenditure

Firms sector

➜

Figure 2.11.3 The circular flow of income

However, the Australian economy is more complex than just households and businesses. The circular flow model can be expanded to show the interdependence of multiple economic sectors. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

households individuals and families who consume goods and services and provide factors of production businesses firms that produce goods and services and employ resources

126

Chapter 2 The economic environment

Income

Household sector

Economic resources Output Expenditure

Firms sector

Financial Savings (S) sector Investment (I)

Flows

1. Households: individuals and families who consume goods and services and provide factors of production

1. Income: money received 2. Economic resources: goods or services that are used as inputs in production

2. Businesses (firms): firms that produce goods and services and employ resources

3. Output: goods or services produced to be sold 4. Expenditure: the purchase of goods and services

3. Government: a country or state’s governing body that provides public goods and services, collects taxes and redistributes income through welfare payments

5. Savings (S): money saved 6. Investment (I): money the financial sector lends to firms to spend on machinery, buildings and equipment

4. Financial sector: banks and other financial institutions

7. Taxation (T): money paid to the government 8. Government expenditure (G): money the government spends on public goods and services

5. Overseas sector: international trade organisations that carry out imports and exports.

9. Payment for imports (M): payments for goods and services produced by businesses in other countries and sold to Australia 10. Payment for exports (X): payments for goods and services produced by firms in Australia and sold to other countries

SA PA M P G L ES E

Government Taxation (T) sector Government expenditure (G)

Sectors

Payment for imports (M)

Overseas sector

Payment for exports (X)

➜

Figure 2.11.4 The five-sector circular flow model of the economy

Source: Reserve Bank of Australia, 2025.

These sectors are deeply interconnected. For example:

• when households save money in banks (financial sector), these funds can be lent to • •

businesses for investment when the government collects taxes from households and businesses, it uses this revenue to provide services such as education and healthcare and also purchases goods from businesses Australian businesses export products overseas and import resources and goods from other countries.

This interdependence means that changes in one sector affect all others. If households reduce their spending, businesses may earn less revenue, leading to potential job losses, which reduces household income even further. Understanding these connections helps us see why economic decisions ripple throughout the entire economy. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.11 How are we connected in our economy?

The circular flow and the business cycle The business cycle

The business cycle depicts the rise and fall in output (production of goods and services) over time.

Expansion

Peak

Trough

SA PA M P G L ES E

• expansion • peak • contraction • trough.

Contraction

Peak Output

Each business cycle has four phases:

Expansion

➜

The circular flow model also Time relates to the business cycle, Figure 2.11.5 The business cycle shows the rise and fall in the output of the economy. Source: Reserve Bank of Australia, 2025. which is the boom-and-bust pattern of economic growth and contraction.

• During periods of economic expansion, money flows more rapidly through the •

economy as businesses hire more workers, household incomes rise, spending increases and business revenues grow. During recessions, these flows slow down, leading to unemployment and reduced economic activity.

What’s missing?

While the circular flow model provides a useful framework, it is important to consider different perspectives on how our economy works in practice. Follow the link https://cambridge.edu.au/redirect/11692 to watch the video The Story of Stuff, which presents an alternative view that challenges some assumptions in traditional economic models. The Story of Stuff traces the life cycle of consumer goods from extraction to disposal, highlighting aspects that the simple circular flow model doesn’t capture:

• environmental costs: the extraction of raw materials and disposal of waste • social impacts: working conditions and inequality in the production chain • consumption patterns: the role of advertising and planned obsolescence in driving consumer behaviour.

This perspective raises important questions:

• Does the circular flow model account for the depletion of natural resources? • What happens to the waste products that leave the system? • How sustainable is an economy based on continuous consumption growth? Follow the link https://cambridge.edu.au/redirect/11693 to watch the video The Story of Solutions, which builds on these criticisms by proposing alternative approaches to economic organisation that prioritise sustainability, equality and genuine wellbeing over mere consumption. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

business cycle the regular rise and fall of activity in an economy over time

127

Chapter 2 The economic environment

Activity 2.11.1 Discussion questions

Now that you’ve explored the circular flow model, the different sectors of the economy, and some of the elements the model leaves out, it’s time to connect these ideas to real‑world issues. Use the questions below to discuss how these ideas apply to real‑world economic issues. 1.

How does an economy provide income?

Using the circular flow model, we can see that income is generated when households provide their labour and other resources to businesses, which pay them wages, rent and returns on investment. The Story of Stuff reminds us, however, that not all participants in the production chain receive fair compensation, and some economic activities create costs (such as environmental damage) that are not reflected in market prices. What is the relationship between the business cycle and employment?

SA PA M P G L ES E

128

During economic booms, businesses expand and hire more workers, reducing unemployment. During recessions, businesses contract and lay off workers, increasing unemployment. This creates a feedback loop: unemployment reduces household income and spending, which further reduces business revenue and can lead to more job losses.

What biases exist in media reporting on economic issues?

Media coverage often focuses on economic growth and stock market performance as indicators of success, which may not reflect the lived experience of ordinary people. Media may emphasise consumption and business perspectives while giving less attention to environmental sustainability, inequality or alternative economic models. Different media outlets may also have political or corporate interests that influence their economic reporting.

Measuring economic success

One of the key questions in economics is how we measure whether our economy is successful. The most common measure is gross domestic product (GDP), which calculates the total value of all goods and services produced in a country over a specific period. Follow the link https://cambridge.edu.au/redirect/11694 to watch the video We, The Economy: GDP Smackdown, which presents a debate about whether GDP is an appropriate measure of economic success. This debate is crucial for understanding what we value in our economy. Arguments for and limitations of GDP are shown in Table 2.11.1. Table 2.11.1 Arguments for and limitations of GDP Arguments for GDP

Limitations of GDP

• Provides a clear, measurable indicator of • Does not measure inequality in income economic activity

• Allows comparison between countries

and across time periods • Generally, correlates with employment levels and living standards • Helps governments and businesses make economic decisions

distribution

• Ignores unpaid work (such as caring for

family members or volunteer work) • Does not account for environmental degradation • May count harmful activities (like pollution clean-up) as positive contributions • Does not directly measure happiness, health or quality of life

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.11 How are we connected in our economy?

129

Doughnut Economics: a new framework Economist Kate Raworth has proposed an alternative way of thinking about economic success. Instead of focusing on a linear model measured by GDP growth, her model – Doughnut Economics – shows how economies can meet people’s needs without damaging the planet. The model is shaped like a doughnut, with two important boundaries. 1. The Inner Ring or Social Foundation represents the minimum standards needed for human wellbeing. It includes access to: food and clean water gender equality and social equity healthcare and education political voice, and peace and energy and housing justice.

• •

SA PA M P G L ES E

• • •

If people fall inside this inner ring, they lack the essentials for a good life. The goal is to bring everyone above this social foundation.

2. The Outer Ring or Ecological Ceiling represents the limits of Earth’s natural systems. It includes boundaries such as:

• climate change • ocean acidification • loss of biodiversity

• air and water pollution • ozone depletion.

If economic activity pushes beyond this outer ring, we damage the planetary systems that support all life.

Ene rgy

erat

iv e a n d

al Politiicce vo

ec di s t rib u ti v e

L a n d c o n v er sio n

al p o

m ic

a P e jus d an

ono

Che

S equoacial lit y

an e n s loa g ro u N it p h o r s p ho

d din g

gen

ll u t i o n

In andco m e w ork

ce tic e

lo ss

Ge q e

r s it y

Education sing Hou

Bio dive

n ua der lit y

F wi resh th w dr ate aw r als

Networks

Shortfall

cation cidifi an a Oce

h alt He

Air pol lutio n

n Clim : limits of Earth etio ’s sy ate ceiling l epl a d c ste ch ogi space for h er t s l u j m d y an o n a uma s fe a Ec g a el s n i e b a : s n i t c o i h t h y uma T unda n ne o f l ia eds Soc Foo ter a d W

Oz on

Overshoot

➜ Figure 2.11.6 Doughnut

Economics focuses on balancing human needs within ecological limits. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

130

Chapter 2 The economic environment

The safe and just space for humanity In the doughnut model, the space between the two rings represents the space where humanity can thrive. An economy operating in this space:

• meets everyone’s needs (above the social foundation) • without overshooting planetary boundaries (below the ecological ceiling). Doughnut Economics challenges us to rethink the circular flow model. Rather than viewing the economy as an isolated circular system focused on perpetual growth, it reminds us that:

SA PA M P G L ES E

• the economy exists within society (not separate from it) • society exists within the environment (not separate from it) • economic success should be measured by whether we are in the “safe and just space”.

circular economy a way of using resources to reduce waste by reusing, repairing and recycling products and materials

Several cities around the world, including Amsterdam and Copenhagen, have begun using the Doughnut Economics framework to guide their economic planning. In Australia, some organisations and local councils are exploring how this model might reshape our approach to economic development. The Bega Circular Valley Program in south-east New South Wales is planning to become a world-leading circular economy by 2050. Follow the link in Activity 2.11.2 to learn more.

➜

Figure 2.11.7 The Bega Circular Valley Program in south-east New South Wales is planning to become a world-leading circular economy by 2050. Courtesy of Bega Circular Valley.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.11 How are we connected in our economy?

131

Activity 2.11.2 Write to be heard 1.

Read the Bega Circular Valley case study at https://cambridge.edu.au/redirect/11695.

Review your class notes on:

• the circular flow model • the Doughnut Economics framework (social foundations and planetary boundaries) • linear (growth-based) versus circular economies. 3.

Writing task 1

SA PA M P G L ES E

a. Using the Bega Circular Valley as a case study, discuss whether Australia can maintain employment and rising living standards while transitioning to a circular economy that operates within planetary boundaries. Your response should be around 600 words and should address the following.

• Outline how economic policies might change under a Doughnut Economics

approach. • Explain whether employment and living standards can be sustained within environmental limits. • Evaluate what changes are needed in the circular flow model to support a circular economy.

b. Download the worksheet from the Interactive Textbook that contains a fiveparagraph scaffold to help you start.

Review 2.11

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

DOC

Download fiveparagraph writing worksheet

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Define the circular flow model and explain how it demonstrates the interconnectedness of Australia’s economy. In your answer, identify at least three of the five economic sectors and describe one connection between them. Compare and contrast GDP and Doughnut Economics as measures of economic success. Explain why Kate Raworth’s model includes both a social foundation and an ecological ceiling and discuss one limitation of using GDP alone to measure Australia’s economic performance.

Thinking, researching and communicating 1.

Watch the Keynes versus Hayek debate: https://cambridge.edu.au/redirect/12025. Explain how these two economists would likely respond differently to a recession in Australia. Refer to the business cycle in your answer and describe how government intervention might affect the circular flow of income. The lesson mentions that “changes in one sector affect all others” in the circular flow model. Choose one specific example from the text (such as household spending reduction) and trace how this change would impact at least two other sectors. Then evaluate whether the Bega Circular Valley project addresses any limitations of the traditional circular flow model.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

2.12

Site study: shopping centre

Learning intention

Success criteria

By the end of this site study, you will view shopping centres and the broader economy through the analytical lens of an economist, recognising the complex web of economic relationships that drive our market‑based society.

❏ I can explain how supply and demand affect prices. ❏ I can identify an example of how scarcity creates choices for consumers. ❏ I can describe how competition between stores influences prices and products.

SA PA M P G L ES E

132

What is a site study?

A site study is an investigation of a real or virtual place to understand how economic decisions happen in everyday life. It takes learning beyond the textbook and into spaces where theory meets reality.

Economics is happening everywhere

When you step into your local shopping centre, you are entering into a living economics laboratory! As you explore, you will:

• discover how supply and demand shape the prices you see • witness scarcity creating genuine consumer dilemmas • observe market competition playing out between neighbouring stores. Through the following challenges, you’ll explore how prices are set, how opportunity cost affects spending, and how businesses use incentives to influence shoppers. This hands-on experience makes economics practical and relevant, because it’s happening all around you, every time you shop.

➜

Get ready to see your local shopping centre in a completely new way as you uncover the fascinating economics hiding in plain sight!

Figure 2.12.1 Economics is all around you.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.12 Site study: shopping centre

133

Site study activity 2.12.1 Economics scavenger hunt Challenge 1: the great shortage scandal

Hunt down the most tragic “out of stock” situation in the shopping centre. Bonus points if it is something ridiculous like fidget spinners or a specific phone case colour. 1.

Take a dramatic selfie with the empty shelf and write a short eulogy for the missing product.

Explain how this scarcity might make people willing to pay crazy prices on eBay!

Challenge 2: food court FOMO

SA PA M P G L ES E

You have got $15 burning a hole in your pocket at the food court. Would you buy the fancy burger, the massive pizza slice, or the bubble tea with extra toppings? 1.

What is the opportunity cost of choosing Insta-worthy food over actually filling your stomach?

Rate your FOMO level from 1 to 10.

Challenge 3: clearance sale detective

Channel your inner bargain hunter and find the most desperately discounted item in the shopping centre with “please-take-this-before-we-throw-it-away” prices. 1.

Take a photo and explain whether nobody wanted it (low demand) or they made way too many (oversupply).

Bonus: find something so ugly you cannot believe someone designed it.

Challenge 4: the price war zone

Find two stores selling the same thing and document the price difference. If, for example, one store is charging $50 for phone cases and another charges $20, investigate! 1.

Are they in different leagues, or is someone desperately trying to steal customers?

Predict which store will win this economic battle royale.

Challenge 5: seasonal price shock

Head to the grocery section and find the most outrageously priced out-of-season fruit. For example, is it $8 for strawberries in winter? 1.

Document this highway robbery and explain why people are willing to pay premium prices for summer vibes in the middle of winter.

Challenge 6: the substitute game

Pick any overpriced item and become a master of alternatives. Found a $200 designer hoodie? Locate the $30 version that looks almost identical. Find something that goes with your original item, too. 1.

Explain how price changes would affect your shopping strategy when you are spending someone else’s money against your own savings.

Challenge 7: the Goldilocks store

Find the store that’s “just right” – not so empty it feels like a ghost town but not so packed you are trapped in a human traffic jam. 1.

Time how long it takes to get served and explain why this store has achieved the perfect balance.

What would happen if they suddenly became TikTok famous?

Download the worksheet to access additional activities to complete in the shopping centre site study. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

DOC

Download additional activities

134

Chapter 2 The economic environment

2.13

Why is economic growth important? Success criteria

In this lesson, you will explore economic growth and how it raises standards of living.

❏ I can demonstrate how changes in economic growth impact consumers and businesses in an economy. ❏ I can explain the effects of economic growth in Australia.

SA PA M P G L ES E

Learning intention

Starter activity

Look at the data in Figure 2.13.1. 1.

What ideas come to mind when you consider the findings? What connections can you make to your peers’ responses? What questions arise as you think about the ideas and consider the responses and comments of others?

➜

Figure 2.13.1 Happiness across East Asia and Oceania (Visual Capitalist, 1 April 2025) Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.13 Why is economic growth important?

135

Think economics Economic growth refers to an increase in the size of a country’s economy over a period of time, usually a year. Economists measure the size of an economy using gross domestic product (GDP) – the total value of all goods and services a country produces in a year.

How is economic growth related to our quality of life? Economic growth can improve our quality of life by:

SA PA M P G L ES E

• creating more jobs and reducing unemployment • increasing average incomes • generating tax revenue for government services • funding technological innovation to keep people healthier.

Growth can occur alongside increasing inequality, environmental damage, as well as stress and overwork as people strive to consume more. Some economists and policymakers advocate for a range of measures that capture broader aspects of wellbeing, such as:

Writing focus 2.13 Developing sentences economic growth the increase in the size of a country’s economy over a period of time, usually a year

• The Genuine Progress Indicator (GPI), which adjusts GDP for factors like income •

Economic growth is important for our wellbeing, and we can measure it in different ways by understanding its effects.

Why is economic growth so important? According to the World Health Organization:

Diarrhoeal disease is the third leading cause of death in children under 5 years old and is responsible for killing around 443 832 children every year. (Source: https://cambridge.edu.au/redirect/11696)

Diarrhoea, spread through infection, is widespread throughout low-income developing countries where there is poor sanitation. Economic growth brings clean piped water and sanitation; it saves children’s lives. Infant survival rates, life expectancy, adult literacy levels and leisure time all tend to be higher in wealthier countries that experience economic growth. According to the World Bank, China has experienced sustained high GDP growth, averaging over 9% annually since its economic reforms began in 1978. This growth has lifted more than 800 million people out of poverty, demonstrating profound social impact alongside economic gains. This is the real importance of economic growth.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Video 2.13.1 Human Development Index

➜

•

distribution, environmental costs and unpaid work. The Human Development Index (HDI), which combines income with education and life expectancy. the annual World Happiness Report, produced by the United Nations, which Finland has topped for the last eight consecutive years.

INCOME LEVEL 1

$1 000

SICK

$2 000

RICH

$4 000

$16 000

(GDP per capita, $ per year, price adjusted)

$8 000

Income

$32 000

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Figure 2.13.2 Gapminder World Health Chart, 2021

WORLD HEALTH CHART

LEVEL 4

100

1 000 million

$64 000

gapm.io/whc

VERSION 2022.1

The world is always changing, for the latest version of this graph and to see the amazing improvements all countries have made over the last 200 years, use our free online tools here:

SIZE SHOWS POPULATION

COLOR SHOWS REGION

This graph is like a world map for health and wealth. North and South mean healthy and sick, East and West mean rich and poor. the bubbles show each country’s average lifespan and income in 2021. Try to find your country to see who the neighboring countries are with similar health and wealth.

SOURCES - INCOME: World Bank’s GDP per capita, PPP (2017 international $) extended to 2021 with IMF’s projections. X-axis uses log-scale to make a doubling income show the same distance on all levels. POPULATION and LIFE EXPECTANCY: Data from UN Population Prospects 2019. LICENSE: Our charts are freely available under Creative Commons Attribution License. Please copy, share, modify, integrate, and even sell them, as long as you mention: “Based on a free chart from www.gapminder.org”.

POOR

HEALTHY

LEVEL 3

SA PA M P G L ES E

LEVEL 2

apminder World Health Chart 2021

Lifespan

(Life expectancy, years)

136 Chapter 2 The economic environment

➜

2.13 Why is economic growth important?

137

Follow the link https://cambridge.edu.au/redirect/11697 to watch how population by income (%) has increased dramatically over the last 200 years across the world. Health and income go together. People in richer countries live longer. Look at the Gapminder World Health Chart (2021) in Figure 2.13.2. There are no low-income countries with long life expectancy and no high-income countries with a low life expectancy. Most countries are in the middle. There are differences within countries, but this world data helps us understand that economic growth helps people live longer, healthier lives.

Activity 2.13.1 Gapminder

SA PA M P G L ES E

Gapminder (https://cambridge.edu.au/redirect/11698) tells us that we are probably wrong about a lot of world economic data and there has been a lot of progress in ending poverty. Here is an example: https://cambridge.edu.au/redirect/11699. In 1990, 58% of the world’s population lived in low-income countries. What do you think that share is today?

• Around 9% • Around 37% • Around 61%

Gapminder tell us that 93% of people in the world answered this question incorrectly and in Australia, it is even higher at 95%. What did you answer? Go to Gapminder and find out if you are one of the 5% in Australia who are up to date in their thinking about economic growth! (In case you cannot find out – it is 9%!)

Countries with a higher GDP per capita have capital and labour. Capital refers to things that are used in production. These can be:

• tangible, such as buildings, machinery and equipment • intangible, such as new ideas through research and development.

The population, or labour force, also needs to have the productive knowledge and skills, gained through education, to make use of their country’s capital and resources. Economists Daron Acemoglu, Simon Johnson and James A. Robinson, who won the Nobel Prize in Economic Sciences in 2024 for their work on institutions and prosperity, found five powerful factors that increase economic growth. They are:

➜

• property rights • honest government • political stability Figure 2.13.3 Nobel Prize winners Daron Acemoglu (left, seated at table), Simon Johnson (centre) and James A. Robinson (right) at a press • a dependable legal system • competitive and open markets. conference in Stockholm after receiving the 2024 award. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

capital (economics) the physical, intellectual or financial resources used to produce value in an economy labour the human effort, both physical and mental, that goes into producing goods and services tangible able to be seen and touched intangible not able to be seen or touched but still having value

138

Chapter 2 The economic environment

Activity 2.13.2 The magic washing machine

Watch Hans Rosling’s TED talk (linked here: https://cambridge.edu.au/redirect/11700) and answer the following questions. 1.

Remember What specific example did Hans Rosling use to illustrate how economic growth and access to electricity transformed his family’s daily life, and which of the five economic growth factors (property rights, honest government, political stability, dependable legal system, competitive and open markets) would have been necessary for his family to afford and access this technology?

Understand

SA PA M P G L ES E

Explain how the “magic” of the washing machine, that is, freeing up time for education and intellectual pursuits, demonstrates the connection between economic growth and human development. How might the absence of a dependable legal system and property rights prevent families in developing nations from experiencing this same transformation?

Analyse

Analyse the relationship between Rosling’s statement that “if you have democracy, people will vote for washing machines” and the five factors that drive economic growth. Is good government the real reason behind economic growth?

Review 2.13 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Define economic growth and explain how it is measured. Which country has topped the UN World Happiness Report for eight consecutive years? Define capital in economic terms. List three of the five factors that economists identify as increasing economic growth.

Thinking, researching and communicating 1. 2. 3.

Analyse the relationship between economic growth and health outcomes using evidence from the lesson. Research and compare Australia’s current GDP per capita ranking with two other developed nations, and explain what this suggests about living standards. Write a persuasive paragraph arguing whether GDP alone is sufficient to measure a country’s wellbeing, incorporating alternative measures discussed in the lesson.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.14 What are the indicators of economic growth?

2.14

139

What are the indicators of economic growth? Success criteria

In this lesson, you will explore the indicators of economic growth.

❏ I can explain why real GDP is used to measure economic growth. ❏ I can analyse GDP data and link it to aggregate demand (AD) and the business cycle.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Looking at the image in Figure 2.14.1 and reading its caption, explain what is happening using economic reasoning and concepts. In your explanation include key terms such as GDP, economic growth, unemployment and government policies. Predict key global economic events that could impact Australia in a similar way.

➜ Figure 2.14.1

The ABS reported in May 2020 that job vacancies decreased by 43%.

Indicators of economic growth

Economic growth is most commonly measured using real gross domestic product (GDP). Real GDP measures the volume of goods and services produced in a country, usually over a year — not just the price or dollar value of its goods and services. Another measure of economic growth is GDP per capita, which divides GDP by the population. Real GDP per capita can be used to compare economic growth across countries and across time regardless of their population size or their fluctuating currency or price changes.

How is GDP measured?

In Australia, the Australian Bureau of Statistics (ABS) collects data from households, businesses and government agencies every three months. With this data it can measure the:

• total value added from goods and services produced • total income generated by employees and businesses (plus taxes less subsidies) • total value of expenditure by consumers, businesses and governments on final goods and services.

The ABS uses this data to measure Australia’s GDP. Figure 2.14.2 on the following page shows Australia’s GDP growth over the last 10 years. The green bars show the quarterly growth, and the purple line shows the yearly growth. The chart shows clearly how the global pandemic in 2020 was disruptive for our economy. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 2.14 Developing sentences

140

Chapter 2 The economic environment

GDP growth

8 Year-ended

SA PA M P G L ES E

Quarterly

–4

–8

1995

2001

2007

2013

2019

–4

2025

–8

➜

Figure 2.14.2 Australian GDP growth as at 30 October 2025

Source: Reserve Bank of Australia, 2025.

How economic growth affects incomes

The business cycle

Potential

GDP

Lower unemployment, higher inflation

Actual

Higher unemployment, lower inflation

Time

➜

Economic growth lifts people’s incomes by increasing the total production of goods and services in an economy, which flows on to workers, businesses and investors. In turn, higher incomes fuel further growth as people spend more on consumption and invest in productive activities, creating a reinforcing cycle. Think back to the circular flow of income where increases in spending move around the economy. Essentially, economic growth creates income, and income drives more growth. However, as shown by the GDP growth chart in Figure 2.14.2, this is not always a smooth path to prosperity.

Figure 2.14.3 Trends in the business cycle Source: Reserve Bank of Australia, 2025.

Case study 2.14.1: COVID-19 and economic growth In 2020, the COVID-19 pandemic was a significant event for the world as the highly contagious virus spread across the globe. After the first case was recorded in Australia in January 2020 and numbers increased, the federal and state governments implemented public health measures to contain the spread of the virus. These restrictions on travel, non-essential business activity and social gatherings put downward pressure on economic activity as businesses shut down and consumers stayed at home. We consumed fewer goods and services, which slowed economic growth. Growth in GDP declined and the unemployment rate spiked at 7.5% in June 2020 as households reduced consumption and increased their savings.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.14 What are the indicators of economic growth?

141

As the economy contracted, it moved along the business cycle into a trough with higher unemployment and lower inflation. Significant policy responses, such as the government support payments to households and businesses, along with dramatic cuts in interest rates, alleviated some of the pressure and helped the economy recover.

Activity 2.14.1 Do the data

• household spending (consumption, C) • investment by businesses and households (I) • spending by the government (G) • net spending from overseas (X − M). This is shown in Figure 2.14.4.

➜

SA PA M P G L ES E

One way to understand GDP as an indicator of economic growth is to split it into different parts. We can measure this by the total expenditure by consumers, businesses and governments on final goods and services (finished goods, not inputs), also called aggregate demand (AD). AD includes:

Figure 2.14.4 The AD equation

Source: Reserve Bank of Australia, 2025.

These components together drive changes in GDP and help explain economic growth. They are also the components of aggregate demand, which measures total spending in the economy. Using the chart of Australia’s GDP components in Figure 2.14.5, answer the following questions. Tip: remember that GDP measured by expenditure is equal to aggregate demand. Contributions to GDP growth Year-ended ppt ppt June 2025

–0.5

Imports

Exports

Government

0.5

Non-mining investment

0.5

Mining investment

1.0

Dwelling investment

1.0

Consumption

1.5

GDP

1.5

➜

Figure 2.14.5 Contributions to GDP growth as at 30 October 2025. Note that ppt = percentage points, showing how much each component adds to or subtracts from GDP growth. Source: Reserve Bank of Australia, 2025. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

142

Chapter 2 The economic environment

Which component of aggregate demand made the largest positive contribution to GDP growth in the year to June 2025?

A. Consumption B. Exports C. Government D. Mining Why does the imports component show a negative contribution to GDP growth?

A. Imports are subtracted from GDP calculations. B. Import prices fell significantly, reducing their dollar value. C. The quality of imported goods declined during this period. D. Australia imported less in June 2025 than the previous year. Based on the pattern of contributions shown, which statement best characterises the Australian economy in June 2025?

SA PA M P G L ES E

A. Export performance is the dominant driver of economic expansion. B. The economy is in recession with all components contributing negatively. C. The economy is experiencing an investment-led boom with strong business confidence. D. Growth is primarily driven by household and government spending, with weak private investment. The chart shows that Australia’s GDP growth was approximately 1.8% in the year to June 2025. What does this figure tell us?

A. Each Australian citizen became 1.8% wealthier during this period. B. Australian households earned 1.8% more income than the previous year. C. The total dollar value of Australia’s economy increased by 1.8%, including the effects of inflation. D. Australia’s economy produced 1.8% more goods and services in volume terms than the previous year.

Review 2.14 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Describe what real GDP measures and why it is preferred for measuring economic growth. Identify how often the Australian Bureau of Statistics collects economic data and what three measurements it uses to calculate GDP. Recall the four components of aggregate demand (AD) and how they relate to GDP. Explain why the COVID-19 pandemic caused Australia’s GDP growth to decline significantly in 2020.

Thinking, researching and communicating 1. 2. 3.

Analyse why imports show a negative contribution to GDP growth in Figure 2.14.5 and evaluate the economic reasoning behind this accounting method. Research and compare Australia’s GDP per capita growth with two other developed economies during 2020–25, explaining any differences you identify. Write a 200-word explanation connecting the business cycle diagram to Australia’s recent economic performance, using appropriate economic terminology, statistics and clear paragraph structure.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

143

2.15 How does economic growth affect our daily life?

2.15

How does economic growth affect our daily life? Success criteria

In this lesson, you will explore the effects of economic growth in Australia.

❏ I can explain how economic growth improves employment, increases government revenue and helps build better infrastructure such as health and education systems.

SA PA M P G L ES E

Learning intention

Starter activity

The report “Feeding Profit: How food environments are failing children” (available at the following link: https://cambridge.edu.au/redirect/11701) used data from more than 190 countries and sources including UNICEF, the World Health Organization and the World Bank. The report found that for children aged between 5 and 19, one in five were overweight. Our access to ultra‑processed food has created growing rates of obesity.

Figure 2.15.1 UNICEF reports that cheap ultra-processed food is behind the rise in overweight children, with one in 10 now obese globally. ➜

What connections can you make between the findings from UNICEF’s report and economic growth?

The effects of economic growth in Australia Employment

Employment and hours worked 2008 average = 100

130

Index 130

120

Employment

110

Total hours worked

100 90 80

110

Average hours worked

2009

2013

2017

100 90

2021

80 2025

Figure 2.15.2 Employment and hours worked (seasonally adjusted) as at 30 October 2025 ➜

Economic growth in Australia has created job opportunities and reduced unemployment over time. Figure 2.15.2 shows employment has climbed since the COVID-19 pandemic caused a spike in unemployment in 2020, demonstrating a close relationship between employment and economic growth. The Reserve Bank of Australia reported in its Statement on Monetary Policy (August 2025), “We judge that the economy will be close to full employment over the forecast period, though our models and some indicators point to the risk that some tightness in labour market conditions remains”.

Index

Writing focus 2.15 Appositives

Source: Reserve Bank of Australia, 2025.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

Government revenue When more people are employed, they pay more tax to the government. This can happen in two main ways: 1. Income tax revenue – with a greater number of people in the workforce, income tax revenue will increase. 2. GST revenue – when households have more income, they will usually spend more on goods and services. In Australia there is a goods and services tax (GST) of 10% on most goods, services and other items sold or consumed in Australia. As consumption increases, so does GST revenue. Figure 2.15.3 shows the massive spike around 2021 driven by the post COVID-19 pandemic commodity boom, catch-up tax payments and record corporate profits. Tax policy adjustments, including the modified Stage 3 tax cuts implemented in mid-2024, would have reduced personal income tax collections.

SA PA M P G L ES E

144

Taxation revenue growth Nominal, year-ended with contributions

Total

Corporate income tax*

Other

Household income tax

GST

–5

–10

–10 2005

2009

2013

2017

2021

2025

*Only includes taxation of resident corporations ➜

Figure 2.15.3 Taxation revenue growth as at 30 October 2025 Source: ABS, Reserve Bank of Australia, 2025.

Stable GDP growth does not automatically mean stable tax revenue growth, especially when coming off an exceptional commodity-driven boom, but it does provide certainty for households, businesses and governments to plan. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.15 How does economic growth affect our daily life?

145

Infrastructure Economic growth generates government revenue that can be reinvested in infrastructure like transportation, healthcare and education. This infrastructure then supports further economic expansion. Australia’s sustained growth has funded major projects such as the Sydney Metro and highway upgrades, which improve connectivity between regions and increase productivity. This infrastructure investment does not just meet current needs but also builds capacity for ongoing economic growth.

SA PA M P G L ES E

➜

Figure 2.15.4 Investing in infrastructure can help drive The Organisation for Economic Co-operation and ongoing economic growth. Development (OECD) reported that in Australia “total public investment grew from around 3.1% of GDP in the early 2000s to 4.1% of GDP in 2022” (Source: https://cambridge.edu.au/redirect/11702). Governments have been investing in new infrastructure to accommodate population growth, such as public housing, and future energy needs, such as the Powering Australia plan to create jobs and reduce energy bills by diversifying with renewable energy sources.

Activity 2.15.1

Thrills and skills in economics 1.

Data analysis and interpretation

Using Figure 2.15.2, explain the relationship between the 2020 event and employment levels. What does this tell you about the connection between economic disruptions and the labour market? Support your answer with specific evidence from the graph.

Critical thinking and cause-and-effect analysis

Stable GDP growth does not automatically mean stable tax revenue growth. Using evidence from the text about the 2021 tax revenue spike and the Stage 3 tax cuts, explain why this statement is true. What factors can cause tax revenue to fluctuate even when GDP is stable?

Application

Imagine you are advising a state government that has just received a significant increase in tax revenue due to economic growth. Using the infrastructure example provided of Sydney Metro, create a justified recommendation for how the government should allocate these funds. Consider both immediate needs and long-term economic benefits in your answer.

Analysis of economic relationships

The text describes two ways that increased employment leads to higher government revenue. Create a flowchart or diagram that shows the relationship between economic growth, employment, household income, government revenue, through both income tax and GST. Include a specific example for each step.

Evaluation and future thinking Australia’s public investment grew from 3.1% of GDP (early 2000s) to 4.1% of GDP (2022), partly to fund renewable energy projects like the Powering Australia plan. Evaluate whether this is a good use of economic growth revenue. Consider at least two advantages and one potential challenge of this investment strategy.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

146

Chapter 2 The economic environment

Activity 2.15.2 Do economics

Watch If You’re Listening: Argentina and Australia once had eerily similar economies. How did one end up with 100% inflation?, available at the following link: https://cambridge.edu.au/redirect/11703. After watching the video, answer the following questions. Remember: in what year did Argentina and Australia have similar economies?

Understand: why did Australia’s inflation reach 25% in 1951?

Apply: how would Artie Fadden’s tax strategy work in Argentina today?

Apply: what consumer behaviours emerge when people expect continuing high inflation?

SA PA M P G L ES E

Analyse: how did Perón’s wage increases without productivity growth cause inflation?

Analyse: compare Australia’s 1951 tax response with Argentina’s spending response.

Evaluate: was Artie Fadden’s unpopular tax increase justified? Support your position.

Evaluate: could Argentina have avoided its crisis by copying Australia’s approach?

Create: design an economic recovery plan using lessons from both countries.

10.

Writing prompt: explain how Australia’s decision to raise taxes in the 1950s helped reduce inflation and support long-term economic growth. Effective reading

Economic knowledge

Using the context

Data response success

➜

Figure 2.15.5 Flow diagram showing the elements needed to achieve success in answering a data response question in economics

Review 2.15 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

How does economic growth create a cycle of increased government revenue through employment? Why doesn’t stable GDP growth guarantee stable tax revenue growth? Explain how infrastructure investment from economic growth creates further economic expansion. What does Australia’s public investment increase from 3.1% to 4.1% of GDP indicate about government priorities?

Thinking, researching and communicating 1. 2.

Analyse how economic growth in Australia can affect people’s daily lives. Investigate a current issue, such as rising interest rates or government spending, and explain your findings using economic terms. Examine the link between economic growth and improvements in employment, health and education. Research a recent example and explain how these changes impact communities.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.16 What do governments target to strengthen an economy?

2.16

147

What do governments target to strengthen an economy? Success criteria

In this lesson, you will learn about the three main economic objectives that governments target to create a strong economy.

❏ I can identify and explain three major government economic objectives. ❏ I can analyse how government policies affect economic outcomes and quality of life.

SA PA M P G L ES E

Learning intention

Starter activity

This lesson is titled “What do governments target to strengthen an economy?” 1.

Copy Table 2.16.1 into your workbook. Read each of the column headings and think about how you could answer each of them when reflecting on this lesson’s focus.

Table 2.16.1 Reflecting on your knowledge What I know

What I want to know

What I learned

How I will learn more

What makes a good life?

To be happy and flourish you need to have your basic needs met, such as:

• access to good healthcare through • •

Medicare good education through schooling and beyond safe roads and transport networks so you can go to work or school and meet up with friends and family.

➜

Figure 2.16.1 A good education is one facet of a good life. All these services and infrastructures depend on government policy, which is driven by people’s expectations of governments. What makes a good life drives a strong economy, which can provide you with everything you need to prosper and flourish. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 2.16 Appositives

Chapter 2 The economic environment

Government policy and everyday life Economics shapes policy decisions that affect billions of lives across the globe. In managing an economy, governments decide on policies that influence everyday life in many ways. In Australia, if you have a job, your pay may be influenced by the minimum wage. Under the Fair Work Act 2009, the Fair Work Commission appoints a panel to review minimum wages in modern awards each year. It considers factors such as inflation, cost of living, the needs of low-paid workers, gender equality, national economic performance and workforce participation. These decisions are about more than money. They affect people’s quality of life as well as outcomes such as efficiency and equity (fairness) for all Australians. Those decisions by the Fair Work Commission directly influence what you get paid and the standard of living that income can unlock for you. Government policy has farreaching effects on efficiency and equity for the people it governs.

SA PA M P G L ES E

148

Why this matters in a democracy

In a democracy, you have a say in what governments decide to do. You need to understand and learn about what makes an economy strong so you can ask the right questions about things that impact your quality of life. Some of the questions you might be asking could include:

• Should higher education be free? • Should the minimum wage be higher? • Should child care be subsidised? • Should public transport be free in peak times?

Think of more questions that you would like to ask about changes that could improve your quality of life.

Analyse this

When you analyse an event, situation or a proposal, you have to look at its components and the relationship between them. Analysis starts by considering the knock-on effects. Can you think about and write down some of the possible knock-on effects of the following?

• University education becomes free for all Australian citizens. • The National Minimum Wage is set at $1500 a week. • Child care is made free for all households with one income. • Concert promoters need to pay all public transport costs for commuters attending their events.

Analysis relies on a clear chain of reasoning. Use the three following sentence starters when analysing the impact of these policy changes and their knock-on effects. There’s an example in Table 2.16.2 to help you. 1. This is because … 2. This leads to … 3. As a consequence … Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.16 What do governments target to strengthen an economy?

Table 2.16.2 How to show a clear chain of reasoning Policy change

Knock-on effect Analysis

The government University education becomes will overspend. free for all Australian citizens.

This is because the government budget is limited. This leads to cuts in other areas. As a consequence, school funding may be slashed, affecting students’ access to good education.

SA PA M P G L ES E

The questions you ask about what makes a good life help governments manage the economy. They could even create better outcomes for everyone. However, you need to analyse them to understand if they will benefit you and a small group of people or if everyone becomes better off in the long term. Policies that create efficient and equitable outcomes will not make everyone happier or better off, but they should potentially be able to improve most people’s quality of life, if not today, then in the future. The government focuses on a range of economic objectives that can flow into our everyday lives to improve our standard of living. They are the big ideas behind a strong economy that give people the opportunity to live a good life. They include:

• good relationships with other countries • a clean and safe environment • a safety net for when things don’t go as you • •

had planned sustainable economic growth price stability and full employment.

➜

Figure 2.16.2 Sustainable economic growth is one objective a From these broader targets flow all the other government will consider decisions and policies that create a cohesive, just and equitable society. But remember, the policies that aim for these targets can have unintended consequences, so you need to be on your guard and use your powers of analysis to determine if they will really help you make a good life for yourself and the people around you.

The economic objectives of governments

Governments choose a range of policy goals that will sometimes change over time. Three areas that economists describe as the major objectives are: 1. economic growth that is distributed fairly and is not significantly harmful to our environment 2. price stability, which stops inflation eroding living standards 3. full employment of all resources, including land, capital, enterprise and labour. The following section reviews these main objectives of economic policy. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

149

150

Chapter 2 The economic environment

Economic growth Earlier on in this chapter, you learned why economic growth was important in an economy: because it increases a country’s standard of living, improves people’s job prospects and contributes to improved infrastructure and services. Measured by the percentage increase in real gross domestic product (GDP), it directly contributes to the general prosperity of households and businesses as it means there are more resources to fund key contributors to our wellbeing, such as healthcare, education and infrastructure programs.

Efficiency and equity

SA PA M P G L ES E

When analysing policies where governments focus on economic growth and wellbeing in managing the economy, we need to also consider the efficiency and equity outcomes. The economic management of an economy should generally aim to provide for those who are vulnerable because of economic or social circumstances, such as people unable to find work, people with disabilities or those suffering the after-effects of a natural disaster. When governments prioritise economic growth, the policies it chooses to implement should ensure that the outcomes are fairly distributed across the economy. Specific policies such as the National Disability Insurance Scheme (NDIS) have been established to address inequality and distribute the benefits from economic growth more equitably across society.

Economic growth and the environment

➜

Figure 2.16.3 Depression Bread Line sculpture from 1999 by George Segal of men in a bread line during the Great Depression, at the Franklin D. Roosevelt Memorial, Washington D.C. The quote at the George Segal Depression Bread Line sculpture is: “The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little.” This quote is from Franklin D. Roosevelt’s second inaugural address in 1937. fiscal policy a government’s plan for deciding how much money to borrow and to collect in taxes, and how best to spend it, in order to influence the level of economic activity

Another key consideration in establishing economic growth as an economic objective is recognising its impact on the natural and built environment. Environmental objectives can also be legislated and informed by national and international agreements such as the Global Plastics Treaty and the Paris Agreement. With the growing realisation of impacts on climate change, ecologically sustainable development has become an important goal for governments.

Fiscal policy

Governments use their annual budget to target programs and policies that will grow the economy. Economists refer to this as fiscal policy.

Price stability Inflation is an increase in the general level of prices of goods and services in the economy, indicated by the Consumer Price Index (CPI). In Australia, the CPI is calculated by the Australian Bureau of Statistics (ABS) and published monthly. The ABS collects prices from a wide range of sources, such as retailers, supermarkets, department stores and websites, that reflect average household spending patterns. It provides a good indication of the overall movement in the prices of consumer goods Final • Cambridge & Assessment Khair,of et living al 2026 for • 978-1-009-78780-2 andpages services and University reflectsPress changes in the©cost Australians. • (03) 8671 1400

2.16 What do governments target to strengthen an economy?

151

Monetary policy Price stability refers to maintaining a low and stable inflation rate. In Australia, the Reserve Bank aims to keep consumer price inflation between 2% and 3%. The Reserve Bank is responsible for monetary policy in Australia, independent of the government, and sets the target for the national official interest rate. This official interest rate, also known as the cash rate, influences how banks and other financial institutions set their interest rates for savings and loans, which then influences general economic activity. Monetary policy helps smooth out the ups and downs of the business cycle. The video at the following link is a useful overview on the role of the Reserve Bank: https://cambridge.edu.au/redirect/12167.

SA PA M P G L ES E

Tightening monetary policy aims to dampen inflation by raising interest rates. Higher interest rates mean that borrowing money is more expensive, but they reward savings. This slows economic activity as less money is being spent in the economy, which impacts the circular flow. Conversely, loosening monetary policy involves lowering the cash rate, which stimulates economic activity by increasing people’s spending power, fuelling the recovery of the economy. Inflation can be caused by too much money chasing too few goods (demand-pull) or increases in the costs of production (cost-push). Governments also have to manage people’s inflationary expectations because if people expect prices to rise, they will act to avoid paying inflated prices by buying now or demanding a wage increase to guard against future price increases. Inflation can also be passed on by higher import prices, which flow through the economy. The global pandemic caused disruptions in the supply chain, or cost-push inflation, making inflation volatile during that time and adding to the uncertainty for the nation. Australia’s inflation target

To achieve an inflation rate of 2–3%

Inflation

Time ➜

Figure 2.16.4 The Reserve Bank of Australia uses an inflation targeting framework to guide its cash rate decisions to keep consumer price inflation between 2% and 3%.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Source: Reserve Bank of Australia, 2025.

monetary policy actions taken by a government to control the amount of money in an economy and how easily available it is; for example, by changing the interest rate

152

Chapter 2 The economic environment

Governments focus on price stability as inflation can erode many gains from economic growth. Price stability:

• creates certainty about future costs so that households and businesses can make • •

economic decisions confidently conserves the real value of income and wealth supports a stable exchange rate so that Australia maintains its international competitiveness for its exports, such as coal and iron ore.

Full employment

SA PA M P G L ES E

Full employment refers to using the full capacity of an economy to produce and satisfy the needs and wants of its people to increase their living standards. It involves utilising all of an economy’s resources or factors of production: land, labour, capital and enterprise. In managing the economy, governments will usually focus on the employment of labour, especially its productivity, or how much an individual can create or produce. Full employment does not mean that there is no unemployment, it means that just about everyone who wants a job has a job. A growing economy is a changing economy, and some unemployment will exist as people change jobs, retrain or leave the workforce.

Why full employment matters

➜

Figure 2.16.5 The gig economy is now a very common part of modern life, but it can undermine people’s long-term financial security.

microeconomic policies government actions that affect individual businesses or industries

macroeconomic policies government actions that affect the whole economy, such as policies that affect inflation and employment

If unemployment is too high, then households’ consumption will fall as income decreases, which then will impact economic activity and move the economy into a recession. Minimising the adverse effects of unemployment is an important focus for governments.

Psychological scarring from being unemployed affects people’s confidence, and they become pessimistic and uncertain about their future employment prospects. People cannot flourish or live a good life when they feel displaced and are not in employment, education or training of their own choosing. The gig economy and more insecure work contracts also undermine people’s long-term financial security, especially for younger generations. People with complex needs who may not have the necessary skills and training may end up in less productive employment or longer periods of unemployment.

Policies for full employment Government policies aimed at full employment use targeted or microeconomic policies, such as fee-free TAFE courses in New South Wales for those aged 17–24 to train, retrain or upskill in building and construction. They also use broader and more far-ranging macroeconomic policies, such as providing cost-of-living support and long-term reforms in areas such as energy, skills and aged care. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.16 What do governments target to strengthen an economy?

Review 2.16 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

153

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Identify the three main economic objectives that governments focus on. Identify what the Reserve Bank of Australia targets for inflation rates. Explain why full employment doesn’t mean zero unemployment in the economy. Describe how the Fair Work Commission determines minimum wage increases annually.

Thinking, researching and communicating

Analyse why governments prioritise price stability as an economic objective. Research one current Australian Government policy targeting economic growth or employment. Explain how the three economic objectives connect to create a good life. Hint: one important way of explaining the effect of a government policy is to use diagrams. In your response to this question, include diagrams of supply and demand. Not only will they save you time, but they will also show your level of economic understanding and that you can clearly illustrate the analytical point you are making. Figure 2.16.6 is an example you could use.

SA PA M P G L ES E 1.

2. 3.

Price level

AD2

AD1

Real output

➜

Figure 2.16.6 Demand-pull inflation arises when the total demand for goods and services (i.e. aggregate demand) increases to exceed the supply of goods and services (i.e. aggregate supply) that can be sustainably produced. The excess demand puts upward pressure on prices across a broad range of goods and services and ultimately leads to an increase in inflation – that is, it “pulls” inflation higher. Source: Reserve Bank of Australia, 2025.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

154

Chapter 2 The economic environment

2.17

What are public goods and services and how does the government provide them? Success criteria

In this lesson, you will learn about the reasons for and methods of government intervention in the Australian economy.

❏ I can explain the key characteristics of public goods. ❏ I can identify and describe three main methods of government intervention in markets. ❏ I can analyse both positive and negative examples of government intervention.

SA PA M P G L ES E

Learning intention

Starter activity Generation gap

Referring to Figure 2.17.1, answer the following questions.

Unemployment rate by age group

15–24

25–64

Percentage (%)

0 1980

1990

2000 Year

2010

2020

➜

Figure 2.17.1 Unemployment rate by age group from 1980 to 2020. Note: shaded bars indicate recessions and pandemics. Source: ABS, Reserve Bank of Australia, 2022.

History tells us that recessions can have “scarring eﬀects” on job market outcomes of young people for up to a decade after the event, with the Global Financial Crisis being a clear example. Source: e61 Institute, “The effect of the COVID-19 recession on the youth labour market in Australia”, 1 July 2022, p. 2. 1. 2. 3. 4.

Which age group, 15–24 years old or 25–64 years old, experiences higher unemployment rates during economic downturns? Which economic objective is failing when youth unemployment rises? Why might young people be hit hardest during economic crises? How might high youth unemployment today affect Australia’s future economic growth? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.17 What are public goods and services and how does the government provide them?

155

Are markets moral?

SA PA M P G L ES E

Market systems can shape positive values as individuals in business need to pay attention to what people need and want to improve their lives. Markets reward self-interested behaviour by businesses, especially when they are honest, cooperative, thrifty and responsible. Let us go back to Adam Smith. He said that the butcher, the brewer and the baker provide goods not from the goodness of their hearts “but from the regard to their own self-interest” (Wealth of Nations, 1776, Book I, Chapter II). Selfinterest is not the same as selfishness. Self-interest often creates positive outcomes for others. When you develop skills, build businesses or maintain your wellbeing, you are better able to contribute to your community and support those you care about. Selfishness is a narrow self-regard that disregards or actively harms others. In economics, Adam Smith’s famous “invisible hand” concept suggests that individuals pursuing rational self-interest can benefit society overall. This assumes that people operate within ethical frameworks and consider broader consequences, not pure selfishness. These two examples show how self-interested behaviour can be channelled into socially beneficial behaviour.

• Andrew “Twiggy” Forrest, the Fortescue Metals Group founder, has pledged to give

•

away most of his wealth as part of the Giving Pledge. His Minderoo Foundation focuses on areas such as ocean conservation, modern slavery elimination, and Indigenous empowerment. He’s also invested heavily in positioning Australia as a renewable green energy leader. Canva co-founder Melanie Perkins has built one of Australia’s most successful tech companies, valued at over $40 billion, while maintaining a strong commitment to social good. Perkins has pledged to give away the majority of her wealth through the Giving Pledge. Canva Education provides free design tools to schools globally, democratising creative education.

Market systems can provide strong incentives, through the profit motive, that encourage ethical behaviour. While markets have expanded virtues, there are also some vices that governments need to protect against so that people and the environment are not harmed. This lesson is about understanding why governments intervene in the economy and how they do that.

The role of government

Markets that are competitive and well-functioning can deliver the greatest good to the greatest number of people. In the background are important government regulations and requirements that set standards for safety and consumer welfare, including penalties for discriminating by race, religion, gender and age. Without government intervention, market failure may be more common. Well-designed government policies can limit market failure by organising and regulating markets. In 2025, the Australian Competition and Consumer Commission (ACCC) issued a recall for coloured sand products found to contain asbestos, a highly toxic product that could be potentially harmful if you breathed in the deadly fibres. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 2.17 Creating topic sentences

156

Chapter 2 The economic environment

SA PA M P G L ES E

➜

Figure 2.17.2 In 2025, when the Australian Competition and Consumer Commission (ACCC) issued a recall for coloured sand products found to contain asbestos, schools around Australia closed as they cleaned up.

Without government intervention regulating safety standards, businesses may have not withdrawn the product immediately as they may not have recognised the danger or understood the consequences for their consumers. Governments, through agencies such as the ACCC and NSW Fair Trading, intervene and protect consumers not only through setting mandatory standards and product recalls but also through price monitoring in essential services such as petrol, electricity and telecommunications.

Public goods

public goods goods or services provided by the government that everyone can use

non-excludable people cannot be stopped from using the good, even if they don’t pay non-rival one person using the good does not stop others from using it too

free rider problem when people benefit from a good or service without paying for it merit goods goods or services that are good for people and society, like education and healthcare

Governments also provide goods and services where markets cannot ensure fair access regardless of income, such as the Great Barrier Reef Marine Park Authority for natural resource conservation. These are called public goods. Public goods have two key characteristics that are disincentives for markets to provide access. They are:

• non-excludable, which means it becomes impossible or prohibitively expensive to •

prevent anyone from using the good non-rival because one person’s consumption of the good does not reduce the quantity or quality available for others.

When you are learning from your teacher, you are not diminishing what others can learn in the same way that the air you breathe does not mean someone else breathes less than you. These characteristics create what economists call the free rider problem, where rational individuals have incentives to avoid paying for goods they can access anyway, leading to under-provision if left to private markets alone. Australia’s national defence is a public good, as military protection cannot exclude any resident within the country’s borders, and defending one person does not reduce the level of protection available to others. Street lighting provides another excellent example, illuminating public spaces for everyone regardless of whether they have contributed to the cost, while one person’s use of the light does not diminish its availability for others walking the same street. Public parks and nature reserves like Kakadu National Park offer recreational and environmental benefits that are freely accessible to all visitors, with the additional advantage that preserving natural heritage and biodiversity creates positive effects for the entire community and future generations.

Merit goods The government also provides merit goods. Merit goods and services are provided by the government based on social values rather than market failure, ensuring universal access regardless of ability to pay. Public education creates positive externalities like informed citizenship and reduced crime, while Medicare promotes both individual health and broader social benefits through disease prevention and workforce health.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.17 What are public goods and services and how does the government provide them?

157

Public libraries democratise access to information and technology, particularly helping disadvantaged communities while strengthening social cohesion through literacy and lifelong learning opportunities.

Natural monopoly

SA PA M P G L ES E

Some infrastructure services work best when there is only one provider, which economists call a natural monopoly. This is a situation where having multiple competing companies would be wasteful and inefficient. For example, imagine having three different companies each building their own set of water pipes to every house, or multiple electricity companies stringing separate powerlines down the same street. Roads demonstrate this principle clearly: building competing highway networks would waste enormous amounts of land and money, while each new road actually makes the whole transport system more valuable for everyone. Because these essential services are too important for daily life and economic activity to risk unreliable provision, and because competition does not work well in these cases, government often steps in to ensure that everyone has access to reliable, affordable infrastructure.

How governments intervene in the market

Australian state and federal governments attempt to balance free market principles with consumer protection, ensuring that markets work fairly while preventing exploitation of consumers who may lack information or bargaining power. They do this through laws, agencies and policies that shape costs and benefits that change or influence the decisions of households and businesses in the market. However, government intervention sometimes fails if poorly designed. The Home Insulation Program (HIP), commonly known as the “Pink Batts Scheme”, operated from 2009 to 2010 as part of the Rudd government’s response to the global financial crisis. The program aimed to provide free insulation to 2.2 million Australian homes to stimulate the economy and improve energy efficiency but resulted in the deaths of four young workers aged 16–25 years, over 200 house fires, widespread fraud, and ultimately cost around $2.8 billion before being abruptly terminated. In a Royal Commission, it was found that the government prioritised speed over safety, rushing implementation without proper training requirements, adequate oversight or sufficient risk assessment of an unregulated industry using inexperienced workers. Government intervention, like the market, has limitations too. Three areas where governments intervene include taxes, superannuation and subsidies.

Taxes There is an ecosystem of taxes in Australia that touch almost every aspect of your life. Whether you are earning, spending, owning property, driving a car or running a business, there is likely a tax designed specifically for that activity. The bulk of government revenue comes from two main sources that most people encounter regularly. They are income taxes and consumption taxes. Income taxes capture money as you earn it through personal income tax, company tax and the Medicare levy – essentially taxing your capacity to generate wealth. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

natural monopoly when one business can supply a good or service more cheaply than many businesses, such as electricity networks

158

Chapter 2 The economic environment

If the budget were $100 ... This is where the money comes from: Tobacco $1.50

$0.85 Beer and spirits

Petrol, diesel and $3.60 other fuels

$0.50 Visa application

Other $12.15

$48.30

Income tax (PAYG)

SA PA M P G L ES E

GST $12.40

In Australia, the federal government collects a Pay As You Go (PAYG) tax where employers automatically deduct tax from each pay and send it directly to the Australian Taxation Office (ATO). Australia’s PAYG system is progressive, meaning the tax rate increases as your income increases – the more you earn, the higher percentage of tax you pay. In 2025–26, there is a tax-free threshold of $18,200, which ensures that everyone can earn a basic amount without paying any income tax, providing essential protection for the lowest earners.

Company tax $20.65

➜

Consumption taxes are collected at the point of sale when you spend your earnings. The Goods Figure 2.17.3 Most of the government’s revenue comes from PAYG tax. This chart and Services Tax (GST) of 10% from 2024–25 shows income tax was nearly 50% of total revenue for that year. Source: Treasury, 2024–25. is applied on most purchases, plus additional excise taxes on specific items like fuel, alcohol and tobacco. The GST is regressive, meaning it takes progressive (tax) a larger proportion of income from low-income earners than from high-income earners, a tax where people with higher incomes even though everyone pays the same 10% rate on most goods and services. This dual pay a higher approach of income and consumption taxes ensures that the government collects revenue percentage both when money flows into your pocket and when it flows back out again. regressive (tax) a tax where people with lower incomes pay a higher percentage of their income

Superannuation

Superannuation provides retirement income. In 1992, the Australian federal government introduced the Superannuation Guarantee Levy (SGL) with a mandatory 3% contribution rate, requiring employers to make contributions into a super fund on their employees’ behalf. In 2025, that contribution increased to 12%, locked up until people retire or turn 65 and can access it. There is around $4.2 trillion of members’ money under management in superannuation in Australia, making it 1.5 times the size of the Australian economy, with forecasts that it will grow to twice the size of the Australian economy in the late 2020s. Australia has a population of just 8% of the United States, yet it has access to the megamoney of superannuation. Australia currently spends around 2.3% of its GDP on the Age Pension, while most nations in the Organisation for Economic Co-operation and Development (OECD) spend around 9% of their GDP. Even with its ageing population and health needs, Australia’s percentage of GDP spent on the Age Pension is predicted to fall to 2%. The compulsory super system finances a range of investments, including 21% of the share trading on the Australian Securities Exchange, nearly one-third of bank short-term debt securities and over one-quarter of equity issued by domestic banks.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.17 What are public goods and services and how does the government provide them?

159

Super funds have a long-term investment plan but are still subject to global financial shocks such as the COVID-19 pandemic, which caused a dip in values for retirees. Australian real wages (that is, what you can buy, not the face value of the money) have not increased over the last decade. Some economists argue that is because the SGL forces employers to pay more superannuation and they cannot afford a wage rise. There are other factors involved as governments balance economic growth, interest rates, inflation and migration, but some economists maintain that workers bear most of the burden for superannuation in the long term. For governments, however, the megamoney of superfunds means that they do not need to pay as much for the Age Pension and they can use those savings to fund other public goods and infrastructure.

SA PA M P G L ES E

Subsidies

A subsidy is a reverse or negative tax. Instead of taking money from individuals and businesses, it is a government payment made to a specific group, such as parents for child care or fossil fuel producers for the Fuel Tax Credit Scheme. Governments use subsidies strategically to encourage production and consumption of goods and services they consider socially beneficial or economically important, such as:

• supporting renewable energy development • making education more affordable • helping struggling industries maintain employment.

This intervention shifts both supply and demand curves in the subsidised market. Producers can afford to supply more at each price level because the government covers part of their costs, while consumers demand more because the effective price they pay is lower. The result is increased market activity at a lower consumer price, though the true economic cost includes both the market price and the government expenditure funded by taxpayers. While subsidies can achieve policy goals like improving access to essential services or supporting emerging industries, they can also create market distortions, encourage inefficiency and prove expensive to maintain over time.

Review 2.17

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Identify the two key characteristics of public goods. Explain the difference between self-interest and selfishness. Describe how Australia’s PAYG income tax system works. Explain why natural monopolies require government intervention.

Thinking, researching and communicating 1. 2. 3.

Explain why the GST is regressive while income tax is progressive. Research an example of government intervention failure other than the Pink Batts Scheme. Evaluate whether government intervention improves or hinders market efficiency. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 2 The economic environment

Investigation: the invisible help economy podcast

2.18

Learning intentions

Success criteria

In this project, you will:

❏ I can research and present information about unpaid work using reliable sources and data. ❏ I can suggest practical solutions to better recognise unpaid work and explain why they would help the economy.

• investigate how unpaid domestic,

community and care work contributes economic value to Australian society • analyse why this work is not included in GDP • evaluate policy solutions using economic reasoning.

SA PA M P G L ES E

160

Your challenge

Did you know there’s a hidden economy in Australia worth $688 billion? It’s called the “invisible help economy”, and it runs on unpaid work – things like teenagers helping siblings with homework, volunteers coaching sports, and neighbours stepping up during emergencies. Without it, communities would struggle to function! Become economic investigators and uncover the secrets of this invisible help economy. Why is such a massive contribution not counted in Australia’s official economy? Who benefits, and who misses out?

Starting your research: understanding what is happening Read Leonora Risse’s research that puts a dollar value on what unpaid labour is worth to the economy: https://cambridge.edu.au/redirect/11704.

➜

Figure 2.18.1 Unpaid labour calculator

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.18 Investigation: the invisible help economy podcast

Your task Create a podcast documentary that blows the lid off this mystery!

• Investigate the types of unpaid work happening around you. • Interview people in your community, such as volunteers, carers and community • •

organisers, to gather their stories. Analyse why this work matters and why it is ignored in official statistics. Produce a podcast that tells the story in a way that grabs attention. Make it engaging, surprising and thought-provoking.

SA PA M P G L ES E

Your podcast will bring economic concepts to life through real voices, and it might even change how people think about what truly counts as valuable work in our society. Your final portfolio of work will include:

1. Interview recordings/transcripts with economic analysis 2. Completed podcast episode 3. Policy recommendation with economic justification 4. Reflection on the community connections made.

Task 1: mapping the invisible help economy

Consider your local community, and identify unpaid workers around you. They might include:

• local sports club volunteers (coaches, canteen workers, groundskeepers) • community group organisers (church groups, cultural associations, neighbourhood • • •

watch) school volunteers (P&C members, reading helpers, excursion assistants) young carers or students with caring responsibilities local business owners who volunteer time to community causes.

Compile a list of 10 people who complete unpaid work, estimating the number of hours per week for each person. Then, calculate potential economic value using basic hourly rates. Copy the table below to help with your research. People completing unpaid work

Estimated number of hours per week

Potential economic value

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

161

Chapter 2 The economic environment

Task 2: investigating the invisible help economy Preparing for and conducting the interviews Working in pairs: 1. Select one group from your list to focus on for your research. 2. Develop 6–8 questions for the interview. Make sure they explore the economic impact of the person’s unpaid work.

Sample questions framework 1. How many hours per week do you spend on this unpaid work?

Data collection focus Ensure that you gather specific information about:

3. How would your community change if volunteers stopped doing this work?

• time commitments and scheduling • skills required and training provided • economic costs if work was paid • community impact if work

4. Should this work be recognised differently by government or society?

• personal motivations and rewards.

SA PA M P G L ES E

162

2. What would it cost to pay someone to do this work?

disappeared

3. Practise how you will ask questions and record answers (try using your phone or a voice recorder). 4. Conduct the interview (in person, on the phone, or video call). Get permission to record and take clear detailed notes. 5. Research the economic value of the interviewee’s work, using online wage data. Interviews could be conducted in a number of ways, including:

• on-site community visits – students visit local organisations during lesson time • school-based community hub – invite community volunteers to school for student •

interviews digital community connections – for schools with limited access to community groups.

Task 3: podcast planning and production Plan your podcast

First, decide what style your podcast will take. You could create a news report that investigates “The $688 Billion Story”, using an investigative journalism approach. Another option is an interview feature, where you highlight one inspiring story from a community volunteer. If you enjoy discussion, you might choose a debate format and explore the question: should unpaid work be counted in Australia’s economy? Or you could make a documentary-style podcast that follows a day in the life of community volunteers.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.18 Investigation: the invisible help economy podcast

Develop your script Your podcast should be 3–5 minutes long – just enough time to tell a clear and interesting story. You need to start strong, so begin with an opening hook that uses the $688 billion statistic to grab attention. Include at least two real voices from the community, like short interviews or quotes, to make it authentic. Connect these personal stories to the bigger picture by explaining how they relate to Australia’s economy, such as opportunity cost or how unpaid work affects GDP. Finish with a clear call to action or a policy recommendation that encourages your audience to think or act.

Produce your podcast

SA PA M P G L ES E

Make sure your podcast sounds professional and polished, ready to share with the school community. To create your podcast, you will need to use an audio editing program or simple phone app. Start by recording clear sound in a quiet space and speak slowly and clearly. Add an introduction and ending with music to make your podcast sound polished. Make sure your interview clips fit smoothly into the episode so the story flows naturally.

➜

Figure 2.18.2 If you have access to a microphone, that would make your podcast sound even better!

Taking it further: community impact forum

• Create a short podcast and present a live two-minute elevator pitch to share • •

your findings. Use your research and interviews to suggest one practical solution to a community problem. Discuss ways you could advocate for policy changes with local government. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

163

164

Chapter 2 The economic environment

2.19

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

• Auto‑marked questions for fast feedback and fun practice • Self‑assessment tools to track your progress, review answers (if enabled by the teacher), and flag questions for extra help • Downloadable worksheets for class or homework revision

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about the economic environment? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Scarcity and the economic problem Opportunity cost

Circular flow model

Interdependence of economic sectors

The price mechanism and the interaction of supply and demand in a market The importance of economic growth in an economy Economic growth indicators

The effects of economic growth in Australia Economic objectives of governments

The reasons for government intervention in the economy

The methods for government intervention in the economy

Visible thinking routine Connect, extend, challenge

This exercise in visible thinking asks you to think about how the concepts in this chapter have expanded your understanding of how the economy works. Using the question prompts, write a paragraph explaining what you previously knew about the topic and connecting what you now understand about the topic to your own experiences. 1.

Connect: how does what you learned in this chapter connect to what you already knew about the economy?

Extend: what new ideas have extended or deepened your thinking?

Challenge: what is still challenging or confusing? What questions do you now have?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

2.19 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Define the term economic thinking.

Describe the difference between a need and a want.

Outline the meaning of opportunity cost.

Define the term marginal benefit.

Describe the law of demand.

Summarise the law of supply.

Define market equilibrium.

List the five sectors shown in the circular flow model.

Identify two indicators of economic growth.

10.

Describe what public goods are and how they are provided by the government.

SA PA M P G L ES E

➜

Figure 2.19.1 When demand is high and supply is limited, goods such as event tickets sell out quickly. This real-world example illustrates the law of demand and the role of scarcity in everyday decision-making.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

• student and class activity reports • a test generator to create custom assessments • built‑in feedback tools • editable downloadable support material • a downloadable and printable “Writing focus” workbook for this chapter. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

165

166

Chapter 2 The economic environment

DOC

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Download single paragraph model

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Explain the relationship between scarcity and opportunity cost, using a personal example to demonstrate how these concepts affect everyday decision‑making. Model answer: Scarcity and opportunity cost are closely connected because limited resources mean individuals must make choices that involve giving up one option to pursue another. Scarcity occurs when there are not enough resources, such as time or money, to satisfy all wants, so people must choose between alternatives. These choices create opportunity cost, which is the value of the next best option a person gives up when making a decision. This relationship can be seen in everyday situations where limited money or time forces people to prioritise one activity or purchase over another, showing how scarcity directly leads to opportunity cost. For example, if someone chooses to spend their money on movie tickets, they may have to give up buying a new phone accessory, making that forgone item their opportunity cost. In this way, scarcity influences every decision by requiring individuals to weigh the opportunity cost of the options they cannot choose.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Linking sentence: reconnects to the topic sentence using the language of the question

Explain: clarify, define and describe Evidence: specific, relevant evidence to support arguments

Examples: provide credibility and illustrate the argument

Structured-response questions

DOC

Compare and contrast positive and negative incentives, providing examples of how each type influences consumer behaviour in different market situations.

Analyse how supply and demand factors affect the price of concert tickets for a popular artist, considering both market forces and potential external influences.

Evaluate the effectiveness of using GDP as a measure of economic progress, discussing both its benefits and limitations in reflecting the wellbeing of society.

Extended-response questions 1.

Download extendedresponse worksheet

Using examples from the chapter and your own research, discuss this statement: “Economic thinking provides valuable insights for understanding both personal choices and broader issues in society.” Download the worksheet from the Interactive Textbook for a scaffold to help you plan your extended response.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

The business environment

Lessons Setting the scene: how did Jahin Tanvir become Australia’s youngest CEO?

3.2

What goals do businesses aim to achieve?

3.3

What types of businesses are there and what makes them different?

3.4

How do inputs, processes and outputs keep a business running?

3.5

How does hiring the right people impact on business success?

3.6

How does competition shape business decisions?

3.7

How do businesses create and maintain a competitive edge?

3.8

What happens to businesses during booms and recessions?

3.9

Why do ethics and social responsibility matter in business?

3.10

How can we measure if a business is successful?

3.11

Skills focus: how can we measure if a business is successful?

3.12

What makes an entrepreneur successful?

3.13

How can an entrepreneurial mindset benefit you?

3.14

How do entrepreneurs contribute to society?

3.15

Case study: what makes Australia’s greatest entrepreneurs successful?

3.16

Investigation: how to create a business plan for a cafe or food outlet

3.17

Chapter review

SA PA M P G L ES E

3.1

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

168

Chapter 3 The business environment

3.1

Setting the scene: how did Jahin Tanvir become Australia’s youngest CEO? Success criteria

In this lesson, you will learn about the potential challenges and rewards of becoming an entrepreneur and business owner.

❏ I feel inspired and excited to learn more about becoming an entrepreneur and business owner.

SA PA M P G L ES E

Learning intention

Jahin Tanvir

➜

Video 3.1.1 Setting the scene: the business environment

➜

Raised in Western Sydney, Jahin Tanvir has dedicated his leadership to empowering young people to understand that their postcode does not limit their potential. As CEO of the Australian School of Entrepreneurship, he has built Australia’s largest youth-led social enterprise, delivering life skills, entrepreneurship and financial literacy programs to more than 274,000 young Australians, many from low-income, migrant or regional communities.

Figure 3.1.1 Jahin Tanvir

Never in a million years!

Writing focus 3.1 Question words

When asked if he imagined that he would one day be one of Australia’s youngest CEOs, Jahin exclaims, “Never in a million years!” He explains that as a typical Western Sydney kid from a migrant family, he’d been taught that education was the only pathway to success. Initially he followed that path, studying a healthcare degree, even though he knew it didn’t match his personality.

The side hustle becomes the main gig

sole trader a type of legal business structure where there is only one owner who has all financial liability and decision-making responsibility for the business entrepreneur a person who takes a risk with their money, time and skills to create and manage their own business

At university, he decided he needed to earn money, and so he started a small sole trader business offering public speaking skills to children. Everyone he spoke to said entrepreneurship was too risky, especially since most of the country was shut down in 2020 during the COVID-19 pandemic. He persevered, landing his first customer at the age of 20 years old. From there, his business grew successful enough that he sold it and he eventually moved on to be CEO of the Australian School of Entrepreneurship at the age of 21.

Failure leads to success Jahin has messed up more times than he can count. A flight delay led to his failing on a promise to a customer. This, however, was a turning point in how he saw failure, and he promised himself that he would not make the same mistake twice. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.1 Setting the scene: how did Jahin Tanvir become Australia’s youngest CEO?

He learned to think strategically; the flight may have been delayed, but he needed to be better and do better – perhaps flying in earlier next time, or running his entrepreneurship courses via Zoom as a backup. “A kick up the behind is sometimes all we need to do better!” Jahin says.

Consistency is the key Jahin credits his success to consistency. He recommends that if young people want to be successful entrepreneurs, they need to be consistent in what they do and how they do it. “Consistency is what makes you an overnight success, with overnight really being more like 10 years.”

SA PA M P G L ES E

Don’t chase money

Jahin’s advice: “Happiness is fleeting, money is fleeting. Impact is fulfilment.” Initially, Jahin was chasing happiness and money, but found himself unfulfilled. “Instead, chase impact. How are you making the world a better place?”

Skills needed for success

When quizzed on the skills needed to succeed, Jahin responds, “Communication and public speaking skills will get your ideas across. Emotional intelligence to deal with the situations that do not go right. And be able to use AI and tech literacy proficiently. However, most importantly know your values, and be firm in them, because you will find them challenged at times by the unethical.”

Where to start?

Jahin recommends young entrepreneurs “start small and simple, perhaps a lemonade stand, a clothing item, anything really. It’s about building up your skills which are transferable for the next bigger and better thing. And get yourself a mentor, or several, people you look up to and trust in their experience to bounce ideas off and to guide you. And then you be a mentor to others eventually to give back. But ultimately, don’t be afraid to take risks. Build your wings and your momentum and you’ll find your place in the world.”

Activity 3.1.1 1.

In your workbook, create a KWL table such as the one below.

List all the things you already know about business

List all the things you want to know about business

At the end of studying this chapter, what have you learned about running a business?

Compare your responses with your classmates. How are your responses similar? How are your responses different?

Explain three pieces of advice from Jahin Tanvir that you think are most important to you. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

169

170

Chapter 3 The business environment

3.2

What goals do businesses aim to achieve? Success criteria

In this lesson, you will learn about the importance of setting goals as a business owner and the impact these goals will have on decisions in your business.

❏ I can explain different types of business goals and their impact on other decisions that a business owner will make.

SA PA M P G L ES E

Learning intention

Starter activity 1.

What are your goals for the end of this term? Do they require assistance from other people? Share your ideas with a partner and then with the class.

Failing to plan is planning to fail

Writing focus 3.2 Transitional phrases

business plan a document created by the business owners or managers setting out a business’s goals and how to achieve them

competition the level of rivalry from other businesses offering similar products

All good businesses will have a business plan that begins with a goal. A business plan is a document created by the business owners or managers setting out a business’s goals and how to achieve them. Setting goals allows businesses to:

• plan for the future by staying focused on what they intend to achieve • motivate employees • allows for measurement of how well a business is performing compared with its goals. For example, you may plan to achieve a mark of 90% in Commerce, but only achieve 80%. You can then evaluate reasons why you did not achieve this goal, such as not enough focus in class or on personal study. A business owner or manager will continually evaluate their performance against their goals to improve. Business goals are not fixed and will change over time as the business grows and finds new opportunities. Many of these goals will be based on external factors to the business, such as new technologies, customer trends, economic change or increased competition.

Business goals

Non-financial

Profit

Social responsibility

Sales

Environmental

Market share

Service and quality expectations

Employment and production ➜

A business will often have financial goals and nonfinancial goals.

Financial

Figure 3.2.1 Types of business goals

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.2 What goals do businesses aim to achieve?

171

Examples of financial goals are outlined in Table 3.2.1. Table 3.2.1 Financial goals Financial goal

Description

Profit

This is the sales minus the expenses. For example, a cafe may make $200,000 in sales and achieve a profit of $100,000 after paying all its expenses, such as wages, rent, electricity, water and the cost of the food made. A business may aim to sell more of its goods to consumers. For example, it may open more stores or sell items online, or even create more types of products to entice new customers.

SA PA M P G L ES E

Sales

Market share

Employment and production

This is the percentage of sales made compared with a business’s competitors. For example, the toy market may be worth $100 million in Australia, and a toy business may sell $1 million of goods in Australia, meaning it has 1% of the market. The business may want to double its sales in the following year, meaning it wants to increase its sales to 2%, or $2 million. A business may want to create additional jobs to allow for more items to be made. For example, a business that produces chairs may hire more workers to allow it to make more chairs.

Generally, non-financial goals aim to improve the reputation of the business. Examples of non-financial goals are outlined in Table 3.2.2. Table 3.2.2 Non-financial goals Non-financial goal

Description

Social

A business may decide to improve its community – for example, by sponsoring the local children’s soccer team. It may also decide to only buy from ethical suppliers that do not use child or slave labour.

Environmental

Where a business may look at ways that it can improve how it treats the environment. It may change its packaging to recyclable materials, or source items for its production from local suppliers rather than from overseas. This would reduce how much pollution is created when the items are transported.

Service and quality expectations

A business may decide to improve the quality of its goods or services to improve the value it offers to customers. For example, a restaurant or hotel may decide to reward its staff if the business achieves a mention in an online review.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

sales the number of units of product sold by a business expenses the costs or money spent to run a business, organisation, or personal life, such as things like rent, bills, salaries, supplies and other necessary items or services market share the percentage of total sales in a market that a company or brand has employment the jobs created by a business production the part of the business that focuses on making the good or service social goals targets set by a business to improve the community and how the business serves it labour the human effort, both physical and mental, that goes into producing goods and services environmental goals targets set by a business to improve the environment around it and how it impacts the environment materials the goods used to produce a good or service by a business

172

Chapter 3 The business environment

How do business goals influence the management of a business? Once a business has decided on its business goals, it will make many more decisions that allow it to achieve its goals. Areas in which a business may make decisions include:

• Pricing: a business may decide to increase the price of items it offers to increase its profit money you have left after you pay for all your expenses

•

SA PA M P G L ES E

target market the market segments that a business focuses on when promoting and selling its goods and services

profit. For example, a cafe may continue to price its coffee at $4, but instead make each menu item $2 more expensive while keeping costs the same to increase its profit. Marketing strategies: a business must decide who its ideal customer or target market is and then promote its products to this group. For example, a fashion store may decide to use famous influencers as its models, and use social media advertising such as TikTok and Instagram to make customers aware of its products. Hiring: a business will make decisions on who it hires based on what is required to achieve its goals. For example, a shoe shop may wish to improve its quality and service expectations, and will hire people who have excellent customer service and a bubbly personality. Sourcing of inputs: a cafe may decide to only use coffee that is certified as being fair trade, meaning workers are paid a fair wage for their work in picking and processing coffee beans, as part of its social goals. Distribution of products: a business may decide to expand its product range and how its products may be purchased. For example, a soft drink manufacturer may decide to create new flavours of soft drink and sell them in more places, such as supermarkets, petrol stations, vending machines and online. By doing so, the business hopes to increase its sales. New product design: a business may decide to develop new products to increase its product range and increase sales. This may result in the business having to hire more people. Customer service: a business may offer after-sales service to increase its market share compared with its competitors. For example, a car dealership may offer purchasers free car servicing for the first three years to entice more people to buy its cars.

inputs materials used in the production of a business’s goods or services; inputs may be tangible or intangible

• • •

• •

Case study 3.2.1: Pepe Saya Butter

In 2009, Pierre Issa discovered that high-end restaurants in Australia could not source locally made, high-quality butter, despite Australia having many dairy cows. Pierre, a dairy dessert maker at the time, decided to turn to butter churning, and Pepe Saya was born. Pierre began selling his cultured, high-quality butter to these restaurants and word spread to other restaurants.

➜

Pierre’s first step was to do research to understand the market before developing his first business plan. His vision was to create butter and related products that are nutritious and delicious, selling one product at a time.

Figure 3.2.2 Pepe Saya Butter

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.2 What goals do businesses aim to achieve?

173

Since then, he has not veered from this vision, with his goals working only towards it. His goals have included:

• creating new products in his range, such as puff pastry and ghee • expanding to new markets, including the United States and the Middle East • making his products more environmentally sustainable by producing them locally to the market he is selling to, where possible.

➜

SA PA M P G L ES E

Pierre meets with his team every year to set goals for the following year, as well as to revise more longterm goals. He says, “Often these goals do not work out, but you have to test it out to see if it works. For every 20 goals, you will have maybe one success, but that one win will make up for all the losses. You just need to remain focused on your vision, and the money will come. Money should not be your goal, delivering a great product is, with the money being a by-product of the mindset and culture in the business, which is focused on quality.”

Figure 3.2.3 Pepe Saya Butter products

Review 3.2

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Outline why it is important for a business to set goals. Define a business plan and explain how a business may use it when setting goals. Identify external factors that may impact on a business’s goals. Explain how and why a business’s goals may change over time.

Thinking, researching and communicating 1.

2. 3.

Using a real-world business example, explain how environmental goals may be important to a business. Using a real-world business example, explain how social goals may be important to a business. Using a real-world business example, explain how a business can use a marketing campaign to increase its sales. Refer to Case study 3.2.1: Pepe Saya Butter. Extract one major lesson from this case study and outline how you might use this if you were to start your own business.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

174

Chapter 3 The business environment

3.3

What types of businesses are there and what makes them different?

Learning intention

Success criteria

In this lesson, you will learn about the features of different business legal structures.

❏ I can discuss the advantages and disadvantages of each type of business.

SA PA M P G L ES E

Starter activity Think, pair, share 1.

2. 3.

Think: identify your favourite places to shop. Pair: share your list with a partner and discuss any similarities or differences in your interests. Share: share your discussion with the class.

Why does legal structure matter?

Writing focus 3.3 Transitional phrases

When starting a business, the legal structure you select has a direct impact on how your business operates. It is important that you understand these legal structures so you can make an informed decision as an entrepreneur. It will affect:

• how and by whom decisions are made • how much tax is paid • who is responsible if things go wrong • how much money can be raised to start or grow the business • how profits are shared between owners. Types of businesses

As a business owner, choosing the right legal structure is essential, as each one has advantages and disadvantages. Types of businesses

Sole traders

Partnerships

Private companies

Public companies

Cooperatives

➜

Figure 3.3.1 Types of businesses

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Types of businesses

3.3 What types of businesses are there and what makes them different? Sole traders

Partnerships

Private companies

Public companies

175

Cooperatives

Sole trader The most common and easiest type of business to own and run in Australia is a sole trader as it involves only one person starting the business. Sole traders have few or no employees apart from the owner.

SA PA M P G L ES E

To start a small business, all you need to do is register your business for an Australian Business Number (ABN). You may also want to operate under a business name other than your own name. This can be done easily by visiting the government website Business Registration Service (https://cambridge.edu.au/redirect/12024) and paying a small fee to register the business name with the Australian Securities and Investments Commission (ASIC).

unlimited liability the owner of a business being personally responsible for business debts, therefore carrying a high level of personal financial risk for the business

Examples of sole traders may include an online influencer who promotes other businesses’ products, a small mechanic shop or a hairdresser.

Some of the advantages and disadvantages of running a small business are outlined in Figure 3.3.2.

Easy and inexpensive to set up and operate

Owner receives all the profits made by the business The owner has full control over all decisions

Unlimited liability (the owner is personally responsible for business debts), so there is a high level of personal financial risk Smaller amount of money available to start the business or to expand No one to share the workload with Owner is taxed at the individual level of tax depending on how much you earn

Disadvantages

Advantages

➜

Figure 3.3.2 Advantages and disadvantages of running a small business

Case study 3.3.1: Elevate Education Consultancy

Being a sole trader means Zaynab can focus on delivering the best service to schools and teachers

After years working in teaching and leadership, Zaynab Salim found herself exhausted and decided to start her own business coaching and mentoring teachers in education. This led to her starting her sole trader business Elevate Education Consultancy.

Figure 3.3.3 Zaynab Salim and her business Elevate Education Consultancy ➜

The sole trader structure allowed her to start quickly without unnecessary barriers, so she could focus on supporting teachers rather than navigating complex set-up requirements. It gave her the ability to act quickly and with flexibility designing professional learning, mentoring early career teachers, or supporting leadership with capacity building. This means her decisions can be made quickly, which is important when schools need responsive, personalised support. As a sole trader, she can adjust, refine and improve programs without waiting for approval from others.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

176

Chapter 3 The business environment

Zaynab needed a structure that didn’t add unnecessary layers of complexity. She found the set-up straightforward, and the ongoing paperwork manageable. This allows her to keep her focus on delivering high-quality coaching and mentoring. Registering for an ABN was quick and didn’t require complex documentation. She didn’t need to set up a board, comply with company regulations or manage the administrative load that comes with a partnership or company. Zaynab found the sole trader legal structure practical and affordable with a simple, low-cost set-up, meaning she could begin offering her services without feeling overwhelmed financially. If Zaynab’s business were to expand into larger contracts, employing additional coaches, or delivering broader programs, she would consider shifting to a private company structure to limit her liability and offer scalability by allowing her to raise additional funds through more shareholders.

SA PA M P G L ES E

For now, however, being a sole trader suitsTypes theof businesses size and nature of her work by allowing her to be authentic, flexible and aligned with the purpose that inspired her in the first place: supporting educators, reducing burnout and strengthening confidence in the teaching profession. Sole traders

private company a type of business legal structure that is a separate legal entity from its owners; the owners have limited liability, meaning that the private assets of owners are protected

Public companies

Cooperatives

A legal partnership is a type of business owned by 2 to 20 people who conduct a business and distribute income or losses between partners. A partnership is generally made up of owners who contribute their skills, labour and money to starting and running a business. Most partnerships have unlimited liability, meaning that all owners are at risk if something goes wrong in the business. It is recommended that a partnership agreement be established when starting a partnership. This document outlines how profits, labour and decisions are to be shared by the owners. A partnership is registered by visiting the government website Business Registration Service and paying a small fee to register the business name with ASIC. Examples of businesses that may use a legal partnership include a small law firm, a family business or a medical practice such as a doctors’ surgery. Figure 3.3.4 outlines some of the advantages and disadvantages of operating a partnership. ➜

shareholder a person who owns shares in a company and therefore gets part of the company profits and the right to vote on how the company is run

Private companies

Partnership

Figure 3.3.4 Advantages and disadvantages of operating a partnership

Shared responsibility over the business

Unlimited liability (the owners are personally responsible for business debts), so there is a high level of personal financial risk

Greater access to money to start and grow the business

Disagreements over money, decisions and workload

Greater range of skills between owners

Shared decision-making Profits are shared Taxes may be higher as profits are taxed as personal income rather than at company tax rates.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Disadvantages

Advantages

partnership a type of legal business structure that has between 2 and 20 owners (partners) who conduct a business

Partnerships

3.3 What types of businesses are there and what makes them different?

177

Case study 3.3.2: Terry and Philomena Terry and Philomena are siblings who had been operating their fruit shop in the suburbs for many years as a legal partnership. Being siblings, they did not create a partnership agreement, as they believed it was not necessary as they had always been close.

SA PA M P G L ES E

➜

Terry was later diagnosed with a medical condition that limited his ability to work. This placed a larger responsibility on Philomena to continue operating the business on her own. Terry also drew out large amounts of money from the business bank account to pay for his medical bills. Due to the unlimited Figure 3.3.5 Terry and Philomena liability of a partnership, this impacted on the business financially. Eventually, Philomena was forced to close the business as she was faced with many expenses that she could not cover through the profits generated by the business. Types of businesses

Philomena wished that she had insisted on a partnership agreement when they had first started the business, or a private company legal structure to protect the rights of each sibling in the event of situations such as this. Sole traders

Partnerships

Private companies

Public companies

Cooperatives

Private company

A private company is a separate legal entity to its owners, so it is essentially like a separate person. The owners have limited liability, meaning their personal assets are protected from the actions of the company and limited to the value of their shares in the business. This limits their liability for the debts of the business.

assets something a business or individual owns

A private company is usually the next step after a sole trader or partnership has grown, and a business owner is looking to protect their individual interests or raise additional funds to grow the business. The owner(s) may invite up to 50 private shareholders, usually people they know, to invest in the business. Private companies are easy to recognise as they will have “Pty Ltd” at the end of their business name, which indicates that they have a proprietary limited company legal structure. This means that the owners are limited in their liability to the value of their investment in the business. Some of the advantages and disadvantages of using a private company structure are outlined in Figure 3.3.6.

Limited liability (owners are only liable for the amount they invest), meaning lower financial risk for owners Easier to raise money than sole traders/partnerships

Profits are to be shared Decision-making may include all owners of the business

More stability for long-term growth

More complex and expensive to set up

Usually a lower tax rate than individual tax rates

Greater accountability to government organisations such as ASIC, with strict reporting rules

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Disadvantages

Advantages

➜

Figure 3.3.6 Advantages and disadvantages of using a private company structure

178

Chapter 3 The business environment

To start a private company, you will need to visit the government website Business Registration Service and pay a fee of several hundred dollars to register the business name with ASIC. Types of businesses

Examples of a private company include a medium-sized construction company or a small chain of fast-food restaurants. Sole traders

Partnerships

Private companies

Public companies

Cooperatives

Public company A public company is a large business listed on the Australian Securities Exchange (ASX). The ASX is the marketplace responsible for selling shares to members of the public, who then become shareholders. Public companies are easy to recognise as they have “Ltd” at the end of their business name. This indicates that they have a limited company legal structure, meaning that the shareholders are limited in their liability to the value of their investment in the business.

SA PA M P G L ES E

public company a large business listed on the Australian Securities Exchange (ASX)

Examples of public companies in Australia include Woolworths Ltd and Qantas Ltd. Figure 3.3.7 outlines some of the advantages and disadvantages of a public company structure. ➜

Figure 3.3.7 Advantages and disadvantages of a public company structure

Limited liability for shareholders to the value of their investment in the business Can easily raise large amounts of money to fund expansion and growth Greater potential to make large profits

Types of businesses

Sole traders

Partnerships

Private companies

Public companies

Shareholders have little control over decisions Profits are to be shared by all owners to the value of their shareholding Expensive and complex to set up

Disadvantages

cooperative (co-op) a type of legal business structure that is owned by its members to serve their interests, with a focus on serving the needs of members and in doing so generating profits that are shared to improve the benefits they offer their members

A public company can have an unlimited number of shareholders, making it easier for money to be raised to pay for the growth and expansion of the business. Public companies must publish financial and other information about the business yearly, and they face greater scrutiny by government organisations such as ASIC, as legislated by the Corporations Act 2001 (Cth).

Advantages

Australian Securities Exchange (ASX) a marketplace where investors can purchase shares in listed companies, which list their shares in order to raise money and grow their businesses

Greater accountability to government organisations such as ASIC, with strict reporting rules

Cooperatives

Cooperatives A cooperative (co-op) is a type of legal entity that is owned by its members to serve their interests. There are many types of co-ops in Australia across many industries, including sporting clubs, in agriculture, banking (credit unions), retail and housing. Their focus is on serving the needs of their members, and in doing so they may generate profits that are shared to improve the benefits they offer their members. Co-ops focus on community benefit, with members having voting rights that allow the managers of the co-op to make decisions on their behalf. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.3 What types of businesses are there and what makes them different?

179

Some of the advantages and disadvantages of the cooperative structure are outlined in Figure 3.3.8.

Difficult to raise money and to get started

Can more easily achieve a shared purpose or protect a common interest

Decision-making can be slow

SA PA M P G L ES E

Profits shared by members or reinvested in the co-op to enable more services to be provided

Disadvantages

Limited liability by members

Advantages

➜

Figure 3.3.8 Advantages and disadvantages of the cooperative structure

Case study 3.3.3: dairy farm

➜

Dairy Farmers Milk Co-operative (DFMC) has over 200 members from more than 100 farms in Queensland, New South Wales, Victoria and South Australia. DFMC seeks to represent the interests of its members by providing expertise in finance and business management, and representing members by advocating for fairer prices for milk produced by individual farms. It does this by acting as a representative of their joint interest in selling their raw milk to producers of dairy products and retailers of milk. By having a cooperative represent their shared interests, member farms are more likely to achieve better profits on their milk.

Figure 3.3.9 Working on a dairy farm

Review 3.3

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Outline why selecting the right type of legal structure is important. Define limited liability. Explain the consequences of unlimited liability. Explain the importance of a partnership agreement for people wanting to go into partnership.

Thinking, researching and communicating 1. 2.

3. 4.

Compare the differences between a private and public company. Refer to Case study 3.3.1: Elevate Education Consultancy. Outline the reasons why Zaynab chose a sole trader legal structure for her business. Discuss reasons why a business may choose to become a private company over time. Justify choosing the legal structure of a public company for a business wanting to expand to overseas markets. Research a cooperative organisation in your area, such as a sports club or credit union. Explain how it serves its members.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

180

Chapter 3 The business environment

How do inputs, processes and outputs keep a business running?

3.4

Success criteria

In this lesson, you will learn about the importance of inputs, transformation processes and outputs in a business.

❏ I can identify inputs and outputs in the business process, and can explain how they interact with the transformation process.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Look at Figure 3.4.1 and think of a business you are interested in. What do you think is included in each step?

Writing focus 3.4 Developing sentences

All businesses produce a good or service that adds value to a consumer’s life. Each business will modify how and what it produces to create a competitive advantage, a point of difference that makes its product more appealing to consumers compared with other products. They do this by deciding the inputs in their production process, turning resources into goods or services that consumers will buy. This is known as the production process. Inputs

output the goods or services produced at the end of the production process

➜

process the steps taken to produce a good or service by a business

Process

Output

Figure 3.4.1 Business production steps

Inputs in the transformation process can be either tangible or intangible. Tangible inputs can be seen and touched, such as the raw ingredients or materials. Intangible inputs are things that you cannot necessarily see or touch but are essential in creating the product, such as machinery, human labour, research, money invested, heating or cooling energy, or water for cleaning. A business owner needs to understand all elements in the production process to make sure that the final product is produced with efficiency so that costs are minimised. Quality also needs to be ensured so that the final product offers value to the consumer. By understanding the relationship between the inputs, transformation process and outputs, a business is more likely to fulfil the needs of the consumer, leading to business success.

The importance of inputs Inputs are the resources a business uses to create its goods or services and can be tangible or intangible. If a business chooses high-quality inputs, it is more likely to produce high-quality products. Poor inputs often lead to poor-quality outputs, low customer satisfaction and higher costs, which make the product less appealing to customers. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.4 How do inputs, processes and outputs keep a business running?

The importance of the transformation process Turning inputs into outputs is known as the transformation process and includes both physical and non-physical processes. The transformation process is critical to the success of a business. Having good management will allow you to produce goods and services quickly and efficiently with little wastage, and consistently so that every product is of the same high standard. This in turn leads to a cost-effective production process. Capital This includes the equipment, machinery and technology used in making the product

Inputs

SA PA M P G L ES E

Materials These are the raw ingredients used to make products

Labour This is the human work that completes the required tasks to add value to the product

Information This is the knowledge and expertise in making the product, such as design, market research, and research and development

Time This is the use of time to produce the product as efficiently and effectively as possible to minimise costs

➜

Figure 3.4.2 Business production inputs

Case study 3.4.1: Claire’s Chairs Pty Ltd Claire’s Chairs Pty Ltd is a small family-run business located in a regional area of New South Wales. The business has 11 employees and produces high-quality chairs for offices, with a focus on ergonomics. Claire was previously a physiotherapist and saw that there were not enough locally made chairs that could be customised to the requirements of the customer.

➜

As the manager and owner, Claire ensures that all her inputs are of the highest quality, including the wood, fabric, sponge, polymer, and nuts and bolts that go into making the physical product. She also invests in her business by ensuring that her machinery is well maintained and precise. Her Figure 3.4.3 A workshop of a small business employees are well trained and skilled in their jobs, with investment in their continuous training and development. Although this may incur some cost to the business, it means that it is able to produce chairs that are more innovative, of higher quality, with minimal wastage, and at a faster speed so that Claire can meet the needs of her customers. Claire’s focus on quality through inputs and staff training has allowed her to reduce her production costs. Her chairs cost less to produce per chair this year than in previous years, meaning a greater profit margin (difference between the sale price and the cost price to produce it). This approach has allowed her business to be successful.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

181

182

Chapter 3 The business environment

The importance of outputs Outputs are the goods or services that customers receive at the end of the transformation process. It is essential that a business considers the customer experience in using its product as part of the process. If a customer is happy with the final product, they are more likely to purchase it again or share their experience with others they know or in an online review, which leads to an improvement in the reputation of the business. This allows a business to continue to increase the number of sales it makes and its competitive advantage. There are two types of outputs that a business could produce:

SA PA M P G L ES E

1. Goods – this includes physical items that are tangible, such as a chair, a laptop or clothing. 2. Services – this includes actions performed for customers, such as a haircut, a massage or a tutoring session.

Some businesses may offer an output that is a mixture of both a good and a service, where the customer may get a physical good and a service at the same time. For example, this may be a meal at a restaurant where a customer receives food to eat and also receives the service of food being delivered to their table, and plates cleared and cleaned afterwards on their behalf. Regardless of whether a business offers a good or a service, or a mixture of both, a successful output should always aim to meet the customer’s needs, be of good quality and be priced appropriately so that the customer feels they are receiving value for money.

Review 3.4 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Define inputs. Compare tangible and intangible inputs. Identify inputs in the production of a product such as ice-cream.

Thinking, researching and communicating 1.

2. 3.

4. 5. 6.

Explain what is likely to happen to an ice-cream manufacturer if it chooses to change its ingredients to lower-quality inputs. Justify the importance of having an effective and efficient transformation process. Refer to Case study 3.4.1: Claire’s Chairs Pty Ltd. Explain how investing in training employees impacted the transformation process for this business. Explain how an output can be both a good and a service. Explain why the transformation process is important in a business. A friend of yours decides to open up a new cafe in your area. Recommend three pieces of advice that you would give to your friend to help ensure that their transformation process is as cost-effective as possible. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.5 How does hiring the right people impact on business success?

3.5

183

How does hiring the right people impact on business success? Success criteria

In this lesson, you will learn about the process of recruiting and selecting staff, and how this can impact business performance.

❏ I can explain the process of recruitment and selecting staff, and how this will impact on business performance.

SA PA M P G L ES E

Learning intention

Starter activity 1.

2. 3.

Have you heard the saying “A business is only as good as the people that work there”. What do you think it means? How do you pick the right people to work in your business? Compare your responses with a partner.

Having the right people in the right jobs will mean that the customers are looked after, leading to a good business reputation, and that productivity is good, which will also affect the business’s reputation and overall success. So how does a business ensure that it has the right people? This largely comes from the recruitment and selection process – attracting the right people to apply for the job, and then choosing the best applicant for the job.

Writing focus 3.5 Developing sentences

Beyond hiring skilled people, businesses need to consider ways to encourage and motivate employees to continue working hard by providing incentives, rewards and training. Having and keeping motivated staff can give a business a competitive advantage, while poor hiring decisions can lead to serious consequences.

recruitment the process of attracting and then hiring people to work in a business

➜

Figure 3.5.1 A team of people working together in an office Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

184

Chapter 3 The business environment

The recruitment process Recruitment is the process of attracting people to apply for a job. A manager will use their skills and knowledge to decide on what recruitment strategies to use based on their knowledge and the type of applicant they want to attract. They do this by following the process of recruitment outlined below. 2. Develop the job description and job specification

1. Identify the need

3. Decide on the recruitment strategy

➜

Figure 3.5.2 The recruitment process

SA PA M P G L ES E

1. Identify the need

The first part of the recruitment process involves the business identifying that a need exists to hire an additional person. This may be because of increased demand on the business as a result of expansion geographically, new products joining the range offered by the business, or because more people are buying the existing goods or services being offered by the business.

job description a list of the tasks and responsibilities that an employee will be expected to perform as part of a job

job specification the skills, qualifications and experience required for a job

A business owner or manager will then need to see if the business can afford it by checking the anticipated cost against the forecast budget. Will they need someone who works part-time (less than 38 hours a week) or full-time (38 hours a week or more)? Will the new employee be a permanent employee earning a salary (fixed amount every week) or a casual employee earning wages (only paid for the hours they work depending on the needs of the business)?

2. Develop the job description and job specification

The next step is developing the job description, which lists the tasks and responsibilities the new employee will be expected to perform. The job specification will outline the skills, qualifications and experience required for the position. These can include soft skills (non-technical skills or attributes, such as teamwork, problem-solving or communication skills) and courses they have completed.

TJ’s Burgers – Nyngan store Casual shop assistant required for a position up to 10 hours a week on the weekend. Job description

Job specification

Duties include:

Skills needed:

Must have:

❏ Serving customers ❏ Light cleaning, including wiping down tables ❏ Operating chip fryer

❏ Excellent communication ❏ Be a team player ❏ Work well under pressure

❏ Hand washing certificate ❏ Previous customer experience

➜

Figure 3.5.3 An example job advertisement

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.5 How does hiring the right people impact on business success?

3. Decide on your recruitment strategy A business owner or manager will need to decide on the recruitment strategy to promote the position. They may consider:

• Will they promote it to existing employees internally (usually for a higher-level job), or • • •

SA PA M P G L ES E

•

will they promote it externally outside the business? Will they use a recruitment service to help them to find the right person? Will they offer a referral fee to existing employees if they recommend someone? Will they advertise it on job boards such as Seek, Indeed or LinkedIn, or via other modes such as a physical poster at the front of the business, or word of mouth by people sharing the news that they are hiring? What will the applicants have to provide? This may include a résumé, a cover letter or a sample of their work.

Depending on the strategy used, some options will attract different types of potential employees (e.g. a poster in the window of a takeaway may attract teenagers that purchase from the shop) and have different costs (a recruitment company may be expensive to use and cost thousands of dollars).

The selection process

The selection process involves the manager or owner deciding who they want and what they will do to find the right candidate based on the requirements of the business. They do this by following this process of selection. 1. Screening

2. Interviews

3. Assessments

4. Reference checks

➜

Figure 3.5.4 The selection process

1. Screening

Screening involves looking through the résumés, cover letters or questions asked as part of the application process and selecting the candidates that best meet the job descriptions and specifications to continue through the process. Some jobs may have hundreds of applicants, meaning that this can sometimes be a time-consuming task. This has led to some businesses using AI programs to sift through applications by embedding key words into the system to look for things such as particular qualifications, to reduce the number of applications that are actually looked at.

2. Interviews This part of the process involves the business owners or managers meeting with a few of the best applicants to ask them questions and assess how closely they match the job descriptions and specifications. This may involve a panel made up of several people from the business, such as the direct manager and the human resources manager, interview the applicant.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

185

Chapter 3 The business environment

Other types of interviews include an AI interview, where applicants are asked to record themselves responding to set questions, or a group interview, where several applicants attend the same interview and interviewers see how applicants respond to the questions in comparison with each other.

3. Assessments Sometimes, applicants may be required to undergo an assessment to assess their suitability for a position. This may involve producing a sample of their work, making a presentation, or completing a literacy or numeracy test. They may be asked to undertake a psychometric test, which is a (usually online) test that measures an applicant’s skills, such as problem-solving and how open they are to teamwork, as well as other personality traits. For example, if a position includes working with customers, it may measure how confident they are interacting with people they are not familiar with.

SA PA M P G L ES E

186

4. Reference checks

The final stage of the screening process may be a reference check. This involves calling referees provided by the applicant, often past employers, to ask key questions about the applicant in relation to the requirements of the business. The prospective employer may ask about the work ethic of the person (e.g. did they complete their job to the best of their ability, were they generally on time and did they have good attendance).

Case study 3.5.1: Early Riser Cafe The owner of Early Riser Cafe was struggling with poor online customer reviews, with many reviews indicating that their coffee was not good despite using good coffee beans.

➜

The owner decided to advertise for a new barista by placing an advertisement in their front window. To ensure that they were hiring the right person, they asked that the applicant had previously completed a barista course or had experience as a barista.

Figure 3.5.5 A cafe needs good coffee beans and a good barista.

As part of the interview process, they asked applicants to produce a variety of coffee types, including a cappuccino and a piccolo, as an assessment of their coffee-making ability. This assessment, along with an interview asking the candidate questions relating to their attitude to customer service, allowed them to decide which of their candidates was most suitable for the position.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.5 How does hiring the right people impact on business success?

187

The benefits of recruiting and selecting the right people Hiring skilled people is essential to the success of a business. Having a good recruitment and selection process will allow a business to find the right person with the right skills and qualifications for the business. Table 3.5.1 Benefits of good recruitment Explanation

Increased productivity

Skilled workers complete tasks faster and more accurately, reducing errors and improving output.

Improved business reputation

Knowledgeable and confident staff may offer improved customer service, leading to repeat purchases and positive online reviews and word-of-mouth advertising.

Greater innovation and problem-solving

New employees will often bring fresh ideas and a good attitude, and work to improve systems by suggesting better ways of doing things.

Reduced training and supervision costs

Having skilled employees means less money and time spent on training.

Improved workplace culture

Employees with good communication, teamwork and leadership skills help build a positive working environment.

Reduced turnover

Hiring the right person means that they are more likely to remain in the position for longer, reducing the need to hire again.

SA PA M P G L ES E

Benefits

Review 3.5

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Outline reasons why hiring the right people is important to a business. Define the recruitment process. Define the selection process. Distinguish between the job description and the job specification. Identify types of assessments that businesses may ask candidates to complete as part of the selection process.

Thinking, researching and communicating 1.

Construct three questions you would ask at Early Riser Cafe in Case study 3.5.1 to determine the suitability of a candidate for the barista job. Construct three questions you would ask as part of a reference check for the barista position at Early Riser Cafe to determine the suitability of a candidate. Justify the importance of recruiting and selecting the right people for a business.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

188

Chapter 3 The business environment

3.6

How does competition shape business decisions?

Learning intention

Success criteria

In this lesson, you will learn about how competition affects business decisions.

❏ I can explain the factors within a business that are impacted by competition.

SA PA M P G L ES E

Starter activity Think, pair, share 1.

2. 3.

Think: a popular restaurant is considering expanding its business to a new area, and it is looking at two different options: one is quiet with no competitors; the other one is busy with a few existing restaurants. Which area should the restaurant choose, and why? Pair: compare your choice with a partner and discuss. Are their reasons similar to yours? Share: share your discussion with the class.

Is competition good or bad?

Writing focus 3.6 Appositives

Competition forces businesses to work harder to attract and please consumers. Competition leads to better-quality products and customer service, fairer prices and more variety to choose from. For a business, however, competition can be a challenge. It means you need to work harder to convince consumers to buy your product, have better customer service, and have better-quality, more innovative products to choose from. Competition will influence many decisions made by business owners, including the prices they charge, the products they offer and the quality of customer service.

What is competition?

Competition is when businesses offering similar products compete to attract customers. One of the goals of a business may be to increase its market share, which is the percentage of total sales in the entire market. Think of the market like a pizza, with each business in the market competing to have a greater share. The result? More variety, more innovation, better quality, better customer service and more advertising.

➜

Figure 3.6.1 Some of the many fast-food outlets in Australia competing for greater market share, meaning customers have greater variety to choose from Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.6 How does competition shape business decisions?

189

How is competition regulated in Australia? Competition has a positive influence on how businesses operate in the economy. However, some businesses may try to limit the influence of competition in their industry and that is why government agencies and laws are important. The Competition and Consumer Act 2010 is the main law dealing with anti-competitive behaviour by businesses. The Australian Competition and Consumer Commission (ACCC) oversees all matters that may damage competition, including the following:

• Mergers between large organisations that may limit competition: for example,

SA PA M P G L ES E

if Woolworths and Coles in Australia were to merge, they would need to seek permission from the ACCC as it would be foreseeable that their merger would result in less competition in grocery prices. Collusion between businesses in setting prices: for example, two businesses are not allowed to work together to set the same, higher prices for the same product; if they did, customers would have no choice but to buy it at that inflated price no matter which business they decide to buy from. Imposing a minimum resale price: for example, businesses that manufacture a good cannot force another business that sells their good to sell it at a set price.

• •

Without adequate competition in a market, there is likely to be higher prices for goods and services, fewer choices, and less innovative products. It is essential that all industries and sectors continue to have many businesses that sell similar products.

Case study 3.6.1: Google Asia Pacific

In December 2025, Google Asia Pacific was fined $55 million by the Federal Court as the result of a case brought by the ACCC. Google engaged in anti-competitive behaviour by reaching an agreement with Telstra and Optus to pre-install Google Search on all Android mobile phones. Its actions could be foreseen to be limiting competition in the search engine market, which led to the ACCC bringing the action to court.

➜

Figure 3.6.2 Google was fined $55 million in December 2025 for engaging in anti-competitive behaviour.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

merger when two businesses come together and become one larger organisation collusion when businesses work together to illegally set prices for goods and services, ultimately making them more expensive for all consumers

190

Chapter 3 The business environment

How competition affects businesses It is inevitable that a business will be impacted by competition, and it is up to the business owner and managers to make decisions about what to do to ensure that they maintain a competitive advantage. Competition has positive impacts for consumers, as outlined around the six broad areas shown in Figure 3.6.3.

Prices A business may lower its prices to attract and keep customers

Product quality A business will need to improve the quality of its products to differentiate itself from competitors Impact on customers: better-quality products

Customer service A business will need to improve its customer service to ensure repeat purchases, positive word-of-mouth promotion and online reviews

Innovation A business will need to be more creative in what it produces so that its products stand out and are more innovative

Impact on customers: better customer service during and after purchases

Impact on customers: a greater choice of products with more innovative features

Marketing and promotion

Efficiency

A business will need to be more innovative in its marketing and promotion

A business must make its product more efficiently by being quicker and using fewer resources than other businesses

SA PA M P G L ES E

Impact on customers: lower prices and better value

Impact on customers: more targeted and innovative promotions that better inform and attract customers

Impact on customers: reduced prices and quicker service

➜

Figure 3.6.3 How competition affects businesses and customers

Case study 3.6.2: Rashays

Putting customers at the heart of everything to achieve a competitive advantage

capital (business) money invested into starting and growing the business

When young couple Rami and Shannon Ykmour opened their first store in 1998 with just $200 at the age of 22, people thought they were crazy! The odds were stacked against them – they were young, had limited capital, and were entering a highly competitive industry. Their original store was in Liverpool, New South Wales. By using a franchising model, their brand now extends to over 30 locations throughout New South Wales, Queensland, Victoria and the Australian Capital Territory. Competition has been a constant consideration in their decision-making, as the entrepreneurs grow their business and meet the diverse needs of their customers. To do this, they had to understand their customer base and what they want, listening to them and carefully watching trends. Starting in Western Sydney, they noticed that the

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.6 How does competition shape business decisions?

191

growing Muslim population was underserved despite growing buying power, with a desire for welcoming hospitality and excellent customer service. Rashays delivered by providing a halal-certified menu and a casual dining experience that felt different to other restaurants in the area. This strategic decision differentiated Rashays from its competitors and built customer loyalty. Product quality and an innovative range of items have also been an important part of Rashays’ success. Rashays’ menu includes a wide variety of menu items beyond the pizza and pasta it started off with. Rashays’ menu now includes:

SA PA M P G L ES E

• premium beef ribs and steaks • gourmet burgers • extensive dessert options • kids’ menus and party packages • function menus for celebrations.

While this has allowed Rashays to remain ahead of its competitors, the business is having to consider the impacts on its pricing and efficiency. The expansive menu adds increasing complexity to its kitchen operations, increases its food costs, and creates the need for greater staff training and investment in new kitchen equipment. Despite this, Rashays’ owners are committed to placing customers at the heart of the business by giving them an experience that includes exceptional food quality and service, setting it apart from its competitors.

➜

Figure 3.6.4 From humble beginnings to long-term success, Rashays remains ahead of its competition.

Review 3.6

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define competition. Outline the positive aspects of competition for the customer. Outline the challenges that competition may cause a business. Explain why efficiency is important in achieving a competitive advantage.

Thinking, researching and communicating 1. 2.

Explain how laws and government organisations protect consumers in Australia. Research Rashays and compare it with other restaurants in your local area. How is it similar? How is it different? Refer to Case study 3.6.2 and extract five important lessons or pieces of advice that an entrepreneur could use to develop their own strategy to achieve a competitive advantage.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

192

Chapter 3 The business environment

3.7

How do businesses create and maintain a competitive edge? Success criteria

In this lesson, you will learn about the processes you will need to consider as an entrepreneur to maintain a competitive advantage.

❏ I can explain the process tools, such as a competitor analysis, market research, identifying your target market, and SWOT analysis, that are used by entrepreneurs to maintain a competitive advantage.

SA PA M P G L ES E

Learning intention

Starter activity

Think of a product you regularly purchase, or a store that you regularly buy from. 1.

Identify why you purchase from that shop. What makes it stand out compared with other stores?

Compare your response with a partner. Do you notice any similarities?

What tools are available to businesses to help them create and maintain a competitive advantage?

Writing focus 3.7 Appositives

In a world with limited money but unlimited wants, businesses must compete to attract customers to buy their products by developing a competitive advantage over businesses offering similar products. Think about a product you have purchased recently. Why did you choose this product over a similar product from another business? You may want to ask yourself how did the business’s product stand out to you?

• Did it offer greater value? • Was it less expensive? • Did the business offer you a unique product or service? • Did it offer better service? • Do you just like the business more because it is more ethical?

Business owners and managers must continually think about how they are going to stand out to consumers. This is called differentiation, and is a strategic approach that businesses use to emphasise the unique features of a product so consumers see them as different from similar businesses with similar products.

Competitor analysis One of the first things a business owner will do if they want to start a business is to conduct a competitor analysis. This is the process where they examine the business market to see what businesses with similar products are doing.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.7 How do businesses create and maintain a competitive edge?

193

This may include considering:

• what they offer • their branding • how much they achieve in sales • what marketing they undertake. This knowledge will let a business owner make informed decisions about how to differentiate their product from competitors’ products. A business owner will need to continually review what their competitors are doing to ensure that they achieve a competitive advantage.

SA PA M P G L ES E

Primary and secondary research

A business owner should regularly conduct research to ensure that they are meeting the needs of customers in their area. There are two main types of research:

1. Primary research: this includes conducting a survey or asking your customers direct questions relating to your business or product, such as what they like or dislike. This type of research is usually expensive and time-consuming but can specifically provide the answers needed by a business owner to make the right decisions. 2. Secondary research: this includes researching about customers by using freely available information, such as that provided by the government through the Australian Bureau of Statistics or other organisations. These organisations will give general information that may be useful to a business owner and is usually inexpensive. However, the information may not specifically answer the questions that a business owner might have.

Identify your target market

Depending on what stage of life you are in, your gender, and how you see yourself, you will find different things appealing and buy different things. People may also have different levels of education, incomes, types of jobs, and needs overall. The study of the features of a population is called demographics. For example, a teenage girl with a limited income will have different buying needs than a man that is 30 years older. This is why it is important that business owners be clear on who their target customer is so that they produce products that best suit that customer’s needs. For example, a clothing store may decide to sell expensive women’s clothing in a suburb where there are a lot of women aged 35+ with high incomes. By identifying and then meeting the needs of a target market, a business is more likely to achieve a competitive advantage.

Completing a SWOT analysis A business should conduct a review of their internal and external business environment so that they can brainstorm ways they can stand out from their competitors.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

primary research a type of research created specifically for what a business would like to know; this may include conducting a survey or asking your customers direct questions relating to your business or product, such as what they like or dislike secondary research a type of research that involves using readily available information to learn more about the business environment

194

Chapter 3 The business environment

This is called a SWOT analysis. They do this by identifying their strengths and weaknesses – these are things that the business can control. This includes things such as the products they sell, the location of their business, what resources they buy to make their products, who they have managing their business, and their business culture. A business will then do an analysis of their opportunities and threats – these are things they cannot control but must manage instead. This could include their competitors, changes to laws, the economy, changes to technology, and the likes and dislikes of society. By analysing their external environment, they will be able to make decisions that give their business a competitive advantage.

SA PA M P G L ES E

SWOT analysis a business process that involves a business owner or manager analysing the strengths, weaknesses, opportunities and threats affecting a business; this is used to make decisions on how to improve

S–Strengths

W–Weaknesses

O–Opportunities T–Threats

Things you have control over as a business owner

• Products • Location • Resources • Management • Business culture

Things you have no control over and can only manage

• Competition • The law • The economy • Technology • The likes and dislikes of society

➜

Figure 3.7.1 A business owner will need to complete a SWOT analysis to make informed decisions that consider their strengths, weaknesses, opportunities and threats.

Case study 3.7.1: Merindah’s cafe

➜

Merindah is in the process of opening a small cafe in Dubbo. She wants to stand out from her competitors and be successful. She decides to do some research so that she selects the right target market. She finds after researching on the Australian Bureau of Statistics website that there are a lot of young people in her town. She then conducts a survey of young people aged between 16 and 24 and finds a lot of them like matcha drinks, iced coffee and boba tea. As a result of her research, Merindah decides that her cafe should have a target market of young people, and that she should locate her cafe within walking distance of the high school, the skate park and the cinema – all places that Figure 3.7.2 Merindah designed her cafe to appeal to her target market. young people visit. She decides to design her cafe in colours and designs that young people find interesting and to have a menu that appeals to young people, including a variety of drinks and snacks such as chips, burgers and fried chicken. Merindah decides to complete a SWOT analysis of her business (see Figure 3.7.3).

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.7 How do businesses create and maintain a competitive edge?

Strengths (internal) – things I control

Weaknesses (internal) – things I control

• Business owner has many years of experience working in cafes

• Inexperienced staff

• Excellent location near schools, skate parks, cinemas and office buildings • A range of drinks and snacks that are appealing to the target market

• Coffee machine purchased is second-hand and may break down • Unknown to target market as it is a new cafe to the area • Cafe may be quiet during the day, as target market may be at school, university or work

• Ability to hire staff easily as lots of young people are looking for casual work

• Limited cash available if sales are not strong

SA PA M P G L ES E

• Good food suppliers that are reliable

Opportunities (external) – things I can only manage

Threats (external) – things I can only manage

• New government offices are opening across the street, meaning more people are likely to buy a coffee on the way to work, or buy lunch

• Cafe already open at end of street and well known to people in the area

• Mothers dropping off their children nearby may meet for a coffee

195

• Substitute products – young people may choose to buy bottled drinks from the local supermarket or eat at home • Economic conditions – a lot of people in the area have a limited income and are unlikely to spend it at a cafe

➜

Figure 3.7.3 The SWOT analysis completed by Merindah allows her to make informed decisions that consider her cafe’s strengths, weaknesses, opportunities and threats.

As a result of her SWOT analysis, Merindah decides to conduct further research into the workers in the new government offices as a second target market. From this research, she decides to promote her business by offering a coffee loyalty card, where for every nine coffees purchased, a tenth one is free. She also decides to offer a range of inexpensive healthy sandwiches and salads. This leads to an increase in sales for Merindah’s cafe and a competitive advantage over existing cafes in the area.

Case study 3.7.2: Pablo & Rusty’s

Delivering high-quality, sustainably sourced coffee allows Pablo & Rusty’s to achieve a competitive advantage

Pablo & Rusty’s Coffee Roasters began its journey back in 2003 with a small cafe in north Sydney started by entrepreneur Saxon Wright. Today, it is managed by CEO Abdullah Ramay, who has led the solid growth of the business. Pablo & Rusty’s now has over 70 employees, two cafes, a premises for roasting, and a wide range of coffee products that meet the needs of its various target markets, who all value quality coffee. Innovative products and processes

The business’s growth can be attributed to its understanding of the highly competitive coffee market, with a focus on sustainability and innovation in its products and processes. Pablo & Rusty’s products offer value with distinct and delicious flavour, and unique products with various flavour undertones and aromas to meet the tastes of its drinkers. It has coffee beans with chocolate undertones that linger, or hints of fruit that satisfy. Its quality-driven, ethically sourced beans are a result of listening to the market and analysing the direction of coffee trends, with over 90% of drinkers preferring their coffee with milk, and their younger drinkers preferring to drink their coffees cold over ice. The business’s understanding

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

196

Chapter 3 The business environment

of trends is a result of its research and quest to meet the needs of loyal customers. Pablo & Rusty’s regularly conducts primary research, organising blind tastings of its new products. Distinct branding allows for customer recognition

➜

SA PA M P G L ES E

Pablo & Rusty’s also ensures that its beans are value for money, using efficient technologies, reducing waste and ensuring that its products are produced at the lowest possible cost, without compromising on Figure 3.7.4 Pablo & Rusty’s products use distinctive branding. quality. Its products can now be found in supermarkets, are delivered to homes, and are found in cafes all over Australia. Pablo & Rusty’s branding reflects the business, providing a distinct, minimalist and elegant design. Sustainability

Pablo & Rusty’s is well known for its ethical stance and corporate social responsibility. It donates 1% of its revenue to organisations that improve the environment. It is also carbon neutral, ensuring that it does not impact the environment negatively in any way. Pablo & Rusty’s approach allows the business to balance profit and purpose to achieve a competitive advantage.

Review 3.7 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Define differentiation. Outline the importance of conducting a competitor analysis. Distinguish between primary and secondary research. Outline the importance of knowing your target market.

Thinking, researching and communicating 1. 2.

Explain how a SWOT analysis may be used by a business in your community. Research Pablo & Rusty’s by visiting its website. Examine its product range and describe how the business may be different from other coffee roasters. Research the ethical and sustainable stance that Pablo & Rusty’s has taken at the following link: https://cambridge.edu.au/redirect/11715. Explain how this may allow the business to achieve a competitive advantage.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.8 What happens to businesses during booms and recessions?

3.8

197

What happens to businesses during booms and recessions? Success criteria

In this lesson, you will learn about the important impact that the business cycle will have on a business.

❏ I can explain how booms and recessions impact on businesses.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Look at Figure 3.8.1. The business cycle has ups and downs, but the overall trend is going up. Why do you think that is?

The economy over time is getting stronger, with businesses growing, new jobs being created and consumers becoming richer. However, it is not a straight line going on an upwards trajectory; sometimes it slows, sometimes it drops and the economy struggles, and at other times it is booming. This is the business cycle. The business cycle

Expansion

Contraction

Expansion

Output

Peak

Trough

Time

➜

Figure 3.8.1 The business cycle is continually changing but generally on a growth trajectory. It is important for a business owner to understand what stage the economy is in so that they make informed decisions. It is important for business owners to understand what stage of the business cycle the economy is in, so that they can make informed decisions about what products to sell, how much to spend, whether to borrow, and if they need to increase or decrease the number of employees they have. Governments also have an important role to play in the business cycle through the decisions they make, and can impact on businesses through their spending and in their policies. By understanding the business cycle, a business owner will understand how interest rates, unemployment and business growth impact on their business.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 3.8 Creating topic sentences

198

Chapter 3 The business environment

What are the stages and features of the business cycle? The economic activity of a country changes over time. As shown in Figure 3.8.1, the business cycle has four main phases: 1. Boom: the economy is strong and growing quickly. 2. Contraction: growth begins to slow. 3. Trough: the economy shrinks and struggles. 4. Recovery: conditions improve and growth begins again. The cycle repeats over years. However, over time, despite the contractions and recessions, economic growth in countries like Australia continues upwards.

1. Boom

SA PA M P G L ES E

recession a period of economic decline when overall spending and business activity fall, often leading to slower growth and higher unemployment

A boom is a period of strong economic growth where businesses will invest in growing their business as new opportunities present themselves due to high levels of consumer spending. The characteristics of a boom include:

• low unemployment • high consumer confidence, with people feeling more confident to spend more on wants • increased spending by businesses and consumers • high business profits • more investment by businesses on machinery and creating new products and new stores • rising employee wages as businesses compete to hire new workers to meet increasing consumer demand.

These characteristics will impact positively on a business by increasing sales, providing new opportunities for expansion and growth, and making it possible to borrow money more easily to fund these. The negative impacts for a business may include increasing competition as businesses innovate their products to meet the demand, difficulty finding workers, and increasing costs such as for wages and to buy inputs such as materials and machinery, leading to inflation. Inflation is when things cost more over time, even when the item remains exactly the same. For example, lollies cost 20 cents during your grandparents’ time, but those same lollies would now cost you $3.

Case study 3.8.1: Jackson takes a risk

Jackson loves shoes, and he decided that now was the time to finally take the risk and open the shoe store he had always wanted. The economy was booming, with lots of consumer spending. This allowed him to offer more of a range to cater to people looking for specialty shoes that were more expensive.

➜

He found it easy to get a loan from the bank to pay for the new fit-out and decor of the store. However, he did not expect that it would be so hard to find employees Figure 3.8.2 Jackson in his shoe store to staff his business. In the end, he decided to pay his employees a little extra per hour to make sure that he could run the business. With things going well in the economy, his sales were strong, and Jackson is now considering opening a second store in another suburb. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.8 What happens to businesses during booms and recessions?

199

2. Contraction A contraction is when economic growth begins to slow, with a decrease in consumer confidence and the overall production of goods and services within an economy. It is characterised by:

• increasing unemployment • reduced spending by consumers and businesses • slowing business sales and profits. 3. Trough

SA PA M P G L ES E

A trough is the shrinking of economic growth, possibly leading to recession. A recession occurs when the economy slows significantly, with two consecutive quarters of below 0% economic growth. Some of the characteristics of a trough include:

• high unemployment • reduced spending as •

•

➜

•

households and businesses become careful about spending money decreased sales and profits by businesses Figure 3.8.3 The “Great Recession” of 2007–2009 was considered the most severe economic businesses making less and financial meltdown since the Great Depression. investment in opening new stores and creating new and innovative products falling or stable prices.

These characteristics will largely impact negatively on a business, with reduced sales, cutting of costs, including by reducing staff, and difficulty in borrowing money. Businesses may also be more likely to close down as they struggle to continue with reduced sales and profits.

4. Recovery

This is where conditions in an economy begin to improve, with increasing economic growth. This is characterised by:

• slowly increasing business and consumer spending • improving unemployment • businesses considering expansion of existing stores and products.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

200

Chapter 3 The business environment

Case study 3.8.2: COVID-19 booms and busts COVID-19 lockdowns in 2020 to 2021 had a big impact on the spending habits of Australians. Initially, things looked bleak, with many businesses forced to shut their doors, unable to make enough sales or earn a profit. Many retail businesses pivoted by offering a variation of their products or services, leading to huge profits. With so many people unable to leave their homes, many restaurant owners thought that their businesses would be shut down forever. However, many began offering home deliveries for the first time. This saw delivery services such as Uber Eats and DoorDash grow. People also started cooking more, and supermarkets such as Coles and Woolworths saw record profits.

SA PA M P G L ES E

Other industries that boomed were businesses that provided house renovation products, such as Bunnings, with many people choosing to renovate or redecorate. Home electronics also boomed, with companies such as JB Hi-Fi and Harvey Norman seeing an increase in sales as people purchased electronics such as laptops to entertain themselves or to work. Things were not so great for airlines, however, with many experiencing financial difficulties. Qantas was forced to lay off many of its staff, and Virgin Australia experienced severe difficulties and was almost forced to close completely.

Review 3.8 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Outline what the business cycle is. Outline what a recession is. Define inflation. Explain why employee wages may be higher during a boom.

Thinking, researching and communicating 1.

Refer to Case study 3.8.1: Jackson takes a risk. Analyse the features of a booming economy and how this impacted on Jackson. Research how businesses were affected by COVID-19 lockdowns. Summarise three examples of businesses that were positively affected, and three examples of businesses that were negatively affected. Refer to the information at the following link: https://cambridge.edu.au/redirect/11717. Explain why having a good understanding of the business cycle may be beneficial to the decision-making of a business owner.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.9 Why do ethics and social responsibility matter in business?

201

Why do ethics and social responsibility matter in business?

3.9

Success criteria

In this lesson, you will learn about the importance of ethical decision-making and corporate social responsibility to a business.

❏ I can explain what ethics and corporate social responsibility are and why they are so important to business success.

SA PA M P G L ES E

Learning intention

Starter activity

Look at Figure 3.9.1. When do you think a business owner should be asking these questions?

Are we being fair and honest?

What is the right thing to do?

Who will be affected by this decision?

Are we causing harm to people or the environment?

➜

Figure 3.9.1 Questions that business owners and managers should ask themselves

Ethical conduct and social responsibility aren’t just about doing the right thing; they’re essential for business survival and growth. Most Australian consumers actively choose to support businesses they recognise as ethical, with many choosing to boycott companies that are unethical in their practices. This means that it is more important than ever for businesses to be ethically and socially responsible. Ethics and social responsibility go beyond just following the law. They are about improving the greater community through how businesses approach a wide range of areas, including:

Writing focus 3.9 Transitional phrases

• how they treat the environment – through climate action, waste management, • •

packaging, and not testing their products on animals how they treat people as part of their production process – by ensuring that people involved in making the product are paid fairly and are given safe and comfortable working conditions; by not using child labour; and by not creating or providing products that harm people how they treat vulnerable groups – including young people, the elderly, women, people with disability, Indigenous groups and ethnic minorities.

For Indigenous businesses, ethical practices mean enacting social responsibility to Country and Community.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Country lands, waterways, seas and skyways to which Aboriginal and Torres Strait Islander Peoples are connected

202

Chapter 3 The business environment

Ethics and corporate social responsibility are about doing what is morally right, fair and responsible. Consumers now demand more than good prices and quality products. They want to know that their purchases are ethical. This means businesses have to consider how they can ensure that their reputation is not affected by unethical activities, as this may lead to reduced profits.

Why is ethical decision-making so important? Ethics are the moral principles that govern a business’s conduct and go beyond just following the law. Business owners and managers who practise ethical decision-making will always consider the questions shown in Figure 3.9.1.

SA PA M P G L ES E

This type of questioning will lead to them being more ethical in how they:

• pay and treat workers, including by not allowing child or slave labour • produce safe products and don’t harm people, animals or the environment • advertise a product truthfully • respect cultural values and diversity • protect customer privacy.

➜

Figure 3.9.2 Lush is an international cosmetics and skin care retailer that prides itself on its ethics in all facets of its business and is recognised globally for its ethical stance across many areas.

Why is corporate social responsibility so important? Corporate social responsibility (CSR) is the responsibility that businesses have to operate in a way that improves the community and the environment and goes beyond just following the law. It is about businesses giving back and operating in a way that shows they care about more than just profit. Figures 3.9.3 to 3.9.7 are examples of how businesses may reflect CSR in their decision-making. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.9 Why do ethics and social responsibility matter in business?

SA PA M P G L ES E

➜

Figure 3.9.3 Qantas produces a sustainability report with clear objectives describing how it will try to reduce its environmental impact.

➜

Figure 3.9.4 The Bread & Butter Project is a not-for-profit organisation that helps refugees learn baking skills through on-the-job training and employment.

➜

Figure 3.9.5 Pablo & Rusty’s Coffee Roasters has several initiatives that focus on objectives such as sustainable and fair sourcing of coffee beans and reducing climate impact. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

203

Chapter 3 The business environment

Figure 3.9.6 Who Gives A Crap has built its reputation around giving back to the global community, with 50% of its profits going to help communities in developing countries access clean water and sanitation.

SA PA M P G L ES E

➜

204

➜

Figure 3.9.7 The Bunnings sausage sizzle has been embraced by Australians, with community organisations able to fundraise by selling sausages using barbecue facilities provided by Bunnings.

What are the positive consequences of CSR and ethical behaviour? Businesses that are ethical in their conduct and exhibit positive CSR are likely to have an excellent reputation and trust with their customers. This may lead to long-term financial success, the ability to attract and retain skilled employees, and less likelihood of experiencing legal and financial risks caused by fines and penalties from government organisations or lawsuits. It is therefore in the best interests of a business to develop strategies that allow it to meet CSR objectives and ensure ethical behaviour.

What are the negative consequences of unethical behaviour? Unethical business conduct can have serious consequences for a business due to damage to its reputation. This can lead to negative media attention, long-term loss of trust in the product, loss of customers, and even loss of employees as they may choose to resign as they do not want to support unethical behaviour. Businesses who behave unethically may also face boycotts with customers refusing to buy their products, or legal implications, such as legal action from government organisations Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.9 Why do ethics and social responsibility matter in business?

SA PA M P G L ES E

Video 3.9.1 Data mining and the value of your information ➜

leading to fines, or lawsuits from individuals or businesses that may seek financial payments to rectify wrongs done to them by the business. It is therefore essential that businesses always consider the ethical impacts of their decisions.

205

➜

Figure 3.9.8 Unethical behaviours, such as using child labour and animal testing, are likely to result in reputational damage and boycotts by consumers.

Review 3.9

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define ethics. Define corporate social responsibility. Outline the types of questions a business owner or manager should ask themselves when making decisions to ensure that they are being ethical.

Thinking, researching and communicating 1. 2.

Refer to Figure 3.9.2. Identify in what ways Lush fulfils its commitment to CSR. Refer to Figure 3.9.3. Identify ways a business like Qantas may fulfil its CSR objectives through its commitment to sustainability and the environment. Refer to Figure 3.9.5. Identify ways a business like Pablo & Rusty’s Coffee Roasters may fulfil its CSR objectives through sustainable and fair sourcing of coffee beans. Refer to Figure 3.9.7. Explain the benefits that Bunnings may receive as a result of its commitment to allow community organisations to fundraise at its stores by running sausage sizzles. Outline the possible negative consequences of unethical behaviour on a business and suggest ways a business may avoid these. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

206

Chapter 3 The business environment

3.10

How can we measure if a business is successful? Success criteria

In this lesson, you will learn about how businesses measure their business performance.

❏ I can explain some of the areas measured by a business owner or manager to improve business performance.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Think of a brand you use every day. Explain why you think it is successful.

Writing focus 3.10 Appositives

As a student, you have to sit exams to assess your performance to see if you are achieving the level of learning required. Businesses are similar to this in that they must always measure their performance so that they can make decisions about what is working, or not working, and put in place strategies to improve. There are four broad areas in which a business may evaluate its performance, as shown in Figure 3.10.1. It is important to note that for Indigenous businesses, community and cultural integration are important success factors. Human resources By measuring: • staff performance • staff turnover • staff satisfaction

Marketing By measuring: • brand awareness • sales • customer feedback

How businesses may evaluate performance

Operations By measuring: • quality • efficiency • levels of waste

Finance By measuring: • sales • profits • growth • cash flow

➜

Figure 3.10.1 How businesses may evaluate performance

Operations Operations is the day-to-day activities, processes and procedures that an organisation undertakes to produce goods or services, including the management of resources, and the speed and quality with which the goods or services are produced. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.10 How can we measure if a business is successful?

207

Measuring these will allow a business to make decisions on how to improve and may include:

• Quality: businesses will measure any differences between intended results and

•

➜

SA PA M P G L ES E

•

actual results in relation to the products produced. For example, a chair factory may look at why a chair has been produced with a loose leg. A restaurant will ensure that every plate served to customers looks the same. The business will measure how many products are returned and then evaluate reasons for the variance, and modify production accordingly. Efficiency: a business will look at the speed at which a product is produced and evaluate whether it can produce the product more quickly by eliminating unnecessary tasks, or training staff to be quicker at performing their tasks. This will reduce the amount of human labour needed and ultimately the business’s costs. For example, a chair factory may decide to eliminate manual assembly of the chair and introduce a machine to do it. A restaurant may offer more training so that staff can make the food more quickly. Levels of waste: a business will Figure 3.10.2 Businesses should always be reviewing efficiency and looking for measure the amount of waste created improvements. from the production process and identify reasons for it. Waste will be adding unnecessary cost to the business and may affect its reputation. For example, in a chair factory, unnecessary waste may be due to a faulty machine that needs additional maintenance. In a restaurant, it may be due to an employee who needs additional training or is careless in how they produce the food.

By evaluating their quality, efficiency and levels of waste produced, a business will be able to make improvements to its operations process.

Finance

Finance is the process of how a business manages its money, including the measurement of sales, growth, profit and cash flow. These measurements helps a business identify what adjustments need to made, such as reducing costs, borrowing funds, budgeting or forecasting future sales. Measuring these will also allow a business to make decisions on what and where to improve. Areas to be analysed may include:

• Sales revenue: this is how much money the business makes from selling its goods

and services before deductions for the costs of making the product. Not selling enough items means that the business will struggle to pay expenses. A business owner may decide to pay for additional marketing, to encourage customers to buy its products.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 3 The business environment

• Profit: this is how much a business has left over from the sales amount after paying

• •

all expenses. For example, a restaurant owner may make $5000 per week in sales but have very high costs, such as wages, rent and food costs, and only have $200 left after paying all expenses. This may indicate that the restaurant is not charging customers enough for the dishes served, or that it should increase the number of sales, or that its expenses are too high and should be cut back, perhaps by having fewer staff. Growth: this is how much growth a business is experiencing in its number of sales, number of customers, number of products offered and number of stores. If a business is not growing after a period of time, a business owner may evaluate reasons why, such as their products not being appealing, and make adjustments. Cash flow: this is how much money is coming in versus how much is going out for the same period of time. Too much money going out will cause cash-flow problems for the business, meaning it may not be able to make payments on time, leading to legal and financial problems for the business.

SA PA M P G L ES E

208

By evaluating their sales revenue, profits, growth and cash flow, a business owner will be able to make strategic decisions in how they organise their money to improve their situation.

Marketing

Marketing is the process of managing how customers are made aware of, and view, a business’s products. Every business makes decisions on how and where it brands, promotes and advertises its products so that consumers perceive its products positively and buy them. Marketing includes:

• Brand awareness: making consumers aware of a business’s products. This is

•

usually the result of effort to make them aware through promotion. For example, a restaurant may spend money to promote its product by inviting a social influencer to the restaurant, paying them a large amount of money. The business will then compare sales before and after to see if there has been improvement in the number of customers, or it may review data relating to how many people have viewed or liked the influencer’s post or have followed the business’s page. This will let the business know if it is advertising to the right target market, or if it needs to choose a different influencer or marketing approach. Sales: this is one of the biggest indicators that marketing has been effective. Businesses will promote their product and then measure how many sales they have made and the average cost of each sale. If a product is not selling as much as they thought, such as a particular dish in a restaurant, a business will change the product or completely remove it. If a product is purchased a lot, a business may choose to use it more in advertisements so as to attract repeat sales. Customer feedback: this can be a powerful way for businesses to learn more about how customers feel about their products. This can be done through surveys sent to customers after they have purchased a product, or monitoring online reviews on websites such as Google Reviews or Facebook.

By monitoring and evaluating brand awareness, sales and customer feedback such as surveys and online reviews, businesses can make adjustments to their products, their sales promotions and how they make customers aware of their product. Marketing performance reflects how well the business attracts and keeps customers.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.10 How can we measure if a business is successful?

209

Case study 3.10.1: Zena and Factory 93 Cafe Factory 93 Cafe was a small cafe in an industrial area, serving quality coffee, brunches and light lunches. Zena, the business owner, was excited, spending a sizeable amount of her savings to refurbish the space, and designing a menu that met the needs of workers in nearby factories. However, the rent costs were high and Zena needed to hire an assistant in the kitchen to prepare meals as she looked after customer service.

SA PA M P G L ES E

➜

After several months of slow sales, Zena decided to reach out to a popular social media influencer whose followers closely Figure 3.10.3 Zena’s lessons in marketing and matched the cafe’s target market to promote her business finance come at a cost. to attract people from outside the area for brunch. Zena was having cash-flow problems and borrowed money from her parents to pay the influencer’s high fee. The influencer posted several videos and gave positive reviews of the cafe. This strategy increased online engagement for a few weeks, leading to increasing sales, but these reduced over time as Zena could not pay for additional posts. Eventually, Zena could not continue to pay the increasing costs, such as wages, suppliers bills and rent, and closed her business. Zena learned that marketing was not enough, and that she needed to have started earlier and been more consistent in trying to increase her sales. She also needed to be more careful in how she managed her expenses. Zena wished that she had started promoting her business earlier to increase her sales, and had been better at managing her cash flow and expenses to ensure long-term survival.

Human resources

Human resources is the process of how a business manages its employees, including performance, turnover and absenteeism, and employee satisfaction. This allows a business to make decisions on how to improve performance and how to increase staff satisfaction. It includes:

• Staff performance: a business will measure how efficient and effective a staff

•

member is based on their performance. This may be formalised, such as with a performance review, or informal by observing. To improve staff performance, a business owner or manager may offer incentives such as positive feedback or money-based incentives such as bonuses. Staff turnover: a business may measure and evaluate its success by how many people quit working for the business over a period of time. Hiring new staff is an expensive process between the advertising and the time spent interviewing and inducting new staff, so businesses are keen to hold on to staff as long as possible. Having many people resign may indicate that there is a problem with the business and the working conditions it offers. A business owner may want to interview leaving employees to find out why they are leaving. Staff satisfaction: a business may want to regularly measure and evaluate how satisfied employees are to be working in the business by conducting surveys. This may allow a business owner to identify problems affecting their employees and make improvements.

Effective measurement and evaluation of human resource practices will allow a business owner to make improvements in how they motivate and keep staff, leading to improved customer service and quality, leading to higher sales.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

210

Chapter 3 The business environment

Case study 3.10.2: Dai Li and her new boss Dai Li had been working at the local childcare centre for several years and was considered a hard worker. However, recently she had been taking a lot of sick days off. When she was approached by the business owner and asked if everything was okay, the business owner discovered that Dai Li was no longer enjoying her job and was thinking of resigning, as she did not enjoy working with the new centre manager, who had been hired a few months before.

SA PA M P G L ES E

The business owner decided to send out a staff survey and found that many of the people working at the centre disliked the new manager because of their rude communication style, poor organising of structure and routines, and evident favouritism with another newer staff member.

➜

Figure 3.10.4 It is important for business owners to regularly review its human resource practices.

The business owner also noticed that there were an increasing number of complaints from families about the quality of the care provided. The business owner decided to speak to the centre manager about the survey results, which led to the resignation of the centre manager. The business owner decided to promote one of the existing staff to the role of centre manager, and offered more training and promotional opportunities, as well as rewards such as recognition and bonuses for high-performing staff. The next staff survey showed an improvement, with Dai Li and her colleagues much more satisfied working at the centre. There was also improved care for the children at the centre, and fewer complaints from families.

Review 3.10 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Outline the importance of measuring and evaluating the performance of a business. Identify the four broad areas of a business that a business owner may evaluate their performance in. Explain how a business may evaluate business performance in the area of: a. operations b. finance c. marketing d. human resources

Thinking, researching and communicating 1. 2.

Refer to Case study 3.10.1: Zena and Factory 93 Cafe. Extract lessons learned by the business owner. Refer to Case study 3.10.2: Dai Li and her new boss. Extract lessons learned by the business owner relating to human resources.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.11 Skills focus: how can we measure if a business is successful?

3.11

Skills focus: how can we measure if a business is successful? Success criteria

In this lesson, you will explore different ways of measuring business success across finance, marketing, operations and human resources.

❏ I can explain how business success can be measured and used to inform decision-making in business.

SA PA M P G L ES E

Learning intention

Starter activity Doing a good job

Have you ever completed a task either at home or at school and been proud of yourself for doing such a good job? Consider what made you think that you had done a good job.

• Was it a feeling you had? • Was there a way to measure it, such as an excellent result?

Business is much like this. You will get some unmeasurable indicators, such as feelings. However, you will also get indicators such as increased sales, greater profits, and satisfied customers and employees as measured by surveys and reviews. There are many ways to measure success, and this lesson will explore the more technical ways you may measure success as a business owner.

➜

Figure 3.11.1 Is it important to measure business success beyond feelings? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

211

212

Chapter 3 The business environment

Thinking about success

SA PA M P G L ES E

Fiona is a personal trainer who has been in business for over three years and has grown her business. She has several income streams as part of her small, home-based business. She offers scheduled group boot-camp sessions, oneon-one personal training sessions, tailored online meal and diet plans, sells sporting equipment online and in person, and has an online media presence on social media that also generates income.

➜

Figure 3.11.2 Fiona is determined to achieve her business goals, and measures her progress by collecting important data.

Her business goals in the next year include:

• increasing her sales • increasing her profit • increasing followers and viewers on social media • increasing her sales of sporting equipment • improving her rating reviews on Google Reviews. Currently, she has the data shown in Table 3.11.1.

Table 3.11.1 Business data collected by Fiona

Year 1

Year 2

Year 3

Forecast for Year 4

Total sales revenue

$32,000.00

$89,000.00

$132,000.00

$160,000.00

Profit

−$16,000.00

$61,000.00

$98,000.00

$140,000.00

Sales of sporting equipment

$0.00

$2300.00

$43,000.00

$55,000.00

Number of tailored online meal and diet plans

5000

TikTok

1221

8909

78,225

800,000

Instagram

860

6012

93,202

120,000

Facebook

123

3443

4284

50,000

1003

3000

5/5

4.8

4.2

4.6

Followers on social media

Ratings on Google Reviews Number of reviews Rating review

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.11 Skills focus: how can we measure if a business is successful?

Review 3.11 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

213

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding

Fiona wants to know by how much her business has grown in the last few years. a. Calculate the difference between Year 3 and Year 1 sales in dollars. b. Calculate the difference between Year 3 and Year 1 in sales as a percentage.

Fiona needs to decide if she is pricing her services and goods at a fair price. a. Define profit. b. Calculate the difference between sales and profit for all three years. c. Comment on the pattern you notice relating to profit.

SA PA M P G L ES E

Fiona has identified that the number of sales relating to her online meal and diet plans is poor. Currently, her cost to produce each online meal and diet plan is on average $27, and she sells these for $30 each. a. Outline a strategy she can use to increase the number of sales in this area. b. Calculate Fiona’s costs if she sells 5000 meal plans in Year 4. c. Calculate Fiona’s sales revenue if she sells 5000 meal plans in Year 4. d. Calculate Fiona’s profits if she sells 5000 meal plans in Year 4. e. Advise Fiona on whether to continue with this service, giving reasons.

Fiona is analysing the data and is seeking your assistance. a. Analyse and comment on her forecast data relating to social media followers in Year 4. b. Recommend two strategies that Fiona could use to increase her number of followers.

Fiona is concerned that her rating on Google Reviews has dropped since Year 1. a. Analyse her rating data and give possible reasons for the change. b. Recommend strategies she could use to improve the rating on Google Reviews.

Fiona wants to improve her sales revenue and profit in Year 4 overall. a. Recommend a strategy she could use to increase her sales overall. b. Recommend strategies she could use to reduce her expenses.

Thinking, researching and communicating 1.

Key question: what is the best legal structure for Fiona’s business? Task: discussion with peers and research. a. Identify the type of legal structure that Fiona most likely has now and why. b. Interview a local business owner to learn about their reasons for choosing a particular legal structure. c. Recommend a new legal structure for Fiona’s business.

Key question: what is the process of hiring a new staff member? Task: Fiona wants to hire a new person to help manage the marketing and finance functions of her business. To assist her: a. Create a job description and job specification for the position. b. Develop interview questions for the recruitment process. c. Role-play the interview process in front of your class.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

214

Chapter 3 The business environment

3.12

What makes an entrepreneur successful? Success criteria

In this lesson, you will learn about the characteristics of entrepreneurship and how these may influence the success of a business.

❏ I can explain the characteristics needed by an entrepreneur and how these can influence business success.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Do you know any entrepreneurs? What are the traits and characteristics they all share? Compare your responses with a partner.

Writing focus 3.12 Appositives

Entrepreneurs are leaders. They are creative. They are risk-taking. They are skilled. They are passionate. They are decisive. They are flexible and adaptable. Entrepreneurs are many things and use a mixture of many of their characteristics to start and grow their business. Take a moment to think about some of the many well-known entrepreneurs in Australia and you will see that entrepreneurship is something we do well. Some of our global success stories include:

• Brad Welsh – Mawal • Melanie Perkins – Canva • Janine Allis – Boost Juice • Naomi Simson – RedBalloon • Kayla Itsines – Sweat • Steven Marks and Robert Hazan – Guzman y Gomez • Andre and Carole Estephan – El Jannah.

So what characteristics do these entrepreneurs have in common, and what can you learn from them on your journey to entrepreneurial success? a

➜

Video 3.12.1 Seabin: an example of innovation in Australia for environmental sustainability

➜

Figure 3.12.1 Some of Australia’s greatest entrepreneurs. (a) Steven Marks – Guzman y Gomez, (b) Melanie Perkins – Canva, (c) Kayla Itsines – Sweat

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.12 What makes an entrepreneur successful?

What is an entrepreneur? An entrepreneur is someone who identifies a business opportunity and develops a solution to a problem they have identified. They will then take a risk by sacrificing time, money and effort to turn the idea into a reality by using their creativity and innovative thinking. Entrepreneurs are an important part of Australian society as they fulfil consumer wants by introducing new products to the market, solving problems affecting people, and creating jobs. The following are key characteristics that entrepreneurs share.

SA PA M P G L ES E

Taking calculated risks Entrepreneurs will sacrifice their money and time by taking the risk to start and grow a business. Many people have ideas that solve problems, but only a few are willing to make a calculated risk to turn that idea into a business. A calculated risk is where a business owner predicts and measures the sacrifices they will need to make if they invest their time, energy and money into a business and then decides if it is worth it. It is this calculated risk-taking that allows for new businesses to be started, to grow and to innovate. By being careful in their decision-making, an entrepreneur can reduce their chances of financial loss and achieve business success.

Creativity and innovation

Successful entrepreneurs think differently. They come up with new ideas or improve existing products to attract new customers and achieve a competitive advantage. This creative and innovative thinking means that consumers are more likely to purchase a business’s product.

Perseverance and resilience

Rejection and failure are part of entrepreneurship, and these many knocks may lead to many people giving up. An entrepreneur needs to be comfortable with failure and use it as an opportunity to learn and adjust what they are doing rather than see it as the end of their business journey. Instead, they must use this knowledge to create new solutions.

Cultural awareness

Understanding the context or background of their customers is essential in developing products that meet their needs. Entrepreneurs will need to ask themselves about the needs of their customer base to make their product more suitable. For example, if they are dealing with young people, how do they cater to their interests better if they are selling clothes? If they have a restaurant, how do they cater to customer tastes and needs? Should their food be spicier, vegetarian, beef-free, kosher or halal? Entrepreneurs are culturally aware and are keen to attract a wider range of customers.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

215

Chapter 3 The business environment

Leadership and communication Having a clear vision and goals is essential to entrepreneurial success. It is also essential that entrepreneurs communicate their vision and goals to their customers, their employees and other stakeholders. Engaging others on the entrepreneurial journey is essential and may involve coaching and leading employees to achieve business goals. Their ability to communicate and network, whether online or in person, helps entrepreneurs build strong partnerships with suppliers, improve customer relationships and motivate staff.

Decision-making and problem-solving In the course of making their business successful, entrepreneurs will be faced with many challenges requiring quick decisions. Some of the problems they may face include limited money, increased competition and staffing issues. They will also need to recognise new opportunities and make decisions to take advantage of them, such as new consumer interests and trends. It is their flexibility and adaptability that allows them to make informed decisions and solve problems.

SA PA M P G L ES E

216

Case study 3.12.1: the makings of a burger empire

For young entrepreneur Ali Chebbani, or “Chebbo” as he is known in the world of business and social media, having cultural knowledge and awareness of what young people want in a burger experience has allowed him to expand his modest food van at the end of a suburban driveway in Western Sydney into what is turning into a food empire. Chebbo’s journey with burgers started at McDonald’s, where he learned the basics of business as a teenager. He turned this knowledge into a small catering business, making burgers for people he knew, before eventually opening a food van during 2020 COVID-19 shutdowns.

➜

Figure 3.12.2 Chebbo – youth, TikTok and smash burgers led to entrepreneurial success.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.12 What makes an entrepreneur successful?

217

He started selling a few burgers at night without leaving home, with a strict pick-up and delivery model using Uber Eats. Within a few weeks, word spread and traffic chaos ensued, with police having to manage crowds in his area as word got around about his delicious smash burgers.

SA PA M P G L ES E

Chebbo at this point was in his second year of university after being successfully accepted into a highly prized business degree scholarship university program. It is his experiences at university that gave him the technical skills to supercharge his business – skills in marketing, human resources, operations and finance. He used TikTok and other social media platforms to creatively promote his business beyond word-of-mouth advertising. His creative approach to marketing his business led to him having in excess of 1.2 million followers on TikTok who tuned in to see him make burgers. This led to him eventually being a finalist in the coveted TikTok Business of the Year award in 2024. His cultural knowledge and awareness of what engages young people allowed him to amplify his brand among his target market. When asked about the importance of having a cultural understanding of his target market, Chebbo says: “Businesses need to be contextual to their target market. To build brand awareness, there needs to be a brand identity – you want to be authentic, aspirational, but still you.” This understanding has allowed him to resonate with whoever walks into any one of his outlets where customers will find something for them, whether it’s a smile, a delicious burger, or Subway Surfers playing on the instore screens looking to engage his younger audience. For Chebbo, creativity is essential beyond just the marketing aspects: “It’s about how you solve problems, how you coach your employees to deliver on the business goals, or how to reduce waste. You continually have to optimise on what you are doing. And listen. Listen to your customers, listen to your employees, as the solutions and your next creative decision will come as a result of listening.”

Review 3.12

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define entrepreneur. Clarify the difference between a risk and a calculated risk. Identify an innovative product you have recently purchased. Outline the features that make it innovative compared with similar products. Identify a setback you may have had as a young person. Explain how you may approach this with greater perseverance and resilience. Identify a business in your local area that has good cultural awareness. Explain how this is demonstrated in the products or services it offers.

Thinking, researching and communicating

Refer to Case study 3.12.1: the makings of a burger empire. 1. 2. 3.

Identify some of the calculated risks that Chebbo has had to take to achieve business success. Explain how he has used cultural awareness to achieve a competitive advantage. Explain how he has used creativity and innovation in his business. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

218

Chapter 3 The business environment

3.13

How can an entrepreneurial mindset beneﬁt you? Success criteria

In this lesson, you will learn about the benefits of adopting an entrepreneurial mindset.

❏ I can describe the characteristics of a person with an entrepreneurial mindset and explain the benefits of having these characteristics.

SA PA M P G L ES E

Learning intention

Starter activity

Mindset is how you view life. Refer to Figure 3.13.1. How many of the characteristics do you have? Would you say you have an entrepreneurial mindset?

Writing focus 3.13 Developing sentences

When you think about your typical entrepreneur, you most probably envision someone who is innovative, risk-taking and driven to turn ideas into opportunities. While this is all correct, an entrepreneur’s success goes beyond this. It is their mindset that determines their long-term success. It is their ability to withstand and learn from failure and to embrace uncertainty as an opportunity. The entrepreneurial mindset is about a person’s attitude to life and business, and their resilience to bounce back and learn from setbacks.

Do you have the entrepreneurial mindset? Passionate

Innovative

Empathetic

Creative

Risk-taking

Adaptable

Understands the needs of their target market

Motivated

Disciplined

Optimistic

Excellent financial management Relationship builder

Persistent – never gives up Visionary

Confident

People-centred

Persuasive

Understands the importance of branding

Curious

Wants to make the world a better place Leadership skills Has attention to detail

Decisive

Adaptable

Excellent product/service knowledge Excellent networker Excellent manager of resources

➜

Figure 3.13.1 Some of the characteristics of the entrepreneurial mindset

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.13 How can an entrepreneurial mindset benefit you?

Benefits of an entrepreneurial mindset Entrepreneurs bring many benefits to the economy and to society because of their attitude and approach to life. The following are some of the characteristics and benefits of the entrepreneurial mindset.

Entrepreneurs are creative and innovative

SA PA M P G L ES E

Entrepreneurs are usually creative people who see the challenges faced in the world as an opportunity to do better and are always looking for solutions to problems affecting people. They challenge existing ways of doing something and do not restrict themselves from trying out new things.

Entrepreneurs have strong problem-solving skills

Having an entrepreneurial mindset allows you to be solution-driven rather than accepting a problem and deciding to live with it. Entrepreneurs are solution seekers, no matter the area of their life, whether it is education, sports, work or socially.

Entrepreneurs are self-confident and know they can change the world

Entrepreneurs have self-belief and will challenge existing mindsets, and are not shy to share ideas. They know what they want and are confident in their ideas and abilities. Entrepreneurs are excellent communicators, often convincing others to join them as they bring new ideas to life.

Entrepreneurs take calculated risks

Entrepreneurs know that failure is a part of success. Instead of being afraid of failure, entrepreneurs weigh up the potential risks and rewards and are decisive, making informed decisions.

Entrepreneurs are adaptable

Entrepreneurs are comfortable with change and will embrace it. They will approach new technologies, new industries or careers, and new ways of thinking with curiosity.

Entrepreneurs are resilient

Entrepreneurs understand that failure is part of learning. They are resilient when facing unexpected situations or stressful experiences. They are persistent, even when others may have given up already.

Entrepreneurs create opportunities for themselves Entrepreneurs are thinkers looking for gaps in the market, identifying needs and potential improvements in everyday life. They know that by fulfilling these needs, they may benefit financially as well. You will often see them starting a small business, having a side hustle or running community initiatives. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

219

Chapter 3 The business environment

Entrepreneurs seek financial independence Entrepreneurs will not tie themselves completely to others; instead, they seek opportunities to make their own money and work their own hours under their own conditions. You will see them starting small businesses and making the most of their money, setting their own terms and conditions.

Entrepreneurs are leaders Entrepreneurs do not wait for others, taking responsibility and guiding others. They lead by example, starting and leading projects at school, at work and in the community.

Case study 3.13.1: a young entrepreneur who turned an idea into a global business

SA PA M P G L ES E

220

It always starts with a solution to a problem

Sam Khalef started his entrepreneurial journey in his grandmother’s Western Sydney garage as an 18-year-old. He had just finished high school and was working as a caretaker and facilities manager for a high-rise residential complex. He realised that fixing issues in the buildings shouldn’t be complicated, with customers having to call through to several people trying to get an issue resolved. Sam questioned why these requests to fix small issues couldn’t be done more efficiently, with fewer people and less running around involved. He looked everywhere to see if software for this type of problem existed and found that there was a gap in the market. So he asked himself: “Why not build it?”

Entrepreneurship is a long-game mindset

Figure 3.13.2 Sam Khalef is founder and CEO of MYBOS, a building management software company. Today, MYBOS has offices across major cities in Australia, New Zealand and the United Arab Emirates, with plans under way to expand into the United Kingdom and North America. From a garage in Sydney to a global expansion, Sam’s journey demonstrates the importance of having the entrepreneurial mindset. ➜

Sam struggled at first with no funding, no investors, and no blueprint to follow. Having grown up in public housing, every cent mattered. He printed his idea on paper, walked the streets of Sydney, and introduced MYBOS door-to-door to managers of residential complexes. It wasn’t glamorous – it was relentless, slow, and full of rejection. But step by step, people began to accept and believe in his solution as they could see the benefit in his product. The brand grew because he refused to stop.

Sam never aimed for quick success; he always viewed MYBOS as part of a 5- to 10-year vision. His focus was simple: win today, then win tomorrow, and do it again. There were many setbacks, with many rejections over many years. However, Sam believed in his product and kept pushing, building momentum. He believes that persistence and resilience are the currency of entrepreneurship.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.13 How can an entrepreneurial mindset benefit you?

221

Real growth comes from resilience, not comfort

In business, new competitors, new challenges and unexpected setbacks happen almost every day. Sam believes that as a founder and CEO, his job is to navigate through all of it, even when the path ahead isn’t visible. At times, he feels like he’s sailing into the unknown. Storms will hit, the waves will push back, but you keep steering forward. Your team must share the same vision, and you must be able to turn every obstacle into an opportunity. There’s no substitute for hard work

SA PA M P G L ES E

Sam believes that putting in the hours helps you understand your market deeply and see patterns others overlook. Being entrepreneurial means you’re always ready to move, adapt and execute with a game-on mentality. Sometimes it’s not about being the loudest, it’s about listening better

That will involve watching market shifts, understanding customer pain points, analysing competitors – this is where opportunities hide. Entrepreneurship means staying flexible enough to pivot when the landscape changes. Opportunities reward those who notice early and act fast. You don’t need to be a good student to be a successful entrepreneur

You don’t need to be academic to succeed as an entrepreneur; however, education gives you skills, structure and discipline. It should not be dismissed. Being a successful entrepreneur requires a mix of knowledge, practical thinking and resilience. Some lessons can be learned; others must be lived. Entrepreneurship is not for everyone, but if you have the ambition, the hunger to grow and the willingness to fail and rise again, take the risk. Sam reminds students: “Success doesn’t happen overnight. Don’t chase fast wins – play the long game and you will be successful.”

Review 3.13

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Outline why it is important to have an entrepreneurial mindset. Identify three characteristics of a person with an entrepreneurial mindset. Describe what is meant by an entrepreneurial mindset. Explain why it may be important to be empathetic as an entrepreneur. Explain what it means to take a calculated risk.

Thinking, researching and communicating 1.

Outline three types of businesses you might want to start to create an opportunity for yourself as an entrepreneur. Refer to Case study 3.13.1: a young entrepreneur who turned an idea into a global business. Rejection, setbacks and failures are part of the entrepreneurship experience. Explain how Sam Khalef deals with challenges as someone with an entrepreneurial mindset. Referring to the same case study as in question 2, extract three pieces of advice or lessons that are shared by Sam as part of his entrepreneurship journey that may be useful to you as a future entrepreneur. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

222

Chapter 3 The business environment

3.14

How do entrepreneurs contribute to society? Success criteria

In this lesson, you will learn about the important impact that entrepreneurs have on society.

❏ I can explain the ways in which entrepreneurs, including those of Indigenous background, positively impact on society.

SA PA M P G L ES E

Learning intention

Starter activity

An entrepreneur is someone who takes a risk to start a business or improve the world through social initiatives (e.g. an organisation that provides a good or service, such as a charity) that benefit others. What are some business ideas or social initiatives that you have? Share these with your peers or class, and write them down in your workbook.

Writing focus 3.14 Creating topic sentences

social enterprise a type of business that is not developed to produce profit but to improve the community it serves; an example may be a charity

Entrepreneurs have an important role in shaping Australia’s economy and society. Businesses they establish drive innovation, create employment, and address social and environmental challenges through their ethical conduct and their corporate social responsibility (CSR) initiatives. Many entrepreneurs bring unique cultural experiences and knowledge to their roles, enhancing society by solving real-world problems and improving quality of life for individuals and communities. Their skills in identifying opportunities, organising resources and taking calculated risks to establish and grow a business or enterprise lead to these improvements to society. Not all entrepreneurs create or drive organisations that are there to make money; some create organisations that improve society and solve problems through social enterprise. A social enterprise is an organisation whose main goal is improving the community rather than making money.

Figure 3.14.1 A social enterprise does not prioritise profit but instead prioritises improving the community ➜

There are many ways that entrepreneurs contribute to society, some of which are shown in Figure 3.14.2.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.14 How do entrepreneurs contribute to society?

Economic contributions

Social and environmental contributions

• Creating goods and services that meet consumer needs • Increasing competition and productivity • Contributing to economic growth and government revenue through taxation • Supporting regional and local economies

• Establishing social enterprises to address issues such as inequality, education and health • Adopting sustainable practices to reduce environmental impact • Promoting ethical sourcing and responsible consumption

Innovation and change

Employment and skills development • Creating jobs • Providing training and skill development opportunities • Encouraging workforce participation among young people and marginalised groups

➜

SA PA M P G L ES E

• Introducing new technologies, products and business models • Responding to changing consumer preferences • Driving efficiency and improvements in existing industries

Figure 3.14.2 Examples of ways that entrepreneurs contribute to society

Indigenous entrepreneurs

Aboriginal and Torres Strait Islander Peoples’ economic systems have been in place for tens of thousands of years. Based on principles of reciprocity and regeneration, these systems continue to inform Indigenous business practices today. Contemporary Indigenous entrepreneurship creates businesses and organisations that add over $16 billion to the Australian economy, generate thousands of jobs, respect Country, build Community and operate in ways that respect Indigenous values and Cultural Practices. Indigenous businesses work for Country and Community by providing:

1. Cultural integrity and Knowledge sharing: they embed culture, language and connection to Country in their business practices. This ensures Practices are Culturally respectful and promotes Indigenous intellectual property for future generations, and some businesses seek to educate the broader Australian society. 2. Self-determination and economic independence: they empower Indigenous Communities to create new economic opportunities, supporting long-term developments that align with Community values and aspirations. 3. Community and intergenerational impact: initiatives are Community-driven, responding to Community needs, and reinvest profits into Community programs. They provide employment opportunities for Indigenous people that capitalise on Indigenous Knowledges and experience. 4. Sustainable and ethical business models: many Indigenous enterprises prioritise environmental stewardship, caring for Country, and collective wellbeing over profit. These organisations have an impact over all of Australian society, modelling corporate social responsibility to other businesses.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

223

Chapter 3 The business environment

Case study 3.14.1: Indigenous social enterprise First Nations Foundation changes lives for the better

When Leah Bennett was asked to become managing director of First Nations Foundation in 2025, she jumped at the chance. After more than a decade in the finance sector, she was keen to make a difference in the world by developing programs that improve Indigenous wealth and financial wellbeing.

SA PA M P G L ES E

224

From Orange to Sydney

➜

Having grown up in Orange in regional New South Wales, Leah knew how bleak things could be without good financial literacy. She grew up admiring the many Indigenous women, including her mother, who gave back to mob and the wider community for years by running homework centres and domestic violence outreach programs. She also wanted to give back, but lack of finances and opportunity led to her moving to Sydney as a young adult, Figure 3.14.3 Leah Bennett, managing director of First Nations Foundation where she found herself working in finance despite dreaming of becoming a social worker. Confidence is the key, along with a good education

Leah did not finish school, but this did not stop her from eventually graduating from university as an adult. Life was tough, and finances were tight. She had to work to earn a living. It was these challenges that led to her building the courage and confidence needed to be a leader. These challenges also give her the clarity to make decisions that now impact lives, developing partnerships and networks that teach financial literacy and entrepreneurship skills. First Nations Foundation equips Indigenous people with the skills needed to take steps and make decisions towards a better future. With challenges come wisdom: Leah’s advice to young people

Leading a social enterprise that positively impacts on the lives of so many is tough. Leah maintains that there are a few things that allow young people to overcome barriers. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.14 How do entrepreneurs contribute to society?

225

The first one is good financial literacy, especially if generational wealth is non-existent. The other is resilience. She urges young people to “push through by regulating their emotions and being emotionally intelligent. When faced with a challenge, be courageous and use it as an opportunity to learn so you can take better calculated risks next time. Making mistakes is okay, don’t give into the fear, and have confidence that you are enough.” Be the role model you never had

Leah encourages young people to surround themselves with good people and to give back. “If you see it, you can become it. Have good people around you that you can trust, who will be there for you when you make mistakes or face challenges. And then eventually become a role model to someone else.”

Activity 3.14.1

SA PA M P G L ES E

Indigenous entrepreneurs leading the way

Indigenous entrepreneurship plays an important role in creating opportunities, building economic independence and strengthening Communities. Many First Nations entrepreneurs are leading innovative businesses that reflect their Culture, creativity and Community values. Conduct research online to investigate examples of Indigenous entrepreneurs. You may like to start with one of the following:

• Liandra Gaykamangu (fashion designer) • Alisha Geary (Thirsty Turtl co-founder) • Clark Webb (founder of Wajaana Yaam Gumbaynggirr Adventure Tours) 1.

Identify one Indigenous entrepreneur and outline their business.

Describe how this entrepreneur demonstrates an entrepreneurial mindset (e.g. innovation, resilience).

Explain how their business reflects First Nations culture, values or Community priorities.

Discuss how this entrepreneur is creating opportunities and positive outcomes.

Review 3.14

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Outline how entrepreneurs contribute to society. Define social enterprise. Explain how businesses may make social and environmental contributions. Outline the history of Indigenous trade in the Australian economy.

Thinking, researching and communicating 1.

Explain how Indigenous entrepreneurs contribute to opportunities and outcomes for First Nations Communities. Research the programs offered by First Nations Foundation. Explain how these programs support financial capability and contribute to more equitable outcomes for First Nations Communities. Watch the video with Leah Bennett and Kaitlin Lee at the following link: https://cambridge.edu.au/redirect/11718. Extract five important lessons or pieces of advice that an entrepreneur may find beneficial. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 3 The business environment

3.15

Case study: what makes Australia’s greatest entrepreneurs successful?

Learning intention

Success criteria

By the end of this case study, you will have a greater understanding of what makes entrepreneurs successful and the types of businesses they operate. You will develop an understanding of how their characteristics and experiences have shaped who they are, and how this has led to their success in business.

❏ I can explain the characteristics and some of the experiences that are likely to shape an entrepreneur. ❏ I can identify examples of typical decisions entrepreneurs may make that will lead them to achieve success. ❏ I can describe how decisions made by entrepreneurs may positively impact the Australian community.

SA PA M P G L ES E

226

What is a case study?

A case study is a detailed investigation of a real business, person or event that allows people to understand more about the subject of the case study. A case study on a business or entrepreneur will show how decisions, challenges and outcomes are connected, providing key learning and inspiration to others.

Entrepreneurs make the world a better place!

Step into the mind of an entrepreneur and learn about what makes them tick. What is the reason for their success? What was their upbringing like? What types of decisions have they made? What motivates them? What benefits have they created for the community? In your learning journey, you will get into the mind of an entrepreneur by:

• discovering characteristics of an entrepreneur and how their experiences have • •

shaped them finding out about the decisions entrepreneurs have made that led to their success learning about the positive impact these risk-taking individuals have had on the Australian and world communities.

By delving into their minds and their lives, you will be inspired to take on the role of entrepreneur yourself! Get ready to tell their story and be them, even if it is for a short time!

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.15 Case study: what makes Australia’s greatest entrepreneurs successful?

SA PA M P G L ES E

➜Figure 3.15.1 Entrepreneurs and their ideas can make the world a better place.

Case study activity 3.15.1

Get to know your most admired Australian entrepreneur Your instructions 1.

You will need to be in groups of two (or three, or four if you have more than one entrepreneur and journalist).

You are to create a television interview or podcast exploring the mind of an entrepreneur by interviewing them as a journalist, or yarning with an Indigenous entrepreneur.

You will need to research them and develop your questions: Who they are? What have been their successes? What have been their failures? What impact have they had? What are their next steps? What you ask is completely up to you!

You will need to record a video or podcast with one or two in your team playing the entrepreneurs (you may want to get dressed up) and the others being the journalists asking the questions we all want answers to.

You will share your recording – with your teacher, your peers, the entrepreneur themselves!

Time to be inspired, and to inspire others by sharing the journey of an entrepreneur.

Suggested Australian entrepreneurs

• Jahin Tanvir – Australian School of Entrepreneurship • Pierre Issa – Pepe Saya Butter • Ali “Chebbo” Chebbani – Chebbo’s Burgers • Sam Khalef – MYBOS • Rami Ykmour – Rashays • Leah Bennett – First Nations Foundation • Brad Welsh – Mawal • Melanie Perkins – Canva • Janine Allis – Boost Juice • Mike Cannon-Brookes – Atlassian • Naomi Simson – RedBalloon • Kayla Itsines – Sweat • Steven Marks and Robert Hazan – Guzman y Gomez • Andre and Carole Estephan – El Jannah

Or you could complete your own research and choose your own! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

227

Chapter 3 The business environment

3.16

Investigation: how to create a business plan for a cafe or food outlet

Learning intention

Success criteria

In this project, you will

❏ I can research and present information about opening a food outlet using business tools. ❏ I can make decisions by analysing my research and feedback provided about my idea.

• research information that will allow

SA PA M P G L ES E

you to make informed decisions when opening a business in your local area • analyse research by conducting a competitor analysis and a SWOT analysis • recommend ideas relating to your business using your research and feedback provided.

Your challenge

You and your best friend have decided to open a food outlet in your local area. As young entrepreneurs, you are keen to be successful and understand that you will need to do some planning to ensure that you are making informed decisions.

➜

228

Figure 3.16.1 Time to start researching and planning your business

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.16 Investigation: how to create a business plan for a cafe or food outlet

Starting your research: first steps Competitor analysis Begin by analysing existing food businesses in your area. You may decide to visit them in person to get a better understanding. Ask yourself:

• What do they offer? • What makes them special? • Who is their typical customer? • What would you do differently if you owned this cafe?

SA PA M P G L ES E

You may also want to have a look at their menu and branding. What jumps out at you? What would you have on your menu? What would your logo and branding look like?

Conduct your research

You need to understand the local area better to know who your target market is. This will also allow you to make informed decisions that are more likely to get the attention of your customers and meet their needs better. Begin by looking at the following:

• Secondary research: you already know the local area well, and may have visited

•

your competitors as a customer already. It may be beneficial to do some internet research. Start by doing a general internet search of your area. Is there anything interesting about it? Perhaps there are a lot of sheep? Or apples or oranges are grown? This may be useful to consider if you decide to have a themed business. You should also do a thorough search using the Australian Bureau of Statistics website (linked here: https://cambridge.edu.au/redirect/11716) to look at census data for your area to better understand the demographics. Are there more males than females? What is the median age? What is the average household income? This information may be useful in making decisions later on. Primary research: it may be useful to dig a bit deeper and learn more about your area, the people who live in it, and what their likes and dislikes are. You may wish to conduct a survey of local people to find out what you would like to know – including, perhaps, food and drink preferences.

Identify your target market

Now that you understand your local area better, you need to decide who your ideal customer will be. This may be more than one group. For example, you may want to choose older people as a target market, and may then want to create a menu, decor, branding and promotions that reflect this. Another group may be mothers with young children who may visit your business during the day, and so you may have a play corner and a kids’ menu. Once you have decided who your target market is, you will feel more confident in making decisions.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

229

Chapter 3 The business environment

Put together a SWOT analysis Create a table like the one in Figure 3.16.2 and brainstorm anything that comes to mind relating to the strengths, weaknesses, opportunities and threats affecting your business. Remember, the strengths and weaknesses of your business are things you have full control over, such as your products, location, resources used, who you employ in your business, and your business culture (e.g. happy, welcoming, calm).

SA PA M P G L ES E

Your opportunities and threats are things you can only manage, such as your competition, the law, the economy, technology, and the social likes and dislikes of society. Strengths (internal) – things I control •

Weaknesses (internal) – things I control •

Opportunities (external) – things I can only manage

Threats (external) – things I can only manage

•

➜

Figure 3.16.2 SWOT analysis template

➜

230

Figure 3.16.3 A strong SWOT analysis is the foundation of your plan.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.16 Investigation: how to create a business plan for a cafe or food outlet

Your task Create a business plan using your research. This is a professional-looking document that you may use to present your business idea to potential lenders and investors in your business. It should have the following areas.

SA PA M P G L ES E

1. Competitor analysis: explain what you learned when you researched your competitors and what you will do differently as a result so your business can compete successfully. 2. Primary and secondary research: present your findings and then analyse them. What information will be important to you as an entrepreneur opening a food outlet? What decisions will you make as a result? 3. Identify your target market: summarise the key features of your target market (you may have more than one). Recommend ideas and decisions you will take as a result of selecting this target market. An important element to include as part of an Indigenous business plan or social enterprise is community integration (how your business connects to your community). 4. SWOT analysis: put together a SWOT analysis to understand your business better by brainstorming everything you can think of. (You may want to look at Lesson 3.7 for an example.) Recommend ideas or decisions you will take as a result of your SWOT analysis. 5. Pitch your idea: recommend your business idea to an audience as a five-minute presentation. This may be to the owner of your local shopping centre, investors, other entrepreneurs in your community, your parents, or even your teachers or classmates. 6. Reflection: listen to the feedback provided by your audience. What are their recommendations? Identify what you will change about your business plan and why.

The business plan

Your business plan will include:

• a title page with your business branding • a contents page (you can generate this easily using Microsoft Word) • an operations section – background information about your business such as • • • • •

location, your products, your managers and staff, what hours you will operate, how you will decorate, and anything else of importance, including a sample of your menu a competitor analysis – who your competitors are and what they are doing to gain a competitive advantage primary and secondary research – present what you have learned from looking at the demographics in your area and any surveys you conducted target market information – why you have selected them as your target market and how you will cater to them a completed SWOT analysis with an analysis of what you will do as a result reflection on what you learned after pitching your idea – the feedback you were given and what you will do as a result of this information.

Take it further: you may want to enter your idea into a competition such as the “Plan Your Own Enterprise Competition” (https://cambridge.edu.au/redirect/11797). Good luck! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

231

232

Chapter 3 The business environment

3.17

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

• Auto-marked questions for fast feedback and fun practice • Self-assessment tools to track your progress, review answers (if enabled by the teacher), and flag questions for extra help

• Downloadable worksheets for class or homework revision

Summary

SA PA M P G L ES E

DOC

Summary notes

Download chapter summary

What have you learned about the business environment? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Financial and non-financial business goals Legal structures of businesses

Recruitment and selection processes Regulating competition

Maintaining a competitive edge Phases of the business cycle

Corporate social responsibility

Business success measurements Entrepreneurial characteristics

Visible thinking routine Compass points

This exercise in visible thinking asks you to think deeply about a new concept in this chapter and evaluate it. Write down your responses to the following prompts. 1.

What excites you about the current business environment and how it operates?

What do you find worrisome about the current business environment? Is there a downside?

What else do you need to know to help you evaluate and understand the business environment?

What is your stance about the business environment in Australia? Do you think something needs to change, and if so, what?

Now discuss your responses with the rest of the class. Did the discussion change what you think? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

3.17 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Identify an example of a financial goal and of a non-financial goal.

Define the term limited liability.

Summarise why a business may choose to become a private company.

Outline the transformation process.

Describe one type of assessment a hiring employer might use.

Recall the role the ACCC plays in the business environment.

Identify the difference between primary and secondary research.

Outline why identifying a target market is important.

Describe the four phases of the business cycle.

10.

Describe how Indigenous entrepreneurs integrate Indigenous Knowledges and Cultural Practices in their businesses.

SA PA M P G L ES E

➜

Figure 3.17.1 Taking a walk down a supermarket aisle will reveal just how many brands are operating in the market for the product you’re shopping for. More competition means more variety and options for customers.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

233

234

Chapter 3 The business environment

DOC

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Download single paragraph model

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Analyse how business competition affects decision-making in areas such as pricing, customer service and innovation. Model answer: Competition affects business decision-making because it Explain: clarify, pushes businesses to adjust their pricing, customer service define and describe and innovation strategies to remain successful in a competitive market. Businesses must understand what their competitors offer so they can make informed decisions about how to attract and retain customers. Competition influences choices such as setting prices, improving service quality and developing new Elaborate: extra products. When businesses face strong competition, they may detail, reasoning, lower prices, increase efficiency or invest in better marketing causes, to differentiate themselves. They may also improve product consequences, features, develop innovative services or refine customer links between experience to gain an advantage. This is evident in the way ideas competition shapes actions such as pricing strategies, product design, customer engagement and efficiency improvements, which are all regulated under the Competition and Consumer Act 2010 and monitored by the ACCC. For example, when two retailers sell similar products, they may compete by offering Examples: loyalty programs, faster delivery options or more sustainable provide credibility packaging to appeal to consumers. In this way, competition and illustrate the influences a wide range of business decisions, encouraging argument businesses to adapt, innovate and provide better value in order to remain competitive.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Evidence: specific, relevant evidence to support arguments

Linking sentence: reconnects to the topic sentence using the language of the question

Structured-response questions 1.

Outline the importance of setting business goals.

Recommend a legal structure that may be beneficial to someone starting a small business and provide reasons why.

Clarify the difference between an input and an output in a business producing a service.

Summarise the recruitment and selection process that may be used by a small business.

Extended-response questions 1.

Explain the impact that competition may have on a business across pricing, product quality, innovation, marketing and promotion, and efficiency. You should refer to real-life business examples in your response.

Justify the importance and impact that entrepreneurs have on society. You should give examples of well-known entrepreneurs in your response.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

The legal and political environment

SA PA M P G L ES E

Lessons 4.1

Setting the scene: the legal and political environment – what is it all about?

4.2

Why do we have laws and what do they do for society?

4.3

How are criminal laws different from civil laws?

4.4

What is statute law and how is it made?

4.5

What is common law and how is it made?

4.6

What is Customary Lore and how is it applied?

4.7

Why do courts have a hierarchy and what does jurisdiction mean?

4.8

Why do laws change over time?

4.9

Skills focus: what cases are heard in Australian courts?

4.10 What is the purpose of the Australian Constitution? 4.11

How does the Constitution shape Australia’s democratic system of government?

4.12 What do the House of Representatives and the Senate do? 4.13 Site study: NSW Parliament House

4.14 Why does the separation of powers exist and what is the role of the High Court? 4.15 How does the High Court interpret the Australian Constitution? 4.16 How can you have a say in Australia’s democracy? 4.17

How do different voting systems work and why are they used?

4.18 How do political parties and independents influence who forms government? 4.19

Investigation: other legal and political systems

4.20 Chapter review

Warning: Aboriginal and Torres Strait Islander people should be aware that this chapter discusses Culturally sensitive matters. Educators should take care to create a Culturally safe environment for students of Aboriginal and/or Torres Strait Islander backgrounds. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

236

Chapter 4 The legal and political environment

4.1

Setting the scene: the legal and political environment – what is it all about?

Learning intention

Success criteria

In this lesson, you will learn about the basic concepts that underpin the legal and political environment in Australia.

❏ I can outline why groups have rules and leadership, and why rules become laws.

SA PA M P G L ES E

As a future voter, it is important that you understand how the Australian legal and political system operates.

➜

Video 4.1.1 Setting the scene: the legal and political environment

Australia’s unique legal and political environment blends elements inherited from its British colonial past with adaptations for the needs of a modern nation. Understanding the mechanics of lawmaking, parliamentary elections and government formation can seem complex, but this topic will clarify these processes. The topic will also provide a foundation of knowledge and understanding for students wishing to do Legal Studies in their senior studies.

Australia’s online safety: the law at work

Writing focus 4.1 Question words

federal related to the central government of a country, as opposed to the government of a specific state or region

➜

In November 2024, when the Australian Government passed laws about the use of social media by Australia’s young people, the legal and political environment intertwined, along with the concept of democracy. Australia’s “people power”, backed by a media campaign of “let them be children”, saw the Federal Government’s enactment of the Online Safety Amendment (Social Media Minimum Age) Act 2024 (Cth) in response to widespread public concern over the effects of social media on young people, including cyberbullying and exposure to harmful content. Figure 4.1.1 Future voters need to understand Australia’s legal and political These laws came into force in system so they can make informed choices, protect their rights and shape the December 2025. nation’s future.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.1 Setting the scene: the legal and political environment – what is it all about?

The previous paragraph is full of words and concepts such as “federal”, “democracy” and “Act” that you might have heard or read before but are not sure what they mean. In this topic, you will learn about these concepts. You will also learn about Australia’s legal and political environment and how it has been created out of Australia’s unique history. It has strengths and weaknesses that you will have to navigate and, perhaps, address as you become of voting age and an adult.

Government Imposes Social Media BAN AMID RISING CONCERNS N

al Media Defends Soci Government c Safety li ssary for Pub Ban as Nece

SA PA M P G L ES E

e DE w S Blocked s m BA oc r o f CONTROVERSIAL t iaedia Pla n T a M B C l l o a n e i tro SOCIAL BAN versial SMEDIA Soc E O Me s Enforc oc e ia i t l M i d r e N d o Takes Effect Nationwide ia h Ban iake as Aut FRE ia Ba s cial MeTda E ff scStoN d e n e f e y a D t t e io f a n S w E n S Government c ide or Publi SP p cessary f e N a s a n EE Brka C s Sparks H Media Activists Protest Social New SOCIAL MEDIA Ban

Ban, Call for Digital Freedom

Debate on FREE SPEECH

➜

Figure 4.1.2 Headlines associated with the Online Safety Amendment (Social Media Minimum Age) Act 2024 (Cth)

New concepts

Think about the following concepts and what you already know about them:

• the making of laws • different types of political systems • how political systems influence the making of laws • Australia’s system of federal government and state governments • Aboriginal and Torres Strait Islander Customary Lore. You will learn more about all of these concepts in this topic.

Activity 4.1.1 See, think, wonder

Look at the headlines in Figure 4.1.2 and answer the following: 1.

What do they mean to you?

How do you think they relate to the topic of the legal and political environment?

What’s one way you think laws or political decisions can influence businesses or consumers? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

237

238

Chapter 4 The legal and political environment

4.2

Why do we have laws and what do they do for society? Success criteria

In this lesson, you will learn about laws and non-legal rules, who makes them and why they exist. You will also start to build an understanding of the concept of the rule of law.

❏ I can identify examples of laws and non-legal rules. ❏ I can explain who makes laws and why they exist. ❏ I can describe the meaning of the rule of law and its importance.

SA PA M P G L ES E

Learning intention

Starter activity

Look at the illustration in Figure 4.2.1 about school uniform rules. 1.

Why do you think schools have rules around what students can wear to school? Would these rules be appropriate for the whole of society?

School blazer with log

i t with collar Whitee shir done up) ca (button n be ool colours Tie in sch

ngth ee-le s n k l o Scho k trouser c or bla

Option - black jumper, e but with school colours

plaid

it skir

Black/plain plain tights or plain socks

Plain blac

k shoes

➜

Figure 4.2.1 Traditional school uniform designs and rules

Why do we have rules?

rule a guide to how things should be done

While not all rules are laws, they must still be followed by the group that they cover. Rules need to have consequences attached to them if they are to work.

Figure 4.2.2 Sign indicating requirement to wear safety shoes in the workplace ➜

society a large community of people who are united by a shared culture, institutions and typically a common legal system and structured relationships, living within a defined geographic area

A rule is a guide to how things should be done. Rules are seen as necessary as they help create order, safety and fairness in our communities and environments. They guide how people should behave, making it easier for everyone to live and work together peacefully. Rules are important in protecting individuals’ rights, ensuring fairness and helping to prevent confusion or conflicts. Overall, rules help society function smoothly and support the wellbeing of all its members.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.2 Why do we have laws and what do they do for society?

For example, both at school and in some workplaces, rules about wearing a certain type of shoe for safety are enforced. Failure to wear these shoes will mean that students and workers cannot engage in certain activities. This means a loss of the learning experience for the student and loss of pay for the worker. Sports teams, schools, clubs and trade unions are all examples of groups that have rules, and these groups all elect a team and team leader to run them. The election is a sign of democracy, which is a system where people get to vote for their leaders. The leaders represent the group and make and review rules on behalf of the members.

239

Writing focus 4.2 Transitional phrases

SA PA M P G L ES E

While rules are suitable for groups, they may not be suitable for society. For example, consider the previously mentioned safety shoe rule. Would it work for everyone in New South Wales or Australia? How would it be enforced? Over time, rules that apply to everyone, such as rules about stealing, become laws.

The difference between laws and non-legal rules

As people started living in groups, they developed a set of rules for how things should be done by members of a group. These rules provided regulations for safety, fairness and order within the group. As groups grew and joined with other groups, they became a society and so the rules worked to prevent chaos by providing clear guidelines for behaviour and ensuring that everyone was treated with respect. This continues in today’s world, where rules provide predictable expectations, which reduces confusion and conflict and makes it easier for people to live and coexist peacefully.

➜

Figure 4.2.3 Rules are part of our day-to-day lives.

Over time, as society developed into nation-states with formal structures running them, many of these rules were formalised into laws. A law is like a rule in that it regulates society, but breaking a law comes with penalties that can be enforced, with a hierarchy of punishments from fines to incarceration. Thus, a law is a legally enforceable rule that applies to all members of society. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

law enforceable rules about how things should be done

240

Chapter 4 The legal and political environment

In Australia, laws are primarily created by parliaments and enforced by police and courts, with penalties such as fines or imprisonment for non-compliance, and they apply to everyone in society. Non-legal rules still exist, but they are guidelines set by private groups or institutions, such as a school’s dress code or a sports club’s regulations. Breaking them can result in consequences like exclusion, but they are not legally binding and are enforced through social pressure, not the state.

The reasons for laws in society As previously mentioned, laws have developed from rules in society to provide a common framework for correct behaviour. The key reasons for laws include:

• Maintaining social order: laws provide a clear structure so that everyone

SA PA M P G L ES E

understands their obligations and rights. Protecting people: laws prevent harmful behaviour and provide safety for members of society; for example, traffic laws and smoking bans. Ensuring fairness and justice: laws are intended to make sure that everyone is treated equally and fairly, regardless of their background. They also provide a system to settle disputes between individuals, and between individuals and the government. Reflecting values and morals: rules, and thus laws, have usually developed from a group’s common morals and ethics. Over time, laws generally continue to change to meet a society’s changing moral and ethical standards. Protecting rights: laws are a way to protect the basic rights and freedoms of citizens, such as the right to a fair trial.

• • • •

The rule of law

rule of law a concept that states everyone is equal before the law

The rule of law is a concept that means everyone, including the government, is equal under the law and must follow it. Under this principle, no one is above the law and laws must be clear, publicly known, and applied fairly and consistently to ensure a stable and just society. It is an important concept because it ensures accountability and provides the foundation for a fair and orderly society. Also, in requiring everyone, including the government, to follow the law, the rule of law establishes trust and prevents chaos or tyranny. Chaos means a society that operates without rules, so lacks organisation; and tyranny means where a leader or group has complete power and no one is allowed to question this authority. For the rule of law to work, it needs to contain the following main elements:

• Everyone is innocent until proven guilty in a fair and public criminal trial. This is • • •

known as the “presumption of innocence”. People can only be punished if an impartial court has decided they have broken the law. A person can only be found guilty of committing a crime if their actions were illegal at the time. This means that a person can’t be accused of breaking a new law with past actions. The government can be challenged about its actions through the legal system and by the media and citizens.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.2 Why do we have laws and what do they do for society?

241

Countries with strict laws and punishments: Singapore Some countries have very strict laws and associated punishments. Singapore is a country known for its cleanliness and low crime rate. It achieves this by having strong regulations on people’s behaviour and fines for misbehaviour. This includes such things as banning the sale of chewing gum. Smoking is also banned in most public places.

Both corporal and capital punishments are part of the legal system. For certain offences, such as murder or trafficking of drugs above a certain quantity, a death sentence may be given. Scamming is a crime on the rise in Singapore, and public caning is one of the punishments provided to scammers who are found guilty of this crime.

➜

SA PA M P G L ES E

Littering is against the law. Dropping even a small piece of rubbish, such as a cigarette butt or a lolly wrapper, can lead to hefty fines. In Singapore, the fines for littering range from S$2000 to S$10,000 (which equates to around A$2300 to A$11,600). Repeat offenders may be required to do community service in a vest marked “Corrective Work Order” to set a public example. Even visitors to the country will be subject to fines for breaking these laws.

Figure 4.2.4 Old Supreme Court in Singapore’s City Hall

Review 4.2

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Match the start of the sentence to its end. When you are sure, write the correct sentence in your workbook.

Start

End

a. Laws provide social order by

preventing harmful behaviour and providing safety for members of society.

b. Laws protect people by

they have usually developed from a group’s common morals and ethics.

c. Laws ensure fairness and justice by

providing a way to run a fair trial.

d. Laws reflect values and morals because

making sure that everyone is treated fairly and providing a way of settling disputes.

e. Laws are a way to protect the basic rights and freedoms of citizens

providing a clear structure so that everyone understands their obligations and rights.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

242

Chapter 4 The legal and political environment

Each of the following statements about the rule of law is incorrect. Rewrite them so that they are correct. a. The rule of law is a concept that means that not everyone, especially the government, has to follow laws. b. People can be punished if everyone decides that they have broken the law. c. People can be charged with previous behaviour under a new law. d. The government cannot be challenged about its behaviour through the legal system.

Thinking, researching and communicating 1.

Read about the way that Singapore deals with offences.

SA PA M P G L ES E

a. Why does the country have strict rules about chewing gum, littering and smoking? b. Imagine you know someone who is about to travel to Singapore. Draft an email providing advice to them explaining how they should behave in that country. Copy the following table into your workbook. Look at the list below and place each item in your table, under the correct heading.

Source

Purpose

Who they cover Enforcement Penalties ( jurisdiction)

Example

Rules (non-legal)

Laws (legal rules)

• Made by official lawmaking bodies such as state and federal parliaments, local councils and courts • Apply to all members of Australian society • Enforced by the police and the court system • Can result in formal legal sanctions, such as fines or imprisonment • To regulate behaviour and protect individuals and the community from harm • Created by specific groups or institutions, such as schools, clubs and families, or by individuals • Apply only to members of that specific group or to individuals who agree to follow them • Enforced through mechanisms like peer pressure, convenience, goodwill or a need for cooperation

within the group • Involve non-legal consequences, such as exclusion from the group or activity, or other forms of social disapproval • To guide behaviour, ensure order and facilitate the functioning of a specific group or activity • A law mandating speed limits on Australian roads, enforced by police and carrying fines for speeding • A school’s uniform policy, enforced by the school administration and resulting in disciplinary action for non-compliance Do we really need laws to regulate people’s behaviour? Shouldn’t it just be common sense and good manners? What do you think? Construct one to two paragraphs in response to this question. Make sure that you justify your answer.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.3 How are criminal laws different from civil laws?

4.3

243

How are criminal laws different from civil laws? Success criteria

In this lesson, you will learn that laws can be categorised into criminal law or civil law, and the similarities and differences between them.

❏ I can define criminal law and civil law. ❏ I can explain how criminal law and civil law are similar and different.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Think about the following question. “If someone steals your bike, is it something that affects only you, or does it involve the community or society? Why?” Present your thoughts to the rest of the class.

➜

Figure 4.3.1 The remains of a stolen bike

The law, which is also known as the legal system, can be divided into different categories. Two of these categories are criminal law and civil law. For example, the case of the bike theft affects the whole of society as stealing is against the law (criminal law), but it also affects the individual and may lead to private legal action (civil law). These ideas will be looked at further in this topic.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.3 Transitional phrases

244

Chapter 4 The legal and political environment

Criminal law Criminal law is the body of law that prohibits behaviours that are seen as harmful to society. It is also known as public law as it exists to protect the general public from criminal conduct. This area of law covers such activities as:

• crimes against persons, including homicide, manslaughter and assault • crimes against property, such as larceny, break and enter, and robbery • white-collar crime, such as tax evasion and computer hacking • crimes against the state, such as treason and sedition • public order offences, such as drunk and disorderly conduct • traffic offences, such as driving without a seatbelt.

SA PA M P G L ES E

criminal law the body of law that prohibits behaviours that are seen as harmful to society

All these activities are seen as behaviours that cause harm to society in some way so they have been included in state or federal laws as crimes. They attract different penalties depending on the severity of the crime. Many of our criminal laws have a religious background; for example, in Christian countries, laws have been derived from the Ten Commandments. Over time, criminal laws have had to change to match changes in society. This has especially occurred as laws try to keep up with technological advancements.

➜

Figure 4.3.2 Criminal law deals with a wide range of offences, including property crime, traffic offences, white-collar crime and violent offences against persons. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.3 How are criminal laws different from civil laws?

245

Criminal laws in action

SA PA M P G L ES E

In Australia, each state is responsible for the main body of criminal laws, which means that laws about certain actions may differ from state to state. However, there is uniformity in the most serious crimes. In New South Wales, the primary criminal code is the Crimes Act 1900 (NSW). It outlines various criminal offences, the penalties and legal procedures for addressing criminal conduct.

➜

When a crime is committed, and the alleged perpetrator Figure 4.3.3 The figure of “Lady Justice” is associated with the legal system. You’ll often find is arrested, a criminal court imagery of her in courts. case or trial will usually be held. In this trial, a prosecutor will have to prove that the defendant (the accused) committed the crime. A prosecutor is a lawyer employed by the government to prove the case. The defendant is the person charged with the crime, and they will usually have a lawyer to defend them against the charges. In a criminal trial, the prosecution has the burden of proof to prove that the defendant committed the crime “beyond reasonable doubt” (known as the standard of proof). A judge oversees the case and acts as an umpire, ensuring that rules are followed. In many trials, a jury (which is made up of eligible citizens) will decide on the verdict of “guilty” or “not guilty” based on the arguments and evidence put forward by the prosecution and the defence teams. In other trials, the defendant may choose to have a judge-only trial, so the judge makes the verdict.

Civil law

Civil law is also known as private law in that it governs the rights and responsibilities of individuals, organisations and government bodies in their private dealings and disputes. It most often involves disputes over contracts, negligence, property, debt and discrimination. It arises from the behaviour of civilians, as it involves injustices against them and the way that they seek justice. In a civil trial, there is no prosecution. The person who initiates the court case (often known as the injured party) is called the plaintiff. The party who the claim is made against is called the defendant. It is up to the plaintiff to prove their case and convince the jury or judge that the civil wrong occurred. As a civil case cannot result in jail time, the standard of proof is lower than in a criminal case and the plaintiff only needs to prove their case “on the balance of probabilities”.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

civil law governs disputes between individuals and groups (such as commercial and government organisations), focusing on private rights and responsibilities

Chapter 4 The legal and political environment

Similarities and differences There are similarities and differences between the ways that breaches of criminal law and civil law are treated. These are summarised in Table 4.3.1. Table 4.3.1 The similarities and differences between the ways that breaches of criminal law and civil law are treated Criminal law

Civil law

Purpose

To maintain public order by punishing offenders and deterring criminal behaviour

To resolve disputes and provide a remedy for a wronged party

Who initiates action

The government, represented by a prosecutor, files charges against the individual or company, known as the accused or defendant.

A private individual or organisation, known as the plaintiff, files a lawsuit against another party, the defendant.

Standard of proof

The prosecution must prove the defendant’s guilt “beyond a reasonable doubt”, meaning there can be no doubt of guilt. This is due to the serious consequences of a criminal conviction.

The plaintiff must prove the case “on the balance of probabilities”, meaning that the plaintiff’s version of events is more likely true than not.

Outcome

Either “guilty” or “not guilty”

A judgment of “liable” or “not liable”

Penalties

A guilty person can be punished with imprisonment, a fine paid to the state, or community service.

The liable party must provide a remedy, most often monetary damages, but also possibly an injunction or specific performance.

Legal protection The accused has a constitutional right to legal representation, even if they cannot afford it.

No constitutional right to free legal aid. The losing party often must pay the winning party’s legal costs.

SA PA M P G L ES E

246

Strange Australian criminal laws

Australia has had some strange criminal laws over time, and some are still in existence. However, very few people have been prosecuted under these laws. These include:

• In Victoria, it is an offence to fly a kite to “the annoyance of any person” in a • •

public place. The maximum penalty is a fine of 5 penalty units (over $1000) – section 4, Summary Offences Act 1966 (Vic). In New South Wales, a driver was able to be fined up to $2200 for not taking enough care to avoid splashing mud on public bus passengers – regulation 291-3, Road Rules 2014 (NSW) (now repealed). In South Australia, obstructing or disturbing a wedding, funeral or religious service is an offence that carries a maximum fine of $10,000 or two years imprisonment – section 7A, Summary Offences Act 1953 (SA).

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.3 How are criminal laws different from civil laws?

Review 4.3 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

247

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding

Complete the following cloze passage in your workbook. The Australian legal system is divided into two main branches: criminal law and civil law. ___________ is concerned with actions that are considered harmful to ___________ as a whole, such as ___________, assault or murder. The primary purpose of criminal law is to ___________ offenders and deter future crime, with potential outcomes including ___________ or fines. In a criminal case, the matter is brought to court by the ___________, which represents the state or the Crown, against the accused (defendant). The ___________ of proof rests with the prosecution, who must prove the accused’s guilt to a very high standard: ___________. ___________, on the other hand, deals with private ___________ between individuals or organisations, such as breach of contract, property disagreements or personal injury claims. The main objective of civil law is to provide a ___________, usually in the form of monetary ___________ (damages), to restore the wronged party to their original position. In a civil case, the person bringing the claim is called the ___________, and the person being sued is the ___________. The plaintiff has the burden of proof, but the standard of proof is lower than in criminal cases: they must prove their case on the ___________ (meaning it is more likely than not that their version of events is true).

SA PA M P G L ES E

Define the following legal terms: a. prosecution b. defendant c. standard of proof d. plaintiff e. beyond reasonable doubt f. balance of probabilities.

Thinking, researching and communicating 1.

Explain in two to three sentences how criminal law and civil law are different. It is often argued that the law is reactive, playing catch-up with society. From your learnings in this lesson, construct three to four sentences for or against this argument. Read the media item “The history behind controversial laws of sacrilege and blasphemy in Australia” at https://cambridge.edu.au/redirect/11719 and answer the following questions: a. Sacrilege is the violation or bad treatment of a sacred object, site or person. Identify examples of sacrilege that are mentioned in the article. b. Outline the origins of the laws around sacrilege and blasphemy (to show disrespect to religion). c. Identify the punishments that can be given for committing sacrilege. d. Outline the reasons provided in the article for slow change in laws concerning religions. e. Outline the arguments for and against the laws that apply for sacrilege given in the article. If you were asked your opinion, what arguments would you give? f. Discuss in three to four paragraphs whether we still have a need for laws around religion in today’s world. Don’t forget that “discuss” means to provide reasons for and against something. Ensure that you provide reasons in your answer.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

248

Chapter 4 The legal and political environment

4.4

What is statute law and how is it made? Success criteria

In this lesson, you will learn about statute law and how a law is made through parliament.

❏ I can define statute law. ❏ I can explain the steps for how a law is made in parliament.

SA PA M P G L ES E

Learning intention

Starter activity

Look at the Privacy Act 1988 (Cth) at the following link: https://cambridge.edu.au/redirect/11720. 1.

2. 3.

What do you think it is about? Who wrote this law? The original Act was written in 1988. Do you think it is still relevant? How can it be changed?

All these things will be explored in this lesson.

Writing focus 4.4 Developing sentences

When the First Fleet came to Australia in 1788, it didn’t just bring convicts, soldiers and sailors; it also brought British traditions and customs, including legal traditions. Thus, the ways that laws are made in Australia have their origins in the ways that they are made in Great Britain – although over time this has been adapted to suit Australian ways. Just like in Great Britain, Australian laws are made in two different ways – through statute law (parliament-made) and common law (judge-made).

➜

Figure 4.4.1 Old Parliament House, Canberra – the seat of government in Australia from 1927 to 1988

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.4 What is statute law and how is it made?

249

Statute law Statute law refers to laws (also known as legislation) made by parliament. Before it becomes a law, a proposed law goes through a process that ensures that any new law is suitable for the society it will serve (see Table 4.4.1 on the next page). A statute law starts its journey as a bill, which is a proposal for a new law or a change to the law. It is introduced to parliament by a member of parliament, who is usually a spokesperson for the group who feel that there needs to be a new law or a change to an existing law. The bill is then discussed and debated by members of parliament (how members of parliament are elected is discussed later in this topic).

statute law laws made by parliament bill a proposed law

SA PA M P G L ES E

Its progress from being a proposal (or bill) to becoming a law can be a lengthy process. In Australia, we have lower and upper houses of parliament, and the bill must be considered by both houses. This not only adds to the examination of the proposed law but lengthens the time taken to create a new law. However, this is important as it means that proposed new laws go through a lot of scrutiny and ensures the new law will be appropriate.

➜

As the bill is discussed and Figure 4.4.2 Then Opposition leader Sussan Ley (left) and Prime Minister Anthony Albanese debated by members of (right) discussing new bills at Parliament House in early 2026 parliament, amendments are often made to the proposed law. It will then be voted on to see if it is accepted. If the majority of the lower house votes against the bill, it may be redrafted or totally abandoned. If the bill passes, it proceeds to the upper house for a similar review, where senators will approve or reject it. If it is accepted at this stage, it then goes to the Governor-General or state Act a law that has passed through Governor for royal assent, becomes an Act of Parliament, and will be a law. These stages parliament for creating a new law are the same at both national and state level. Lawmakers are often accused of “knee-jerk” reactions to social and media pressure when making laws, but this process of examination of the bill means that the new law should be appropriate for its purpose. On the other hand, the law system is often criticised as being reactive (not proactive) and slow to meet change, responding to events or problems that have already occurred. Critics would argue that the longer it takes to pass a law the more likely it is that the new law could be outdated before it is put in place. An example of this is mobile phone use. Most of the laws around using mobile phones were written after their introduction. The process of making a law is outlined in Table 4.4.1 on the next page. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 4 The legal and political environment

Table 4.4.1 The process of making a law in Federal Parliament Stage

House of Representatives (the Lower House)

Senate (the Upper House)

Preparation

Idea for new law identified (e.g. from government policy, community groups, departments). The bill (draft Act) is drafted by the Office of Parliamentary Counsel.

–

Introduction

First reading: The bill is First reading: The minister presents the bill (proposal for a new law) to the introduced to the Senate, and house, and the clerk reads its long title. the clerk reads its long title.

SA PA M P G L ES E

250

Second reading: The minister makes a speech explaining the bill’s purpose and general principles. Debate is adjourned to allow members to study the bill. Later, members debate and vote on the main idea.

Second reading: Senators debate and vote on the main idea of the bill.

Detailed scrutiny Consideration in detail (optional): Members discuss the bill clause by clause and may propose amendments.

Committee of the whole (optional): Senators discuss the bill in detail and may propose amendments.

Final vote

Third reading: A final debate may occur, and members vote on the bill in its final form.

Third reading: Senators vote on the bill in its final form.

Agreement

The bill is passed by a majority vote and sent to the Senate.

The bill is passed by a majority vote. It must be in an identical form to the one passed by the House of Representatives.

Royal assent

After being passed by both houses in identical form, the bill is presented to the Governor-General for approval (royal assent).

Debate and vote

Commencement The bill becomes an Act of Parliament and officially commences as law (either immediately, on a specified date, or 28 days after royal assent if not specified).

Access the following link (https://cambridge.edu.au/redirect/12163) for an introduction to the Federal law-making process from the Parliamentary Education Office.

The role of the Governor-General The Governor-General position in Australia is a legacy of Australia’s British history. The Governor-General is the British monarch’s representative in Australia and holds constitutional and ceremonial duties. They act on the advice of the Prime Minister and Federal Government, appointing ministers and providing royal assent to bills passed in Federal Parliament. In addition, the Governor-General also performs ceremonial functions, initiates federal elections and has “reserve powers” for exceptional circumstances. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.4 What is statute law and how is it made?

251

Each state also has a Governor who carries out similar functions. The positions are nominated by the Prime Minister and state premiers, respectively, and formally appointed by the British monarch. The Governor-General’s role in the Australian political and legal system involves constitutional duties, including signing legislation (but only on the advice of ministers). They also have executive powers, such as:

• giving royal assent to a bill • starting the process for a federal election. The Governor-General has reserve powers, such as:

SA PA M P G L ES E

• the ability to dismiss a prime minister • the power to appoint a prime minister if a federal election has not resulted in a clear outcome.

Figure 4.4.3 Australia’s 28th Governor-General, Sam Mostyn, was sworn in at Parliament House on 1 July 2024. ➜

There is ongoing debate in Australian society about the role of the GovernorGeneral and our connection to the British royal family. Many Australians have no ties to the United Kingdom and question the need to have its monarch as Australia’s formal head of state. This debate also raises questions about the ongoing relevance of the Governor-General and their powers.

The constitutional crisis: the Governor-General dismisses the government

➜

In a situation that is notorious in Australian history, on 11 November 1975, the Governor-General at the time dismissed Prime Minister Gough Whitlam and his Labor government. The Governor-General, John Kerr, justified this action because the government could not pass bills, including those to do with the budget, Figure 4.4.4 Prime Minister Gough Whitlam addresses through the Senate, which was reporters outside the Parliament building in Canberra after his controlled by the opposition. The dismissal by Australia’s Governor-General. move was seen as controversial, as many felt that the Governor-General did not have the authority to do this, because the monarch (and thus her representative) had no input into governing the country.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

252

Chapter 4 The legal and political environment

Review 4.4 Thinking, researching and communicating

Knowledge and understanding

Online quiz

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1.

Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. Statute law is another term for legislation made by a parliament.

SA PA M P G L ES E

b. Before a bill becomes a law, it goes through a process to ensure its suitability for society.

c. A bill is a current law that is being reviewed for changes.

d. A bill is typically introduced to parliament by a member who speaks for a group advocating for the law change.

e. The process of a bill becoming a law is typically a quick and short process.

f. In Australia, a bill only needs to be considered by the lower house of parliament before it can become a law. g. The requirement for a bill to pass through both houses of parliament helps ensure that the proposed law goes through a lot of scrutiny and is appropriate.

h. Amendments can only be made to a bill before it is initially voted on in the lower house. i. If the majority of the lower house votes against a bill, it must be abandoned completely.

j. The stages for creating a new law are different at the national level compared with the state level in Australia.

2. 3.

Outline the advantages and disadvantages of the time taken to turn a bill into a law. Describe the role of the Governor-General in Australia.

Thinking, researching and communicating 1. 2.

Construct a flow diagram that explains the passage of a bill to becoming a law. Who was Gough Whitlam? Summarise what happened to him and his government. Do you think we need a Governor-General in modern Australia? Justify your answer.

➜

Figure 4.4.5 Gough Whitlam on the campaign trail

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.5 What is common law and how is it made?

4.5

253

What is common law and how is it made? Success criteria

In this lesson, you will learn about common law and how a law is made by judges.

❏ I can define common law. ❏ I can explain how judges create law through decisions.

SA PA M P G L ES E

Learning intention

Starter activity

Look closely at Figure 4.5.1 of M.V. (Bill) Windeyer in his Supreme Court chambers, and answer the following: 1.

2. 3.

What do you think the books are? Why does the judge need them? Who else may refer to them? Write down three questions you have about this topic.

➜

Figure 4.5.1 M.V. (Bill) Windeyer in his Supreme Court chambers ahead of his elevation to judge, pictured with portraits of his legal ancestors

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

254

Chapter 4 The legal and political environment

Common law Writing focus 4.5 Developing sentences

Today, common law is still based on decisions made by judges. This occurs when a judge decides on a new or unique legal issue in a court case and so makes a ruling that may be different from other rulings. This sets a new standard regarding the law around the case. This new standard is known as a precedent and will be used by judges in future similar cases. A new precedent is created when a case has no previous similar cases, or when a higher court reverses or overrules an existing precedent. (The court hierarchy is explored later in this topic.)

SA PA M P G L ES E

common law a system of laws based on customs and court decisions rather than on written laws made by a parliament

Common law derives from the early English legal system when roaming magistrates (judges) heard cases in towns and cities and made laws about them. This meant that the English people were treated similarly under a common set of laws.

precedent a new standard set by judges in deciding a court case

An example of precedent creating a new law in New South Wales was in the R v Loveridge case where the NSW Court of Criminal Appeal increased the sentence given to Loveridge for a “one-punch death”. By doing this, the court established a binding precedent that lower courts must follow when sentencing people convicted of similar offences. It also highlighted the seriousness of the crime and the need to stop similar crimes. This precedent influenced the introduction of new laws, including a minimum non-parole period for such offences.

Types of precedent

Precedent can be divided into two categories; binding precedent and persuasive precedent.

Binding precedent is where lower courts must follow decisions of higher courts in the same court hierarchy. For example, all Australian courts are bound by decisions made by the High Court of Australia. In New South Wales, the district courts must follow decisions made by the Supreme Court.

➜

Figure 4.5.2 From left to right, barristers Colin Mandy SC and Sophie Stafford, with lawyers Ophelia Holloway and Bill Doogue, arrive for the trial of Erin Patterson at Latrobe Valley Magistrates’ Court in Morwell on 30 April 2025, in the high-profile mushroom poisoning case.

Persuasive precedent means that decisions made by lower courts are not binding to other courts, but they can influence a court’s decision. This is especially so if the case involves similar issues or legal principles. Lawyers for both the prosecution and the defence will refer to decisions made in previous judgments (binding and persuasive) as they put forward their cases. They argue that previous decisions are relevant to their cases. This is why you see a lawyer with so many books and documents in a court case. It also means that they must do a lot of research beforehand.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.5 What is common law and how is it made?

Review 4.5 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

255

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding

SA PA M P G L ES E

Complete the following multiple-choice questions. Write the correct answer for each in your workbook in the form of a statement. 1. How did common law originally develop in the early English legal system? A. Through laws passed by a central parliament B. Through decisions made by local sheriffs and mayors C. Through the consistent rulings of roaming magistrates (judges) across different towns and cities D. Through a written constitution that was applied uniformly 2. What is the primary way new common law is created by judges today? A. When a judge decides to ignore all previous laws B. When a judge decides on a new or unique legal issue in a court case C. When a judge asks the public to vote on a new law D. When a judge strictly follows ancient, unchangeable rules without variation 3. What is the term for the new standard created by a judge’s decision that must be used by judges in future similar cases? A. A statute B. A bill C. A precedent D. A verdict 4. Under what circumstances can a new precedent be established? A. Only when a parliament passes a new law B. When a case has no previous similar cases or when a higher court overrules an existing precedent C. Only when the public demands a change in the law D. When a lower court decides it doesn’t like an existing ruling 5. In the example of the R v Loveridge case in New South Wales, how did the court’s action affect the law? A. The court decreased the sentence for “one-punch deaths” to be lenient. B. The court established a binding precedent that lower courts must follow for similar offences. C. The court decided that “one-punch deaths” were not serious crimes. D. The court created a new law that was immediately overturned by parliament. 6. The precedent set by the R v Loveridge case ultimately influenced the introduction of what new legal measure? A. A public holiday in memory of the victim B. A new type of trial by jury for similar offences C. A minimum non-parole period for “one-punch” offences D. A nationwide ban on ever creating new precedents 7. Outline the difference between binding precedent and persuasive precedent. 8. Explain how judges and lawyers use precedent.

Thinking, researching and communicating 1.

Using what you have learned so far about the law in Australia, design a poster that could be displayed on a wall and shows the differences between criminal and civil law and the differences between statute and common law. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

256

Chapter 4 The legal and political environment

4.6

What is Customary Lore and how is it applied? Success criteria

In this lesson, you will learn about the Customary Lore of the Traditional Owners of the land now known as Australia, as well as the concept of terra nullius.

❏ I can describe Customary Lore and its role in Aboriginal and Torres Strait Islander Communities. ❏ I can explain the concept of terra nullius and its historical impact. ❏ I can compare Customary Lore with Australian law.

SA PA M P G L ES E

Learning intention

Starter activity

See, think, wonder 1.

Customary Lore the traditional customs, beliefs and stories that guide behaviour and decision-making within Aboriginal and Torres Strait Islander Communities terra nullius a Latin term meaning “land belonging to no one”

Figure 4.6.1 The Three Sisters in Katoomba is recognised as a site of Cultural, social and historic significance to Gundungurra, Wiradjuri, Tharawal and Darug Peoples, and is linked to Dreamings involving kinship rules, Customary Lore and consequences. ➜

See: what do you see in Figure 4.6.1? Observe the image closely and identify features of the landscape that might represent how the Gundungurra, Wiradjuri, Tharawal and Darug Peoples connect Cultural Knowledge, responsibility and Customary Lore to Country. Think: consider how Customary Lore guides relationships, responsibilities and behaviour within Communities, and compare this with the written rules, formal institutions and processes used in Western law. Wonder: what questions do you have about how Customary Lore is learned, practised and upheld, and how it is similar to or different from the Australian legal system?

Customary Lore and the introduction of terra nullius

Aboriginal and Torres Strait Islander Peoples have lived on and cared for this land for tens of thousands of years, with complex systems of law and Customary Lore governing relationships, responsibilities to Country and dispute resolution. Current Australian law is based on the English legal system, which was transported to Australia with the First Fleet in 1788. Rather than recognising the existing legal systems or making treaties, the British imposed their own. Over time, the concept of terra nullius (a Latin term meaning “land belonging to no one”) developed, denying First Nations Peoples’ traditional connection to the land and relationships with Country. This idea allowed the British to claim legal control and disregard the existing Customary Lore systems. Today, First Nations Peoples maintain strong connections to Country and continue to observe traditional responsibilities where possible under Australian law.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.6 What is Customary Lore and how is it applied?

257

Customary Lore The Customary Lore of Aboriginal and Torres Strait Islander Peoples is an ancient system that encompasses traditional understandings, Knowledges and beliefs that guide social order and rules for living. It is a dynamic system that continues to guide the lives of many Aboriginal and Torres Strait Islander Communities today. The main features of this Customary Lore are as follows.

• Traditionally passed down through generations both orally and non-verbally through

SA PA M P G L ES E

•

sacred stories, ceremonies, songs, dances and art. Today many Indigenous people also share this Knowledge using contemporary technologies. It is based in the Dreaming and Country. The Dreaming accounts for the creation of the world by ancestral spirits, and provides the philosophical Knowledge base for living. Country refers to the specific geographic areas and waters that hold deep spiritual and cultural significance for different First Nation Peoples. It involves kinship systems that determine an individual’s roles, responsibilities and relationships within their family, Community and nation. It involves the authority of Elders, who are the respected Knowledge Holders and lawmakers in their Communities. Elders have the responsibility for passing down Lore and helping to settle disputes. Customary Lore sets out distinctions between men’s and women’s business. This means that certain sacred Knowledge and ceremonies are reserved for initiated men or women. It has a holistic approach that links individual wellbeing to family, community and the land. It is a diverse concept, meaning that there is no single Aboriginal and Torres Strait Islander legal system. Lore varies among the hundreds of different language groups and nations across Australia.

• • • • •

Aspects of Customary Lore

One aspect of Customary Lore is “payback”. This is based in the concept of reciprocity and is used to restore balance after a grievance by providing punishment and reconciliation. However, because it can involve physical means to bring about justice, it can be at odds with the criminal legal system. The contemporary practice of circle sentencing is informed by Customary Lore and is an alternative sentencing program that incorporates Community input into the justice process. It usually involves Elders, members of the Community, the victim and the accused sitting in a circle and deciding on an appropriate punishment. Today, it includes a magistrate and prosecutor. This collaborative approach seeks to reduce reoffending, support victims and assist the Community in addressing the underlying causes of crime. Although the modern Australian legal system has acknowledged the existence of Customary Lore, it has only made limited efforts to incorporate it, for example through such areas as circle sentencing for offenders of Aboriginal or Torres Strait Islander background. Some aspects of Australian law conflict with Customary Lore. Customary Lore is not uniform across Australia, and different First Nations language groups and clans have their own distinct legal systems, which Australia’s singular legal system finds difficult to• Cambridge accommodate. Final pages University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.6 Appositives

Country lands, waterways, seas and skyways to which Aboriginal and Torres Strait Islander Peoples are connected

258

Chapter 4 The legal and political environment

The Mabo decision

SA PA M P G L ES E

Precedent was discussed in an earlier lesson. The Mabo decision is an example of precedent, as it overturned the principle of terra nullius. In a landmark ruling in 1992, the High Court recognised native title in Australia. The term “landmark” means pioneering or stand-out event. By doing this, it created a legal precedent in Australia for acknowledging the connection of Aboriginal and Torres Strait Islander Peoples to their traditional lands. This decision then led to the Native Title Act 1993 (Cth), which established a framework for native title claims. The Mabo decision is named after Eddie Mabo, who led a group of Torres Strait Islander people in lodging a case in May 1992 with the High Court of Australia – Mabo and Others v Queensland (No. 2) (1992) – for legal ownership of Mer (Murray Island). Eddie Mabo died before the High Court handed down its decision, but his legacy has changed legal history.

➜

Figure 4.6.2 Activist Edward Koiki Mabo in the 1980s

Review 4.6 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

4. 5.

Outline the importance of kinship and Elders in Customary Lore. Outline the meaning of terra nullius and its importance to British occupation. Explain how the use of physical punishments in “payback” creates a conflict with the principles of the modern Australian criminal legal system. What is circle sentencing? How does it incorporate Community input into providing justice? Outline the challenges the Australian legal system faces in integrating Customary Lore.

Thinking, researching and communicating 1.

2. 3. 4.

Choose one area of Customary Lore and propose how it could be used in dealing with legal issues in Australia. Ensure that you provide enough detail in your proposal. How did the Mabo decision overturn the doctrine of terra nullius? What was the legal outcome of the Mabo decision and what precedent did it establish? Who was Eddie Mabo and what was his role in the landmark 1992 High Court ruling?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.7 Why do courts have a hierarchy and what does jurisdiction mean?

4.7

259

Why do courts have a hierarchy and what does jurisdiction mean? Success criteria

In this lesson, you will learn about the state and federal court hierarchies and the roles played by these courts.

❏ I can describe the structure of the court hierarchy. ❏ I can distinguish between state and federal courts. ❏ I can explain the roles of different courts in Australia.

SA PA M P G L ES E

Learning intention

Starter activity

Look at Figure 4.7.1. 1.

What does it tell you about going to court? Why do you think that some judges and lawyers are required to wear wigs and robes?

If you said that courtrooms are very formal places, you are correct. Court cases become more formal, the more serious the case. Robes and gowns are important in higher courts as they show the authority that court officials hold in dealing with legal matters. The robes and gowns also provide anonymity, so that legal officials can separate their private life from their work life. ➜

Figure 4.7.1 Solicitors and barristers being admitted to the bar at the Supreme Court of Australia, 1974

Hierarchy and jurisdiction

The word “hierarchy” means ranking according to status or authority. In Australia, the legal system is organised into a hierarchy of courts at both the state and federal levels, each with its own jurisdiction and level of authority, according to their importance and the types of cases they are permitted to hear. The term “jurisdiction” refers to the legal authority of a court or other body to hear and decide cases. It is based on factors such as the level of crime, geographic location and who is involved. In Australia, each court within the hierarchy has its own defined jurisdiction. For example, lower courts will generally hear less serious matters. This ensures that cases are handled by the appropriate level of the judicial system. It also allows appeals to be made to higher courts about decisions made in lower courts. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.7 Appositives

Chapter 4 The legal and political environment

➜

SA PA M P G L ES E

260

Figure 4.7.2 The Australian court hierarchy

State courts

Local or magistrates’ courts

These are the lowest level courts, and they mainly deal with minor criminal offences, traffic violations and small civil disputes. These civil disputes are limited to claims up to $100,000. Magistrates usually preside over these courts, and there are no juries. In New South Wales, the position of magistrate was renamed as judge in 2025 to better reflect their qualifications as well as the seriousness and volume of their work.

District or county courts At the next level of the court hierarchy are the district or county courts. They deal with more serious criminal matters, such as burglary or assault, and larger civil cases (in New South Wales, these are claims up to $1.25 million). A judge presides over these courts, and these courts may include juries for certain trials. Victoria is the only state to have a County Court.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.7 Why do courts have a hierarchy and what does jurisdiction mean?

Supreme courts Each state and territory has a supreme court. It is the highest court at the state level. Supreme courts hear the most serious criminal cases, such as murder, and major or more complex civil matters (which, in New South Wales, are claims over $750,000). They also have the jurisdiction to hear appeals from lower state courts. A judge presides over these courts, and these courts usually include juries for trials.

State courts of appeal

Figure 4.7.4 Supreme Court, Darwin

➜

Figure 4.7.3 County Court, Melbourne

➜

SA PA M P G L ES E

Some states have a separate court of appeal within the supreme court structure. The role of these courts is to specifically hear appeals from lower courts.

Figure 4.7.5 Law Courts, Sydney

Federal courts

Federal Circuit and Family Court of Australia

This court, which has locations in each state and territory, handles federal law matters such as family law, intellectual property matters and migration cases.

Federal Court of Australia

The Federal Court hears more complex federal matters, such as corporate law, industrial relations and administrative law. This court also hears appeals from the Federal Circuit and Family Court.

➜

High Court of Australia

Figure 4.7.6 High Court of Australia, Canberra

The High Court is at the top of the hierarchy. It is the ultimate court of appeal for both state and federal matters and hears appeals from supreme courts and federal courts. It also has the role of interpreting the Australian Constitution, as well as resolving disputes between states and the Commonwealth.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

261

262

Chapter 4 The legal and political environment

Review 4.7 Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Connect the correct end of each sentence to its start and write the sentence in your workbook.

Start

End

a. A hierarchy is

hear more serious crimes, such as burglary or assault, and larger civil cases.

SA PA M P G L ES E

b. The term “jurisdiction” hear the most serious criminal cases, such as murder, and major or more means complex civil matters. c. Local courts

an order of importance.

d. District courts

hears complex federal matters such as corporate law, industrial relations and administrative law.

e. Supreme courts

hear minor criminal cases and civil cases up to the value of $100,000.

f. The Federal Circuit and Family Court of Australia

has the role of interpreting the Australian Constitution, as well as resolving disputes between states and the Commonwealth. It also hears appeals from lower courts.

g. The Federal Court of Australia

handles federal law matters such as family law, intellectual property matters and migration cases.

h. The High Court

to have authority over.

Identify which court would hear the following cases.

a. Traffic infringement b. Appeal about a supreme court matter c. Divorce property settlement d. Complex civil case over $800,000 e. Break-in leading to the death of the shopkeeper f. Break and enter g. Shoplifting h. Civil case under $100,000

Thinking, researching and communicating 1.

Create a chart, picture or diagram that shows the court hierarchy in Australia. Include enough information that it can be used as a study tool.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.8 Why do laws change over time?

4.8

263

Why do laws change over time?

Success criteria

In this lesson, you will learn about reasons for changes in the law and the ways that lawmakers respond to them.

❏ I can identify reasons why laws change. ❏ I can describe examples of changes in the law. ❏ I can explain how lawmakers respond to changing needs in society.

SA PA M P G L ES E

Learning intention

Starter activity

When cars began to be used in Australia, they were very new technology. Thus, the rules were simple and applied to local areas, with a speed limit of 13 km/h in Sydney’s central business district and varying limits elsewhere, often between 10 and 16 km/h. By 1937, as car ownership grew, speed limits in built-up areas had increased to 50 km/h, and on open roads to 80 km/h. This is an example of how laws have changed over time to adapt to modern-day situations.

➜

Can you think of any recent changes to laws and why they have come about?

Figure 4.8.1 Vehicles on Elizabeth Street, Sydney, in 1931

Changing laws

The world we live in is always changing, and for this reason laws need to be adjusted or rewritten to reflect these changes. Unfortunately, it is difficult to predict changes, so the changes to the laws are usually reactive as opposed to being proactive. An example of this is the laws regarding mobile phone use while driving. These laws were all written after the introduction of mobile phones. In Australia, laws are regularly updated and changed to reflect the dynamic nature of society. Social changes regarding attitudes and beliefs to such things as marriage, religion, privacy and discrimination have meant that laws needed to be amended to promote equality and social justice. An example of this was the amendment to the Marriage Act 1961 (Cth) in 2017 to allow same-sex marriages to be recognised by Australian law. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.8 Creating topic sentences

264

Chapter 4 The legal and political environment

Making changes to laws by either creating a new law or amending an existing one has the same process as described earlier in the topic. Laws in Australia are changed and amended through a process involving parliament, where a bill is introduced, debated and voted on in both the House of Representatives and the Senate.

Technology factors

➜

SA PA M P G L ES E

Technological advancements have created new technologies and situations that existing laws do not effectively address. Laws have had to be updated to regulate issues such as cybercrime, digital privacy and intellectual property. Unfortunately, a lot of cybercrime originates from overseas and so Australian law is ineffective in dealing with the perpetrators. In these circumstances, lawmakers need to alert citizens of the dangers, and work with overseas governments and international bodies to stamp out criminal activity.

Figure 4.8.2 In an age of far-reaching cybercrime, it is more important than ever to be vigilant about your digital privacy.

Economic factors

economic growth the increase in the size of a country’s economy over a period of time, usually a year

Figure 4.8.3 The “gig economy” can also include side hustles, like dog walking! ➜

Economic factors such as new industries, financial crises or shifts in employment create change and can be the cause for legal updates to support economic growth and stability or to protect consumers and workers. An example of this is the “gig economy”, where more and more workers are undertaking shortterm contracts. In these circumstances, these workers are often seen as being self-employed.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.8 Why do laws change over time?

Political factors

SA PA M P G L ES E

Political factors can also create changes to laws. Such things as government priorities and international developments may lead to changes in the law. For example, Australia may need to amend laws to comply with international treaties or respond to global events. Over the years, Australia has incorporated United Nations treaties and conventions into federal law.

➜

Figure 4.8.4 Australian Prime Minister Anthony Albanese was a key speaker at the 80th session of the United Nations General Assembly in September 2025.

Community safety factors

A greater need for community safety and protection will see changes to laws. These changes include updates to criminal laws, and new or updated health regulations and environmental protections. The emergency health laws that were used in 2020 to 2022 to deal with the COVID-19 pandemic are examples of laws changed to deal with community safety.

Other factors

➜

Other reasons that laws are changed are to correct errors, to reduce or clear Figure 4.8.5 A woman not wearing a mask is seen being questioned by police in up ambiguities, and to close loopholes Melbourne, 2021. that have become evident through court decisions or public feedback. In addition, decisions by higher courts, such as the High Court of Australia, may reveal the need for legislative reform so that laws are interpreted and applied in the most appropriate way. For example, amendments to privacy laws were made to clear up areas of confusion and make them more relevant to modern times. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

265

266

Chapter 4 The legal and political environment

Changes to the law caused by technology Social media laws Despite the fast pace of technology, lawmakers do try to put measures in place to protect society. This can be seen with social media laws.

SA PA M P G L ES E

➜

In response to concern about the effect that social media was having on young people in Australia, the Federal Government introduced new laws that became effective in December 2025. These laws set a minimum age of 16 for social media accounts, meaning that platforms such as Facebook, Instagram, TikTok, Snapchat and X had to put measures in place to prevent people under the age of 16 from keeping accounts. The new law, the Online Safety Amendment (Social Media Minimum Age) Act 2024 (Cth), initially does not impose penalties on individuals but requires social media platforms to take reasonable steps to enforce the age limit, with noncompliance attracting fines of up to $49.5 million. Publicly available content will still be available to view Figure 4.8.6 How have you been affected since the introduction of the new laws surrounding age restrictions for social media? without an account.

Anti-scam laws

The greater number of people carrying out transactions using technology has attracted increased illegal activity aimed at scamming consumers. The Federal Government has responded to this with the Scams Prevention Framework Act 2025 (Cth). This law requires businesses such as banks, telcos and social media companies to take reasonable steps to prevent, disrupt, report and respond to scams. It also empowers regulators such as the Australian Competition and Consumer Commission (ACCC) to investigate breaches and non-compliance and to impose penalties of up to $50 million. The regulations also provide clearer pathways for consumers to seek compensation.

Bodies that bring about change In Australia, the media can bring about changes to law with a focus on certain issues. The changes to bail laws in New South Wales in the mid-2020s were brought about by constant media agitation and calls for government action. In addition, community concern, and advocacy from special interest groups, can highlight deficiencies in the law and pressure the government to initiate reform. The social media law changes by the Federal Government were partly in response to these pressures. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.8 Why do laws change over time?

267

A more formal approach involves law reform bodies, such the Australian Law Reform Commission (ALRC) and state-based commissions (e.g. NSW Law Reform Commission, Victorian Law Reform Commission). These are independent bodies that research specific areas of law referred to them by the Attorney-General. These bodies engage with experts and the community, release discussion papers and deliver comprehensive reports containing recommendations to the government. The government subsequently determines whether to enact these recommendations into law.

SA PA M P G L ES E

While changes in the law play a role in ensuring that Australia’s legal system remains relevant, effective and responsive to the needs of citizens, the law does play “catch-up” in terms of reflecting changes in society. Introducing new laws takes time, as seen earlier, and while providing appropriate checks and balances, it also adds to the lack of proactiveness in the legal system.

Review 4.8

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Use the information provided in the text to complete the following table in your workbook.

Cause of change

Description

Example

a. Social

b. Economic

c. Technological

d. Political

e. Community safety and protection f. To clarify existing laws

2. 3.

4. 5.

Recall how laws are made or amended in Australia. Identify the laws that have been introduced to deal with technological change. Why were they introduced? Do you think they will work? Make sure you provide good reasons for your answer. Outline the different bodies that can bring about changes to the law. Explain why the legal system is seen as reactive. Provide examples from the text (or more recent examples) in your answer.

Thinking, researching and communicating 1.

Write an extended response to the following prompt. “Discuss the extent to which the law is able to respond to change. In your response, consider the reasons why the legal system may lag behind developments in society.” Remember that to discuss means to provide reasons for and against. An outline to help you write your answer is provided in the activity worksheet that you can download from the Interactive Textbook.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

DOC

Download extendedresponse worksheet

268

Chapter 4 The legal and political environment

4.9

Skills focus: what cases are heard in Australian courts? Success criteria

In this lesson, you will examine statistics about the different cases heard in the criminal courts of Australia. You will also revisit the court hierarchy.

❏ I can outline the main cases that are heard at the different levels of court in Australia and I can match crimes to the court that they would be heard in.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Earlier on in the topic you learned about the court hierarchy. Now it is time to think about the main cases that are heard in the Australian court system. What do you think these are? The media tends to make a lot of noise about crime to the extent that we may feel that we live in a lawless society. Do you think this really is the case? Why or why not?

➜

Figure 4.9.1 The media would make us believe that we live in a lawless society.

Criminal court statistics The Australian Bureau of Statistics (ABS) is the main agency in Australia that collects and shares information about the country’s economy, people and society. This also includes information about criminal cases heard in the courts.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.9 Skills focus: what cases are heard in Australian courts?

At the time of publication, the ABS had issued the following statistics:

• 521,632 defendants finalised in criminal courts in 2024 to 2025, up 1% • most judgments resulted in a guilty outcome (97%) • just over half of those with a guilty outcome received a fine (52%). The ABS stated that in 2024 to 2025 there was a total of 521,632 defendants finalised across all criminal courts in Australia, an increase of 1% (6172) from the previous year.

• The median age of defendants was 35.4 years, reflecting a slow but steady increase •

SA PA M P G L ES E

• •

over the past decade. The majority of defendants (75%, or 391,115) were male, with the proportion greater in the higher courts (87%, or 14,116). Youth defendants aged 10 to 17 years accounted for 4% (22,801). The median case duration was nine weeks, with most judgments resulting in a guilty outcome (97%, or 451,045).

The data highlighted that in 2024 to 2025, the most common principal offences were:

• traffic and vehicle regulatory offences – 38%, or 200,146 defendants • acts intended to cause injury (mostly assault) – 14%, or 75,576 defendants • offences against justice (such as breach of violence orders) – 10%, or • •

51,361 defendants theft – 8%, or 42,321 defendants illicit drug offences – 6%, or 31,383 defendants.

The data in Table 4.9.1 shows the types of crimes that are being heard in Australian courts. Table 4.9.1 The types of crimes being heard in Australian courts

Traffic Assault Offences Theft and against vehicle justice offences procedures and orders

Drug offences

Harm or endanger persons

Public order, health, and safety offences

2023–24

1,90,725

72,817

50,021

43,462

36,718

19,548

22,898

2024–25

2,00,146

75,576

51,361

42,321

31,383

21,091

20,909

Source: Australian Bureau of Statistics. (2023-24). Criminal Courts, Australia. ABS. https://www.abs.gov.au/statistics/people/crime-and-justice/criminal-courts-australia/2023-24.

The court hierarchy As you learned earlier in the topic, the court system has different levels to hear different types of crimes, depending on their seriousness. This is called the court hierarchy. The NSW court hierarchy is summarised in Figure 4.9.2 on the following page.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

269

Chapter 4 The legal and political environment

SA PA M P G L ES E

270

➜

Figure 4.9.2 The NSW court hierarchy Source: Rule of Law Education Centre website, “Court Hierarchy and Jurisdictions of NSW”, 13 September 2022. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.9 Skills focus: what cases are heard in Australian courts?

Review 4.9 Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

271

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Refer to Table 4.9.1 as well as the latest information released by the ABS and complete the following activities.

SA PA M P G L ES E

a. Identify the approximate number of defendants who appeared in criminal courts in the most recent year reported. b. Identify the most common types of offences for which defendants were dealt with in criminal courts. Which offence categories increased or decreased compared to prior years? c. Look at the most common principal offences and turn the data into a graph. What type of graph did you choose and why? d. Criminal cases are heard in different courts depending on the severity of the crime. Recall in which court each of the crimes listed in the following table would be heard if the crime was committed in New South Wales. Construct and complete the following table in your workbook.

Crime

Court

Traffic and vehicle

Offences against justice Illicit drug offences

Acts intended to cause injury Theft

➜

Figure 4.9.3 The Darlinghurst Courthouse is predominantly used for sittings of the Supreme Court of New South Wales. Would any of the above offences be seen in this court?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

272

Chapter 4 The legal and political environment

Thinking, researching and communicating 1.

a. Scenario 1: minor traffic offence Jane was caught speeding in a school zone and has been fined by the police. She wants to contest the fine. Identify which court would handle Jane’s case. Why? b. Scenario 2: burglary case Tom is charged with breaking into a house and stealing valuables. The alleged burglary is serious but not considered the most severe type of crime. Identify which court is most likely to hear Tom’s criminal case first. c. Scenario 3: large civil dispute A business sues another company for breach of contract involving a claim of $200,000. Identify which court would be appropriate for this civil dispute. d. Scenario 4: appeal from District Court Laila was found guilty in the District Court for a robbery charge. She believes the judge made an error in applying the law and wants to appeal the decision. Identify which court Laila should appeal to, and why. e. Scenario 5: environmental dispute A community group wants to challenge the approval of a large industrial development, arguing it will cause environmental damage. Identify which specialist court or tribunal would hear this case. f. Scenario 6: murder trial Franco is charged with murder, one of the most serious crimes under NSW law. Identify which court will conduct Franco’s trial. g. Scenario 7: appeal to the High Court The High Court of Australia receives an appeal on a constitutional question from a lower court’s Figure 4.9.4 The Australian Coat of Arms decorates the front of the High decision. Explain where this appeals Court of Australia in Canberra. process fits in the court hierarchy and why the High Court is involved.

SA PA M P G L ES E

Think about the possible reasons behind the trends in offence types. Consider social, economic, or law and justice factors. Work with another student to discuss and then write an explanation for these changes. By the time you are doing this activity, the data may be quite old. Go to the ABS website and research the latest figures. You will need to look up “criminal courts, Australia”. Describe the types of crimes that are being heard in court. Are there any major changes? If so, why do you think they occurred? Look at the following scenarios and match them to the court in which they would be heard. Justify your decisions based on jurisdiction, seriousness of the offence, and the court’s position in the hierarchy. Compare your answers with another student.

➜

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.10 What is the purpose of the Australian Constitution?

4.10

273

What is the purpose of the Australian Constitution? Success criteria

In this lesson, you will be introduced to the Australian Constitution and its application to the Australian legal and political environment.

❏ I can define the Australian Constitution. ❏ I can describe its main purpose. ❏ I can explain how the Constitution shapes Australia’s legal and political system.

SA PA M P G L ES E

Learning intention

Starter activity

How much do you know about the Australian Constitution? Can you answer the following questions? 1.

2. 3.

4. 5.

What year was the Australian Constitution enacted? How many states are represented in the Constitution? What is the role of the Constitution? What is the parliament? What is “the separation of powers”?

Pre-Federation

Figure 4.10.1 Sir Samuel Griffith

➜

Prior to 1901, Australia was not a single nation but six separate, self-governing British colonies of New South Wales, Victoria, Tasmania, South Australia, Western Australia and Queensland. Each colony had its own laws and was more connected to the British Parliament than to the other colonies. With Federation, the states came together as one country with its own national constitution.

Figure 4.10.2 Andrew Inglis Clark

The Australian Constitution was drafted by representatives from the Australian colonies at a series of conventions in the 1890s. Key figures in writing the Constitution were Sir Samuel Griffith, a judge, who led the drafting of the first version, and Andrew Inglis Clark, a Tasmanian lawyer, who produced an early draft influenced by the US Constitution. Significant contributors include Charles Kingston, Edmund Barton and Alfred Deakin, who also played important roles in the new nation’s early political history.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.10 Transitional phrases

274

Chapter 4 The legal and political environment

The importance of the Constitution The Australian Constitution is the legal framework that sets out the structure and powers of the Australian Government. It was passed as a British Act of Parliament in 1900 and established Australia as a federation of six states on 1 January 1901. Thus, the Constitution created a unified nation by bringing together the six former British colonies into the Commonwealth of Australia. It is Australia’s supreme law, meaning that all other laws must be consistent with it. Access the following link (https://cambridge.edu.au/redirect/12164) for a short video introducing the Australian Constitution, from the Parliamentary Education Office.

SA PA M P G L ES E

For Australian citizens, the Constitution is important as it creates a system of government that shares power and makes sure no single group has too much power. It sets out how power is shared between the federal, state and local levels of government. The Constitution outlines the workings of the Australian Parliament, the roles of its two houses, and gives power to the High Court to resolve constitutional disputes. It also includes provisions to protect the rights of Australians, such as guaranteeing religious freedom and the right to vote. The Constitution is not a bill of rights because it was established to be a framework for government, not a specific list of individual rights. The writers deliberately rejected framing it as a bill of rights. However, the Constitution does contain several explicit human rights. These are the right to freedom of religion, the right to a trial by jury for federal offences, and the right to just compensation for property acquired by the Commonwealth. Over the years, there have been calls for a bill of rights with arguments that it would protect the rights of minority and vulnerable groups and provide a clearer legal avenue for infringements of rights. Arguments against a bill of rights include that a constitutionally entrenched bill of rights would be difficult to change to keep up with modern society.

Other countries: constitutions and bills of rights

➜

Not every country has a written constitution. For example, the United Kingdom has an unwritten constitution, consisting of a collection of laws and conventions. New Zealand has an unwritten constitution, where constitutional changes are made through regular legislative processes. Sweden also has an unwritten constitution, composed of four fundamental laws, which requires amendments to be approved twice by the parliament. An unwritten constitution has the advantage of having flexibility, allowing it to adapt to changing social and political conditions without formal amendments. However, criticisms are the potential for lack of clarity, making it harder for citizens to access and understand, and easier for Figure 4.10.3 “We the People” is the opening phrase of the Preamble to the United States Constitution. governments to manipulate the system. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.10 What is the purpose of the Australian Constitution?

275

While Australia does not have a bill of rights, some other countries do, including the United States, Canada, India, Germany, Japan and South Africa, where rights protections are set out in their constitutions. It must be remembered that every country has a unique history, and its political and legal system has evolved to meet its needs. ➜

SA PA M P G L ES E

Figure 4.10.4 Amendments were proposed to Japan’s constitution during the COVID-19 pandemic. The heading reads: “Draft amendment to the Japanese Constitution”.

Review 4.10

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. Prior to 1901, Australia was a single, unified nation.

b. Before Federation, the Australian colonies were more connected to each other than to the British Parliament. c. The Australian Constitution was drafted by representatives from the Australian colonies at a series of conventions in the 1890s. d. Sir Samuel Griffith led the drafting of the first version of the Constitution.

e. The Australian Constitution was passed as an Australian Act of Parliament in 1900. The Constitution established Australia as a federation of six states on f. 1 January 1901.

g. The Australian Constitution is the supreme law, meaning all other laws can contradict it.

h. The Constitution outlines how power is shared only between the federal and state levels of government. i. The Constitution is a bill of rights because it was established to list individual rights. j. The Constitution does not include any explicit human rights provisions.

Thinking, researching and communicating 1.

2. 3.

Identify the human rights provided by the Australian Constitution. In your opinion, should there be more? Why or why not? If you could add any, what would they be? If Australia was to have a bill of rights, what should it include? Imagine that you were involved in a debate that Australia needs a bill of rights. What would your arguments be in the affirmative for a bill of rights? What would they be in the negative? Make sure that your arguments contain enough detail. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

276

Chapter 4 The legal and political environment

4.11

How does the Constitution shape Australia’s democratic system of government? Success criteria

In this lesson, you will look at how the Australian Constitution supports a democratic system of government.

❏ I can describe the democratic principles outlined in the Australian Constitution. ❏ I can explain how the Constitution ensures a democratic system of government. ❏ I can give examples of features in the Constitution that protect democracy.

SA PA M P G L ES E

Learning intention

Starter activity

Look at the picture of Prime Minister Anthony Albanese voting. Earlier on in the topic, you learned about the “rule of law”. How does this image support this concept?

➜

Figure 4.11.1 Prime Minister Anthony Albanese (centre), his then fiancée, now wife Jodie Haydon (left) and his son Nathan (right) cast their votes at a polling station in Marrickville, 2025.

Main features of Australian government

Writing focus 4.11 Transitional phrases

There are three main features of government in Australia as set out in the Constitution. These are:

• a constitutional monarchy • a system of democracy • a federation of national, state and local governments. Constitutional monarchy

Australia is a different form of democracy from many other countries as it has a constitutional monarchy. This is a system of government where a monarch, such as a king or queen, serves as the head of state but their powers are limited by a constitution. Under this system, the monarch’s role is largely ceremonial, with real political power being held by the elected government. Having a monarch as part of the Australian political and legal system is a legacy of British settlement. As discussed earlier in the topic, the Governor-General is the monarch’s representative in Australia. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.11 How does the Constitution shape Australia’s democratic system of government?

Australian democracy

SA PA M P G L ES E

A democracy refers to a system of government where the citizens have the power to participate in decisionmaking either directly or by electing representatives to make decisions for them. It is supported by such things as free and fair elections, the rule of law, and the protection of human rights and freedoms.

Figure 4.11.2 King Charles III and Queen Camilla visited Australia in 2024, and are pictured here standing in front of the Sydney Harbour Bridge. ➜

The Australian Constitution establishes a democratic system of government in Australia in different ways. One way is by allowing eligible Australian citizens to vote for members of parliament to make laws on their behalf. In Australia, voting is compulsory for all citizens 18 years and older.

The Constitution further provides for a democratic system, and protects it, by dividing power among the three branches of lawmakers to stop any one group from being too powerful. This is called the separation of powers. This is looked at later in the topic. Another important way that the Constitution provides for a democratic system is by creating a federation of states, meaning that power is shared between the federal government and the state governments. In addition, local governments also have power to make and apply laws. When Federation occurred in 1901, the states retained the powers that were not given to the Commonwealth. Once again, this ensures that power is divided among elected decision-makers across the country.

Transfer of power from the states to the federal government When Australia federated in 1901, the states transferred certain powers to the new national government, including defence, foreign affairs and immigration. However, over the last century the states have also ceded other rights. This development has been intended to promote greater consistency in legal frameworks, and there have been instances where the federal government has exercised influence through financial incentives to assume greater control.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

277

278

Chapter 4 The legal and political environment

One example of this is gun control. In response to the 1996 Port Arthur massacre, the states transferred the administration of gun rights to the federal government. The massacre prompted states and the federal government to establish a uniform national gun control policy through the National Firearms Agreement (NFA).

The separation of powers

SA PA M P G L ES E

Figure 4.11.3 Guns collected in Melbourne following the national gun control policy in 1996 ➜

A constitutional separation of powers divides governmental authority into three distinct branches – legislative, executive and judicial. This is to prevent any single body having too much power. This separation acts as a system of checks and balances to ensure a balance of power and, thus, democratic government.

Levels of government and their responsibilities, including the division of powers The Australian Constitution has created a democratic system of government by dividing up responsibilities between the federal and state governments. This is called the division of powers and should not be confused with the separation of powers. Australia’s government is divided into three levels. These are federal, state/territory and local government, each with its own responsibilities. The federal government handles national issues like defence, currency and foreign affairs. This is important because a nation requires cohesive and effective leadership in these areas. State governments manage areas like health and education, and local councils focus on community matters like waste collection and local roads. This lets governments tailor decisions to their populations. Some powers, such as taxation, are shared between the federal and state levels. These are called concurrent powers. Where conflict occurs, the federal government will override lower levels of government. The members of each level of government are elected by eligible voters in elections. Federal elections are usually held every three years, as are council elections. In New South Wales, state elections are held every four years. Each state has its own constitution. This is allowed under the Australian Constitution; however, section 109 of the Constitution provides that when a state law conflicts with federal law, the federal law takes precedence, rendering any inconsistent provision of the state law invalid. The Northern Territory is not a state. When Australia became a federation in 1901, its land was part of South Australia. In 1911, it became a territory without a constitution and was governed by the federal government. The Northern Territory has had selfgovernment since 1978, allowing it to make decisions like a state government. In a 1988 referendum, its population rejected the idea of becoming a state, believing that they would have greater benefit by remaining a territory.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

279

4.11 How does the Constitution shape Australia’s democratic system of government?

In the same way, the Australian Capital Territory (ACT) is not a state. It is a territory with powers granted by the federal government, which has ultimate authority. The ACT is not a state because it was created as a federal territory to house the nation’s capital. It is self-governing and so can make decisions like a state, but it lacks a constitution, and its laws can be overridden by federal parliament. Table 4.11.1 outlines the responsibilities of each level of government. Table 4.11.1 Responsibilities of each level of government Level of government Responsibilities Defence, foreign affairs, trade, immigration, social security, currency, customs, making laws for the entire country, and collecting and redistributing most income tax

SA PA M P G L ES E

Federal government

State/territory government

Schools, hospitals, police forces, courts, public transport, major roads, agriculture, consumer affairs, and other areas not exclusively assigned to the federal government

Local government (council)

Community matters such as waste collection, local roads, parks, libraries, local planning and building approvals, and community services

Review 4.11

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Define the following terms in your own words: a. constitutional monarchy b. division of powers c. concurrent powers d. separation of powers.

2. 3.

4. 5.

What is democracy? Outline the ways that the Constitution allows Australia to be a democracy. Identify the part of the Constitution that allows it to override state decisions. Why do the states transfer responsibilities to the federal government? Provide an example. Identify the levels of government in Australia. Provide examples of their responsibilities. Write the following sentences in your workbook and fill in the missing words.

, and a. Australia’s government is split into three levels: is responsible for national issues like defence and foreign affairs. b. The manage health and education. c. handle community matters such as waste collection and local roads. d. . e. Elections are held for each level of government by allows states to have their own constitutions. f. The

Thinking, researching and communicating 1.

Look at the responsibilities of the local government. Why do you think they have these specific responsibilities? Discuss why the Northern Territory and the Australian Capital Territory are not states. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

280

Chapter 4 The legal and political environment

4.12

What do the House of Representatives and the Senate do? Success criteria

In this lesson, you will gain an understanding of the functions and responsibilities of the House of Representatives and the Senate.

❏ I can identify the main functions of the House of Representatives and the Senate. ❏ I can describe the responsibilities of each chamber. ❏ I can explain how the two houses work together in lawmaking.

SA PA M P G L ES E

Learning intention

Starter activity 1.

It is time to recap things that you have learned about the Australian legal and political system so far. Don’t forget to update your KWL table. Imagine that you had to describe the Australian legal and political system to an overseas visitor. What are three unique things that you could tell them about?

The bicameral system

Writing focus 4.12 Developing sentences

Australia has a bicameral system of government. This refers to a legislative system that has two chambers or houses within one parliament. These chambers are typically called the lower house and the upper house. The lower house is also known as the Legislative Assembly or House of Representatives. The upper house is also called the Legislative Council or Senate. In Australia, the Federal Parliament and most state parliaments have a bicameral system. The Northern Territory, Queensland and the Australian Capital Territory are unicameral as they only have a Legislative Assembly.

Bicameral system

Lower house

Upper house

House of Representatives

Senate

➜

Figure 4.12.1 The bicameral system of the Federal Parliament

The bicameral system plays an important role in Australia by establishing checks and balances within the legislative process. It ensures that proposed legislation undergoes thorough review and that the views of both the general population, represented by the House of Representatives, and the states and territories, represented by the Senate, are considered when making laws. This was discussed earlier in the chapter in the passing of a bill (see Table 4.4.1).

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.12 What do the House of Representatives and the Senate do?

The functions and responsibilities of the lower house The Federal House of Representatives has the main purpose of representing the people of the nation. At the state level, the lower house represents the people of the state. The members of the lower house have been voted in by members of their electorate. An electorate is a geographical area that roughly contains the same number of voters. For this reason, an urban electorate may be much smaller in size than a rural electorate, but the number of eligible voters will be similar. The boundaries and populations of electorates are regularly reviewed to reflect changes in demographics and maintain equal representation.

SA PA M P G L ES E

Many members of the lower house belong to a political party. The party with the most elected members in an election will form government and will hold power in most parliamentary decision-making. The leader of the successful party will become Prime Minister at the national level, or Premier at the state level. The leader will choose other elected members to hold positions of responsibility in their government, and this group will make up the Cabinet. The members of the Cabinet are known as ministers and hold positions such as Minister for Defence. The Cabinet is the top-level decision-making body of the government, and the Federal Cabinet comprises of the Prime Minister and approximately 20 senior ministers.

➜

Members of the lower house serve fixed terms, and the chamber is Figure 4.12.2 Australia’s House of Representatives designed to reflect the population distribution, ensuring that the interests of all Australians are considered in the legislative process. The lower house is also known as the Legislative Assembly as it is responsible for proposing and debating legislation. The process of creating legislation was described in Lesson 4.4. The House examines government activities and holds the executive (the Prime Minister and ministers who run the government) accountable through debates, questions and committee inquiries. For this reason, the House of Representatives is often called the “people’s house” as its members have been popularly elected by voters who feel that they will be fairly represented by the person they voted into parliament.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

281

Chapter 4 The legal and political environment

The functions and responsibilities of the upper house The upper house is also known as the Senate in Federal Parliament and the Legislative Council at state level. Its members are also elected, but voters tend to vote for a party (as it appears on the ballot paper) rather than an individual. This means that if a senator or member cannot finish their term of office, their party can fill the vacant position without an election occurring. At a national level, each state has 12 Senate positions with terms of six years. Each territory has two Senate positions with three-year terms. The upper house is elected using a proportional representation system, with each state being treated as a single electoral district. At this level, the Senate’s main role is to represent the interests of the states or territories and to review, amend and either approve or reject legislation proposed by the House of Representatives.

SA PA M P G L ES E

282

At the state level, the Legislative Council also serves as a house of review. It scrutinises and evaluates legislation proposed by the Legislative Assembly, making sure that laws are thoroughly examined before being enacted. The council plays a crucial role in the democratic process by suggesting amendments to bills, rejecting legislation or referring matters to committees for further investigation. The number of upper house members and terms of office will vary depending on each state. In New South Wales, the Legislative Council has 42 members. Their terms are staggered, with 21 members elected for an eight-year term at each general election. Elections are looked at further in this topic.

➜

Figure 4.12.3 Australia’s Senate

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.12 What do the House of Representatives and the Senate do?

Review 4.12 Online quiz

Knowledge and understanding

Thinking, researching and communicating

283

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1.

Define the following terms in your own words: a. bicameral system b. unicameral system c. electorate d. Cabinet. Copy and complete the following table to compare the two houses of the Federal Parliament.

SA PA M P G L ES E

Feature

Lower house

Upper house

a. Common name(s)

b. Main purpose/role

c. Head of government (party leader) d. How members are elected e. Nickname

f. Term length

Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. The bicameral system only exists at the federal level in Australia. b. The leader of a state government is called the Prime Minister.

c. An urban electorate is usually larger in size than a rural electorate because it has more voters.

d. The House of Representatives is often called the “people’s house”. e. If a Senator leaves office early, an election must be held to fill the vacant position. f. The Senate scrutinises and evaluates legislation proposed by the lower house.

4. 5.

Recall the role the bicameral system plays in the Australian legislative process. Why might an urban electorate be much smaller in geographic size than a rural electorate?

Thinking, researching and communicating 1.

Analyse how the House of Representatives and the Senate affect how laws are made in Australia. Investigate a recent law or debate and list the things that each chamber did to influence the outcome. Examine how the way that federal parliament is structured can change decisions on important issues. Research an example and explain your findings using the correct legal and political terms.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 4 The legal and political environment

4.13

Site study: NSW Parliament House

Learning intention

Success criteria

In this site study, you will learn about NSW Parliament House, its history, design and use.

❏ I can identify the different sections of NSW Parliament House. ❏ I can outline the history, design and uses of NSW Parliament House.

SA PA M P G L ES E

284

What is a site study?

A site study is an investigation of a real or virtual place to understand how legal and political decisions happen in everyday life. It takes learning beyond the textbook and into spaces where theory meets reality.

NSW Parliament House

In this site study, you will make a virtual visit to NSW Parliament House as it is not always possible to make a visit in person. If you do get a chance to go, the virtual visit will assist you in finding your way around. You can access the virtual tour at: https://cambridge.edu.au/redirect/11721. Use the virtual tour navigation to explore different rooms and areas of Parliament House.

➜

Figure 4.13.1 NSW Parliament House

Site study activity 4.13.1 A walk through NSW Parliament House Part A: exploring the building 1.

The exterior a. Describe the style of architecture used in the design of NSW Parliament House. b. What materials can you see that were used to build the Parliament? c. Can you find the clock tower? What is it called?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.13 Site study: NSW Parliament House

The chambers a. What are the names of the two main chambers in the Parliament House? b. What colours are used in each chamber and what do they represent? c. Find the Speaker’s Chair in the Legislative Assembly chamber. What is its purpose?

Important rooms a. Locate the Members’ Dining Room or the Library. What activities do you think happen here? b. Find the Grand Staircase. Can you describe its features or decorations?

Part B: history and function 1.

History

SA PA M P G L ES E

a. When was NSW Parliament House constructed? b. Are there any plaques or inscriptions you can find that tell about important events in the Parliament’s history?

Legislative process

a. What is the role of the NSW Parliament? b. How many members represent the people of NSW in Parliament? (Hint: check for any information visible in the virtual tour or related pages.) c. What happens in the chambers during a typical parliamentary session?

Part C: the chambers 1.

Identify the chambers

a. What is the name of the chamber with red seating? b. What is the name of the chamber with green seating?

Chamber layout

a. How are the seats arranged in the Legislative Assembly chamber (e.g. rows facing each other, semicircle)? b. Where does the Speaker of the Legislative Assembly sit? Describe the position.

Symbols and features

a. Can you spot the Mace in the Legislative Assembly chamber? What is its purpose? b. What symbols (e.g. coat of arms, flags) do you see in the chambers? What do they represent?

Decor and architecture

a. Describe the ceiling of the Legislative Council chamber. Are there any interesting designs or decorations? b. What type of lighting is used in the chambers (e.g. chandeliers, modern lights)? c. Choose one piece of furniture or decoration in either chamber and describe why you think it is important or symbolic.

Function a. What activities take place in the Legislative Assembly chamber? b. How is the Legislative Council different in its role from the Legislative Assembly?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

285

286

Chapter 4 The legal and political environment

4.14

Why does the separation of powers exist and what is the role of the High Court? Success criteria

In this lesson, you will gain an understanding of the separation of powers and the way it is applied in Australia.

❏ I can define the concept of separation of powers. ❏ I can describe the three branches of government and their roles. ❏ I can explain how the separation of powers operates in Australia.

SA PA M P G L ES E

Learning intention

Starter activity

Imagine a country where the leader also makes the laws, enforces them, and decides if someone breaks them. 1.

2. 3.

What potential risks could there be in this system? How might citizens be affected? How might a country get around the problems that this system may cause?

In this lesson, you will learn about how the Australian legal and political system avoids this.

The separation of powers

Writing focus 4.14 Developing sentences

As seen earlier in the chapter, the Australian Constitution provides for a democratic system, and protects it by splitting the power among the three branches of lawmakers to stop any one from being too powerful. This is called the separation of powers. The three branches are shown in Figure 4.14.1. These three branches make, interpret and apply laws, but the Constitution (by separating the power between them) provides checks and balances to ensure that these laws provide equity and fairness, thus following the principles of the rule of law.

The legislature

Separation of powers

Legislature (Federal Parliament)

Executive (Federal Government)

This consists of the House of Representatives and the Senate. It has the power to make and change laws.

This is led by the Prime Minister and Cabinet and is responsible to the Parliament. It carries out and enforces laws.

Judiciary (High Court and Federal Courts) This is responsible for the interpretation and application of the law, as well as resolving legal disputes.

The legislative arm is the Federal Parliament. As seen earlier in the topic, it holds the authority to create new laws as well as amend or repeal (cancel) existing ones. Parliament is made up of two separate chambers: the House of Representatives and the Senate, along with the Governor-General, who represents the monarch.

➜

Figure 4.14.1 The separation of powers Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.14 Why does the separation of powers exist and what is the role of the High Court?

287

A proposed law is called a bill. For a bill to become law, it must be debated and approved by both Houses of Parliament and then be given royal assent by the Governor-General. Once this process is complete, the bill becomes an Act or statute.

The executive

SA PA M P G L ES E

The executive arm of government is responsible for implementing and enforcing laws. While executive power formally resides with the Governor-General, it is typically led by the Prime Minister and carried out by government ministers. These ministers are members of parliament who are responsible for specific areas of government. For instance, the Minister for Defence manages laws related to the defence forces. Public servants and other government staff also form part of the executive branch, although they are not elected but instead act in a support role. This is mirrored at the state level.

➜

Figure 4.14.2 Australian Deputy Prime Minister and Minister for Defence, Richard Marles

The judiciary

Figure 4.14.3 Former Chief Justice Tom Bathurst at his swearingin ceremony in Banco Court, Sydney, 2011 ➜

The term “judiciary” refers to a country’s court system. Under the separation of powers, the judiciary and the courts are responsible for interpreting and enforcing the law as well as resolving disputes that arise under it. The courts also play a crucial role in ensuring that laws are applied fairly and equally to all individuals, protecting our rights and freedoms. Federal judges are appointed by the Governor-General on the recommendations of the government. Once appointed, they cannot be easily removed by the executive branch, which allows them to operate independently and make impartial decisions without fear or bias.

Reasons for the separation of powers

The separation of powers is another way that the Constitution provides checks and balances on how laws are made and applied in Australia (and the states). It does this in the following ways.

• While members of parliament have the authority to make laws, they must regularly •

face elections. If their laws are seen as unpopular or unfair, voters can choose to replace them with new representatives. This means that the government must stay in tune with the needs of its citizens if it wants to stay in power. Having an independent judicial system ensures that both the legislature and the executive operate within the limits set by the Constitution, protecting individual freedoms. The High Court has the power to invalidate any law that conflicts with the Constitution. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

288

Chapter 4 The legal and political environment

• Government ministers must secure the approval of the majority in both houses of

parliament to introduce new laws. If they fail to gain enough support, the proposed law will not pass. All government ministers are members of parliament and are individually accountable to the parliament. They are required to respond to questions in parliament regarding the actions they take in their executive roles.

SA PA M P G L ES E

The separation of powers model does have weaknesses. One is that there is an overlap between the executive and legislative powers. In Australia, members of the executive (ministers) are also members of the legislature (parliament). This can reduce the legislature’s ability to check the executive; this is especially true if the government has the majority in the lower house. Another criticism is that the government is involved in the appointment of judges, which means that they may appointment people who lean towards government policy.

Review 4.14 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding

Complete the following multiple-choice questions. Write each correct answer as a statement in your workbook. 1.

Which branch of government is responsible for creating laws that affect businesses and the economy? A. Executive B. Legislature C. Judiciary D. Police The branch that enforces laws and regulations that businesses must follow is the: A. legislature. B. judiciary. C. executive. D. treasury. If a business believes a law is unfair or breaks constitutional rules, which branch would handle this dispute? A. Executive B. Legislature C. Judiciary D. Commerce department Separation of powers helps to: A. concentrate power in one branch. B. prevent corruption by dividing powers. C. stop businesses from operating. D. allow businesses to make laws. Which of the following is not a reason why separation of powers is important? A. Protects businesses from unfair laws B. Ensures that laws are fairly enforced C. Gives all economic power to the D. Provides checks and balances executive branch Explain the term “separation of powers”.

Thinking, researching and communicating 1.

Write an extended response to the following prompt. “Evaluate the effectiveness of the separation of powers in Australia.” Remember that evaluate means to make a judgement about how good something is. An outline has been provided in the activity worksheet that you can download from the Interactive Textbook to assist you.

DOC

Download extendedresponse worksheet

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.15 How does the High Court interpret the Australian Constitution?

4.15

289

How does the High Court interpret the Australian Constitution? Success criteria

In this lesson, you will look at the democratic system of government compared with other systems. You will also look at the role of the High Court.

❏ I can compare Australia’s democratic system with other systems of government. ❏ I can describe key features that make Australia a democracy. ❏ I can explain the role of the High Court in supporting democracy.

SA PA M P G L ES E

Learning intention

Starter activity

Read the advertisement about the High Court judge position carefully.

JOB OPPORTUNITY

High Court judge – Australia

Are you a highly skilled legal professional committed to justice and excellence? We are seeking an experienced and dedicated individual to join the High Court of Australia as a judge.

Key requirements:

❏ Prior experience as a judge in another court or a minimum of five years practising law as a barrister or solicitor ❏ Exceptional legal knowledge and expertise ❏ Strong analytical and communication skills ❏ Personal qualities including integrity, impartiality and sound judgement If you possess the qualifications and personal attributes necessary to uphold the highest standards of the judiciary, we invite you to apply for this prestigious role.

Consider why certain qualifications or qualities are important for a High Court judge. What might this tell us about the role? a. Write down three important qualifications or qualities the advertisement highlights. b. Rank them in order of importance.

2. 3.

Compare your response with a partner. Do you agree or disagree with each other? Discuss your reasons.

The role of the High Court in interpreting the Australian Constitution The High Court plays an important role in the Australian legal and political environment as its main role is to interpret the Australian Constitution. The High Court provides another check and balance by ensuring that rulings by the lower courts don’t conflict with the Constitution. The High Court has the ultimate authority, and it does this by making decisions on legal cases that need a ruling on constitutional provisions, settling disputes between the states and the Commonwealth, as well as making sure that laws passed by governments are within Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400 their constitutional powers.

Writing focus 4.15 Appositives

290

Chapter 4 The legal and political environment

It can invalidate any law, or parts of a law, that it finds unconstitutional. Thus, the High Court plays a crucial role in the separation of powers. It does this by ensuring that due process is followed by legislative, executive and judicial branches and that they stay within their designated roles. Beyond its role in ensuring constitutional validity, the High Court is also the highest court of appeal for all other cases from federal, state and territory courts. This includes both criminal and civil cases.

SA PA M P G L ES E

Because it is the highest court in Australia, its decisions are final. The High Court is a federal court, which means that any decision it makes applies to the whole country. The High Court consists of seven judges: the Chief Justice and six justices. Most important cases are normally determined by a full bench comprising all seven justices. No jury is used in the High Court. High Court judges are appointed by the Governor-General in Council, meaning the appointment is made by the executive government on the advice of the Prime Minister. When a vacancy occurs, the Attorney-General consults with state attorneys-general, senior judges and legal experts before recommending a candidate to the Prime Minister, who then advises the Governor-General to make the formal appointment. Judges must retire at age 70 and can only be removed for proven misbehaviour or incapacity by a request from both Federal Houses of Parliament.

Landmark cases

The Australian High Court has had some landmark cases. Some cases have clarified areas of the Constitution.

• The High Court case Commonwealth v Tasmania

➜

(1983), known as the Tasmanian Dam Case, prevented the Tasmanian Government from constructing a hydro-electric dam on the Franklin River, as it was inconsistent with federal law under the World Heritage Properties Conservation Act 1983(Cth). The court upheld the Commonwealth’s power to legislate based Figure 4.15.1 Former Premier of New South Wales, Neville on international obligations under the external Wran, pictured holding a toy wombat he was given in front of a affairs power (section 51(xxix) of the Constitution). sign protesting against further dam construction in south-west This ruling stood out as it strengthened federal Tasmania 1983 government authority over the states, particularly in environmental matters. In Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920), called the Engineers’ Case, the High Court clarified the division of powers between the Commonwealth and the states. It rejected previous doctrines that protected implied state powers and established the principle that Commonwealth laws generally take precedence over conflicting state laws.

•

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.15 How does the High Court interpret the Australian Constitution?

Comparison of the democratic system of government with other systems of government Australia has a democratic system of government, which means that power is held by the people through their elected representatives. Not all countries have the same system. Other forms of government can be authoritarian, where power is concentrated in the hands of a single leader or a small elite group of people. Under this political system, there is limited or no input from the public. In addition, civil liberties and political freedoms are often suppressed. When all power is held by one person, it is called an autocracy. An oligarchy is when an elite group holds power. Countries such as China, North Korea and Russia are considered to have authoritarian styles of government.

SA PA M P G L ES E

In some countries, dictatorships exist. This is an extreme form of authoritarian rule with an autocrat maintaining firm control over all decision-making. Although the leader, known as a dictator, may have been elected to the position, over time they have maintained power through force, intimidation, by suppressing opposition, and limiting civil liberties. Eritrea is a modern example of a country under the control of a dictator. Another system of ruling a country is a monarchy, where a king or queen is the head of state. They typically rule for life. This is usually a hereditary position where political power is legally passed down through a family. Australia is a constitutional monarchy, meaning that the monarch has limited power in making political decisions but has a more ceremonial role.

➜

Some countries of the world still have a monarch as leader of the country. For Figure 4.15.2 Black Lives Matter activists at a rally in Sydney, 2020. In example, Brunei has an absolute monarchy authoritarian countries, the right to protest publicly is often limited. whereby the Sultan of Brunei is head of government. Other countries with absolute monarchs are Eswatini, Oman, Saudi Arabia and the United Arab Emirates. Often different types of government can be categorised into the philosophy that drives them.

• Democracy: the term “democracy” comes from the Greek words demos (meaning

•

“people”) and kratos (meaning “power” or “rule”), and so it means “rule by the people”. This is a system of government where power ultimately rests with the people. In a democratic society, citizens have the right to participate in decisionmaking processes, typically through voting in free and fair elections to choose their representatives. It places an emphasis on the protection of individual rights and freedoms, the rule of law, and equal participation for all members of society. Socialism: in this system, the community collectively owns the main economic resources. Socialist governments place a strong emphasis on social welfare and strive for equality in income and wealth distribution. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

291

292

Chapter 4 The legal and political environment

• Communism: this form of government is founded on the ideas of Karl Marx and

SA PA M P G L ES E

•

Friedrich Engels and is a more extreme version of socialism. Under communism, there is no private ownership; almost everything, except for some personal belongings, is owned by the state, which provides for all the needs and desires of its citizens. This system may rely on strong autocratic leadership to ensure that its ideals are met. Communist countries have included the Soviet Union and China. Fascism: this system, famously adopted by Adolf Hitler, involves a strong centralised authority that allows no opposition or criticism. The ruling political party controls all aspects of the nation and promotes aggressive nationalism along with anti-communist policies. Countries with fascist political systems have relied on strong leaders to ensure that goals were met. Examples of countries that have experienced fascist control include Germany and Italy during World War II.

These political philosophies and systems of government differ depending on the perceived needs of the citizens of a country or the existing conditions of the government. For example, during times of strife such as war, a more authoritarian style of government may develop. While a democratic system will emphasise individual freedoms and accountability, more authoritarian styles of government often prioritise efficiency, stability or tradition at the cost of political freedom. While a democratic system can change with the times due to how representatives are chosen, it is difficult for authoritarian governments to respond to social changes in their countries. This can lead to civil unrest, even civil war, in some nations as citizens agitate for change.

Review 4.15

Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Outline the role of the High Court. Recall how High Court judges are elected. Do you think this is satisfactory? Justify your answer. Recall how many judges hear cases in the High Court. Why do you think having more than one judge on each case is important?

Thinking, researching and communicating 1.

2. 3.

Explain how the High Court safeguards the Australian legal and political system. How did the two cases mentioned clarify the role of the federal government? Copy and complete the following table in your workbook.

Form of government

Description

Example

Democracy Authoritarian Autocracy/dictatorship Constitutional monarchy Absolute monarchy Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.16 How can you have a say in Australia’s democracy?

4.16

293

How can you have a say in Australia’s democracy? Success criteria

In this lesson, you will learn about how Australian citizens can take part in the democratic process.

❏ I can identify different ways citizens can participate in democracy. ❏ I can describe the importance of citizen participation in a democratic system. ❏ I can explain how voting and other actions influence government decisions.

SA PA M P G L ES E

Learning intention

Starter activity

Two opinions about democracy are:

• For democracy: “Democracy allows everyone to have a voice in how the country is run.” • Against democracy: “Democracy can lead to slow decision-making and gridlock.” What do you think? Can you think of an argument to support each of these statements?

The rights and responsibilities of individuals in the democratic process

Australia is a democracy, which means that individuals, if they meet the criteria, have the right to vote. The criteria is that a person must be a citizen aged 18 years or older and be enrolled to vote. In Australia, enrolment and voting are compulsory; a fine may be issued for failure to enrol or vote. Enrolment is with the Australian Electoral Commission (AEC). This enrolment entitles a person to vote in all elections. The AEC is responsible for maintaining the Commonwealth electoral roll and conducting federal elections, by-elections and referendums. It does not conduct state, territory or local government elections. These are conducted by other electoral authorities. For example, in New South Wales, the NSW Electoral Commission is responsible for running state and local elections. In a democracy, individuals have the right to express their views freely subject to certain restrictions that are covered by laws to respect the rights and reputations of others. In addition, freedom of speech is not allowed if it goes against the protection of national security, public order, public health or morals. This right to freedom of speech is set out in the International Covenant on Civil and Political Rights (ICCPR), which was adopted by the United Nations on 16 December 1966. Australia follows this covenant and has incorporated some parts of it into legislation through anti-discrimination laws and freedom of information acts. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.16 Appositives

Chapter 4 The legal and political environment

A democracy also allows citizens to participate in public affairs through such actions as joining or volunteering for political parties or interest groups, participating in protests, and contributing to consultations and inquiries, such as parliamentary committees. These rights and responsibilities are essential for a functioning democracy because they make sure that the government is based on the consent of the people, who can influence decisions that affect them.

➜

SA PA M P G L ES E

294

Figure 4.16.1 Political party representatives outside a Yarrawonga polling place, 2022

Registering to vote

As previously stated, it is compulsory to vote in Australia, and it is expected that all eligible members of society will enrol to vote when they turn 18. By doing this, their name is placed on the electoral roll. The electoral roll is a list of all eligible citizens who are registered to vote in federal elections and referendums. It also entitles citizens to vote in state and local council elections. A new citizen is expected to enrol once they have received official notification of their citizenship. To be eligible to enrol, a person must be over 16 (early enrolment is allowed so that when someone turns 18 they can vote), be an Australian citizen, and have lived at their address for at least one month. In addition, proof of identity must be provided in the form of a driver’s licence, Australian passport number, Medicare card number or Australian citizenship number, or by having someone who is enrolled confirm identity.

➜

Figure 4.16.2 There are several ways you can verify your identity to register to vote.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.16 How can you have a say in Australia’s democracy?

The processes involved in conducting an election The Australian Constitution and the Commonwealth Electoral Act 1918 govern the running of federal elections in Australia. The Australian Electoral Commission (AEC) organises and runs federal elections. The term of office in federal parliament is three years.

➜

SA PA M P G L ES E

The Governor-General has the power to start the process for a federal election, which typically includes all the House of Representatives and half the Senate. The Prime Minister will request a date from the Governor-General for the next election when the three-year Figure 4.16.3 A Sydney pre-polling during the 2025 federal election. term of the House of Representatives nears expiration. The Governor-General then dissolves the House of Representatives, and the country is placed in caretaker mode until a party achieves a majority in the election. The Governor-General authorises the election by issuing a writ. A writ is a legal document that authorises an election to be held to choose a new parliament. It specifies the dates of the election, closing of electoral roles and the deadline for candidate nominations. For a federal election, eight writs are issued, one for each state and territory. The writs must be issued within 10 days of the dissolution of the House of Representatives. There are other specific dates around the running of an election. These include that the polling date, a Saturday, is not less than 33 days nor more than 58 days after the writs are issued. Also, after the writs are issued, unregistered eligible voters have seven days to enrol. An example of timing from the 2025 federal election is shown in Table 4.16.1. Table 4.16.1 An example of timing from the 2025 federal election Year

Issue of writ

Close of rolls

Close of nominations

Polling date

2025

31 March 2025

7 April 2025

10 April 2025

Saturday 3 May 2025

Sometimes there is a need to run a by-election. A by-election is held when a vacancy occurs in the House of Representatives due to death, resignation, absence without leave, expulsion, disqualification or ineligibility. When this occurs, a writ for the byelection is issued by the Speaker of the House to elect a new member to the House of Representatives.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

295

296

Chapter 4 The legal and political environment

SA PA M P G L ES E

The Speaker of the House is the presiding officer of the House of Representatives. The Speaker is elected by the members to run meetings in an orderly fashion. The role includes ensuring that the rules of parliamentary procedure are followed and acting as the house’s spokesperson. The Speaker is responsible for maintaining dignity and decorum during debates. They also oversee the administration of the house.

➜

While each state and territory has its own electoral laws for state and local Figure 4.16.4 Australians headed to the polls on 3 May for the 2025 federal election. At elections, the process is generally the the Clovelly Surf Life Saving Club in Sydney, they were cooking up “democracy sausages” same. Differences include the Governor for voters. of each state calling the election, and the term for state governments being four years. Other differences include such things as the laws about sources of funds, campaigning and systems to choose parliamentary members. For example, in New South Wales, there are rules on who can make donations to parties and candidates. In the Australian Capital Territory, it is illegal to canvass for votes within 100 metres of a polling place.

Review 4.16 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Identify the electoral body that conducts state and local government elections in New South Wales. Is enrolment to vote compulsory in Australia, and what happens if a person does not enrol or vote? Describe the process involved in calling an election in Australia. Outline the purpose of a writ. When are they issued? How many writs are issued for a federal election, and for whom are they issued? Outline the reasons for a by-election and the process for calling one.

Thinking, researching and communicating 1.

Assess how Australia incorporates human rights principles into its election processes and protocols (rules). Provide enough details to defend your assessment. How do different electoral systems impact voter turnout and political representation in democracies around the world? Carry out research to see how at least two other countries conduct elections. (You could look at such things as compulsory voting, the day of the week of the election, and proof of identity requirements.) Construct at least two paragraphs about each country. Based on your learnings so far and your answers to the previous questions, write a response to the following statement: “Australia has an electoral process that should be adopted by the rest of the world”. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.17 How do different voting systems work and why are they used?

4.17

297

How do different voting systems work and why are they used? Success criteria

In this lesson, you will learn about the different voting methods used in elections. You will also consider arguments for and against compulsory voting.

❏ I can identify different voting methods used in Australian elections. ❏ I can describe how each voting method works. ❏ I can explain the advantages and disadvantages of compulsory voting. ❏ I can evaluate arguments for and against compulsory voting.

SA PA M P G L ES E

Learning intention

Starter activity

In the previous lesson, you carried out an assessment of Australia’s electoral system and looked at how some other countries go about calling and running an election. 1.

Write down three key points that you can remember and discuss them with another student. Use some of your findings to fill in your KWL chart.

Different countries have different ways of voting in their elected officials. Australia has a preferential system; however, until 1918 the “first-past-the-post” voting process was used. The first-past-the-post system is one of the simplest forms of voting because it requires a voter to vote for only one candidate, then the candidate with the greatest number of votes is elected.

Preferential voting

In Australia the preferential voting process has been used since 1918 in federal elections. It is now also used in state elections. This system depends on the idea of an absolute majority, where a candidate must obtain more than 50% of the votes. In this system, the voter must mark their vote on the ballot paper by placing the number 1 against the name of the candidate of first choice, and then give their choices for all the remaining candidates in order of preference by numbering them 2, 3, 4 and so on. All squares on the ballot paper must be numbered, although if one square is left unnumbered, the blank square will be considered to be the voter’s last preference, but only if a first preference has been indicated. In preferential voting, when the votes are counted, the first step in getting the election result is to count the first preferences for each candidate. If the count shows that any candidate has achieved a majority (over 50% of the vote), they are elected.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 4.17 Developing sentences

Chapter 4 The legal and political environment

➜

If the first count does not show an outright majority, the next step is to exclude the candidate with the lowest votes and sort out those ballot papers according to the next preference marked by the voter. This process is repeated until there is a successful candidate. Today, many people vote prior to the actual election day or in another electorate if they will be away from home on the day of the election. This delays the final count and means that a successful candidate may not know the result on the day of the election.

SA PA M P G L ES E

298

Figure 4.17.1 A completed ballot in Australia’s general election in 2025

Optional preferential voting

Optional preferential voting is a system that New South Wales has used in state elections since 1980. In 2023, the NSW state government introduced optional preferential voting for local government elections. It is considered a simpler process for voters to use, especially when there may be many candidates. In optional preferential voting, the voter does not have to assign every candidate with a preference. They can vote for one, some or all candidates on the ballot paper. If a ballot paper does not have a second preference, it is known as an “exhausted” ballot paper and is removed from the count. This process is followed if the ballot paper only has two preferences, three preferences and so on. The Australian Electoral Commission’s video on preferential voting is linked here: https://cambridge.edu.au/redirect/12165.

Proportional voting

Counting the Senate votes is more complicated. While the preferential voting system was used for Senate elections between 1919 and 1946, a system of proportional representation is now used. Under this system, a candidate needs to obtain a certain percentage or (proportion of the votes), known as the quota, to be elected. The ballot paper (which is usually very long) is divided into two sections. Unlike voting for the lower house, voters can nominate a party or group by preference with the numbers 1 to 6 in the boxes above the line. This means that the party not a set individual, wins the Senate seat. Alternatively, voters can place numbers against individual candidates in order of preference from 1 to 12 below the line. Due to the number of independent and small party groups that run for the Senate, counting can take weeks. Australian voters do have a tradition of voting for a major party candidate in the House of Representatives and smaller party candidates in the Senate. If you are very interested in understanding more about the system, the AEC website provides a detailed explanation.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.17 How do different voting systems work and why are they used?

Formal and informal votes To ensure that their vote counts, voters must follow the advice given on the top of their ballot paper and complete it as per these instructions. This is called placing a formal vote, and it will be counted and contribute to the election result. However, if a ballot paper is not completed correctly, it is called an informal vote. An informal vote is not counted in the election result. A ballot paper may be considered informal for several reasons, including:

SA PA M P G L ES E

• it is blank or unmarked • ticks or crosses have been used when numbering in order of preference is required • the required number of boxes haven’t been marked • it has writing on it that identifies the elector. Australia’s compulsory voting system

Australia is different from many other countries in that voting is compulsory. Section 245(1) of the Commonwealth Electoral Act 1918 (Cth) states: “It shall be the duty of every elector to vote at each election”. The argument for this is that compulsory voting provides legitimacy to elected governments, with nearly all electors having their say through voting, and the elected government is seen as the majority’s choice. Across the world, only 27 countries out of 195 have compulsory voting. In the 2025 federal election, 90.7% of enrolled voters cast a vote. In the United Kingdom’s general election of 2024, voter turnout was estimated to have been 60%, the lowest turnout since 2001.

➜

After every federal election, the Joint Standing Committee on Electoral Matters (JSCEM) looks at how the election was run and listens to people’s opinions. Then, it writes a report with ideas to make Australia’s voting system better.

Figure 4.17.2 Voters mark their ballots in private booths.

Interestingly, in 1996, the JSCEM suggested getting rid of compulsory voting; however, some members of the committee did not agree, and the government decided that it was not the right time to think about making voting voluntary.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

299

300

Chapter 4 The legal and political environment

In 2004, the committee said that there should be a study about whether voting should be compulsory or voluntary. Since then, there has been ongoing debate, but no formal national move to make voting voluntary. The Australian Government and electoral bodies have generally maintained the position that compulsory voting supports high electoral participation and democratic legitimacy. Deciding if voting should be compulsory is up to Federal Parliament. The Australian Electoral Commission (AEC) does not take sides. Its job is to run elections according to the current laws. In addition, the AEC educates people about voting in Australia by providing information, so everyone understands the issue.

SA PA M P G L ES E

There are arguments for and against compulsory voting.

Arguments for compulsory voting

• Increases voter turnout: compulsory voting ensures that a higher percentage of the •

•

population participates in elections, resulting in outcomes that better reflect the will of the entire electorate. Enhances legitimacy: high voter turnout can increase the validity of elected governments, strengthening democratic principles. Promotes political engagement: when voting is mandatory, it can lead to citizens becoming more informed and engaged in political issues. Encourages equal participation: compulsory voting allows all eligible citizens to vote, and so promotes greater political equality.

Arguments against compulsory voting

• Infringes on personal freedom:

mandatory voting can be seen as a violation of individual rights, including the right not to participate in the political process. May see uninformed voting: some people may vote without sufficient knowledge or interest simply to avoid penalties, which could reduce the quality of electoral decisions. Potential for disengagement: forcing people to vote could Figure 4.17.3 Official ballot counts in Australia’s general election in May 2025 increase resentment or disengagement from politics. Increased administrative costs: compulsory voting can require additional resources for monitoring and penalising non-voters. Does not address the causes of low turnout: compulsory voting makes participation mandatory but does not necessarily solve the underlying reasons why people choose not to vote or may do an informal vote, such as lack of access or political disillusionment.

•

➜

• •

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.17 How do different voting systems work and why are they used?

Review 4.17 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

301

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Read the information about preferential voting and answer the following questions.

SA PA M P G L ES E

a. What does an “absolute majority” mean in the context of preferential voting? b. How does a voter fill in their ballot paper under the preferential voting system? c. What happens if no candidate receives a majority of first preference votes? d. Why might the final election result be delayed? e. How is optional preferential voting different from preferential voting? Choose the correct option in the multiple-choice questions. Write the correct answer as a statement in your workbook. 2. What voting system is currently used for Senate elections in Australia?

A. Preferential voting system B. Proportional representation C. First-past-the-post D. Instant run-off voting In the current Senate voting system, what is the “quota”? A. The total number of candidates running C. The number of parties running for office

B. The percentage or proportion of votes a candidate needs to be elected D. The total number of informal votes On the Senate ballot paper, what does numbering from 1 to 6 above the line indicate? A. Voter is ranking individual candidates from B. Voter is nominating a party or group different parties by preference C. Voter is abstaining from voting D. Voter is making an informal vote Which of the following is true about voting below the line on the Senate ballot paper? A. Voters place numbers from 1 to 12 against B. Voters only select a single party group. individual candidates in order of preference. D. Voters place numbers only from 1 to 6. C. Voters must write the party name. Why can counting Senate votes take weeks? A. Because most votes are informal B. Due to the large number of independent and small party groups running C. Because voters mostly vote above the line D. Because the quota is high What is a “formal vote” in an election? A. A vote that is not counted because it is B. A vote that follows the instructions and is wrongly completed counted in the election result C. A vote that contains ticks or crosses instead D. A blank or unmarked ballot paper of numbers Which of the following would make a ballot paper informal? A. The ballot paper is correctly completed with B. The ballot paper is blank or unmarked. numbers in the required boxes. D. The voter numbers the required amount C. The voter numbers boxes in the correct order. of boxes.

Thinking, researching and communicating 1. 2.

Construct a table that sets out the arguments for and against compulsory voting. Are you for or against compulsory voting? What would happen if students chose not to vote in the Student Representative Council or prefect elections at your school? Write a letter to a major newspaper arguing for or against compulsory voting. Alternatively, write a speech that could be delivered in parliament. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

302

Chapter 4 The legal and political environment

4.18

How do political parties and independents inﬂuence who forms government? Success criteria

In this lesson, you will learn about the role played by political parties and individuals in the political environment. You will also learn about the way government is formed after an election and look at how referendums can be used to change the Constitution.

❏ I can describe the role of political parties and independent representatives in Australia’s system of government. ❏ I can explain how government is formed after an election. ❏ I can outline the process of a referendum and its purpose in changing the Constitution.

SA PA M P G L ES E

Learning intention

Starter activity

India is considered to be the country with the most political parties operating in a democratic system. The United States of America, also a democracy, has only two main parties although some smaller parties do exist. What advantages and disadvantages can you think of in both types of systems?

Writing focus 4.18 Creating topic sentences

Political parties play an important role in scrutinising government decisions as well as proposing, debating and passing legislation. In both federal and state parliaments, most members belong to a political party. Political parties are groups of individuals who share similar political beliefs and form a party with the aim of influencing government policy by getting their members elected to parliament. The party with the most elected members after an election forms the government. The party or coalition of parties with the next-highest number of elected members forms the opposition.

Federal and state cabinets

At federal level, the leader of the successful party becomes the Prime Minister. At a state level, they become the Premier. The territories’ leaders are called Chief Ministers. This leader selects other members to form the top-level decision-making body, called the Cabinet. The members of the Cabinet are each assigned an area of responsibility, called a portfolio. There are portfolios for such areas as Finance, Health and Defence. The Cabinet ministers sit on the front bench in parliament. Members who do not have a portfolio sit on the backbench. The main opposition party will mirror this set-up, except it will have a shadow cabinet with shadow ministers.

Independent members of parliament Some members of parliament do not belong to a political party. They are called independents because they are not attached to a party. They take part in debates and can introduce and vote on bills. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.18 How do political parties and independents influence who forms government?

SA PA M P G L ES E

Independents play an important role in scrutinising and supporting political decisions as they are not aligned to any political party. In parliament, they sit on the crossbench. The term “crossbench” refers to the curved seats that they occupy in the legislative chamber, situated between the two major parties. This allows the independent member to cross the floor to either side when voting on important decisions. Independents cannot hold Cabinet positions.

303

➜

Figure 4.18.1 Nicolette Boele is the independent member for the electorate of Bradfield on Sydney’s North Shore.

The significance of a parliamentary majority, a hung parliament and minority government

In an election, each party tries to gain a sizeable majority of votes so that they have more chance of having their decisions accepted and passed in the parliament. If the election result is too close, it means that the winning party may have to make deals with the independents to have its policies and legislation passed. This will often mean that the policy may be changed to take on the ideas of the independent member. If the winning party does not gain a majority of votes in an election, it is called a hung parliament. To form a government, a party must secure support from independent or minor party members. This leads to a minority government and means that the leaders of the government need to constantly negotiate with the crossbenchers to pass laws. If the government cannot gain support for a policy, it may be subject to a no-confidence vote where the opposition members declare that the government is not fit to rule. If the government cannot get its policies passed or loses a no-confidence vote, a new election may be called.

Double dissolution

A double dissolution can be called if the government cannot get its laws or policies passed through the upper and lower houses. Specifically, in a Federal double dissolution both the entire House of Representatives and the entire Senate are dissolved at the same time, triggering a full election for all seats in both houses. This is different from normal elections, where only the House of Representatives and half of the Senate seats are contested.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

304

Chapter 4 The legal and political environment

A double dissolution is usually called when the Senate repeatedly rejects or fails to pass a piece of legislation passed by the House of Representatives. The GovernorGeneral dissolves both houses on the advice of the Prime Minister. The purpose of a double dissolution is to break the deadlock and allow voters to then choose members of both houses in an election, potentially allowing the government to pass the previously blocked legislation (if it wins the election).

The political parties in Australia In both federal and state politics, there are three main parties:

• The Australia Labor Party (ALP) was established in 1901. It traditionally supports

SA PA M P G L ES E

•

workers’ rights. The Liberal Party of Australia was formed in 1944. It traditionally supports the needs of business. The National Party of Australia (formerly the Country Party) was formed in 1920. It supports the needs of people in rural and regional areas.

•

The Liberal Party and National Party have usually united as a coalition to form a government when they achieved enough votes in an election. There are also minority parties in Australian politics. They mainly have more success in being elected to the upper house. These parties include the Australian Greens, One Nation and Katter’s Australian Party.

Australian voting trends

While Australian voters have mainly voted for one of the bigger parties in the lower house, in more recent times there has been a swing towards voting for independent candidates. In the upper house, Australian voters have tended to vote in more independent candidates and the opposite to which party they vote for in the lower house. While this does provide for greater scrutiny of government, it also means that policies and bills may take longer to be approved or not approved at all.

The process by which referendums to change the Australian Constitution are initiated and decided

➜

Video 4.18.1 What is a referendum? (Australian Electoral Commission video, made in the lead-up to the 2023 referendum)

In Australia, a referendum, or national vote, is needed to approve any proposed changes to the Constitution. Since Federation, Australia has had 45 proposals to change the Constitution, but only eight have been successful. For a referendum to be successful and an alteration to the Constitution to be passed, a double majority vote must be achieved. This means that a majority of voters in a majority of states (at least four of the six states) vote “Yes”, and a national majority (more than half) of voters from all states and territories vote “Yes”. Even if the referendum wins at a national level, if it is not successful in four or more states, it will not pass. This is important so that the more heavily populated states, such as New South Wales, do not create a change that other parts of Australia do not want.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.18 How do political parties and independents influence who forms government?

Review 4.18 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Describe the following terms: a. hung parliament

b. double dissolution.

Identify some Australian voting trends. Outline the purpose of a referendum and explain under what conditions it can create change.

SA PA M P G L ES E

Thinking, researching and communicating 1.

Read the media item “How an independent or minor party flips a safe seat in federal election” at https://cambridge.edu.au/redirect/11722 and complete the following questions. a. Look at the heading of this item. What do you think it means? b. Read through the article and list all the reasons that: (i) support is falling for major parties and (ii) support is rising for independent candidates. c. Outline the “three Ps” of disruption. d. What is a patron? Provide an example of one and how they have funded a candidate. e. Describe how the major parties have responded to the rise of independent candidates. f. Who is Cathy McGowan? Explain her success. You are tasked with putting a study guide together on forming a government. Write brief but relevant notes under the following headings: Introduction to political parties

• Definition and purpose of political parties • Australian political parties • Role of political parties in parliament • Importance of influencing government policy through elections Forming government after elections

• How the party with the most elected members forms the government • Role of the opposition party/parties • Majority government • Minority government Federal and state cabinets

• Leaders: Prime Minister (federal), Premier (state), Chief Ministers (territories) • Cabinet formation and structure • Portfolios and their significance (e.g. Finance, Health, Defence) • Frontbench and backbench roles The opposition and shadow cabinet

• Purpose and structure of the opposition • The shadow cabinet and shadow ministers Independent members of parliament

• Definition and role of independents • The crossbench • Function of independents in debates and voting • Limitations (no Cabinet positions) Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

305

Chapter 4 The legal and political environment

4.19

Investigation: other legal and political systems

By completing this investigation you will have the opportunity to consolidate the ideas learned through this chapter and demonstrate your understanding of Commerce concepts and skills. This investigation is designed to be completed over multiple weeks, as you complete the chapter.

Investigation topic: the political and legal system of a country other than Australia

SA PA M P G L ES E

306

Objective: to investigate and understand the structure, functions and features of the political and legal system of another country. Choose a country other than Australia and conduct a detailed study on its political and legal system.

➜

Figure 4.19.1 You could choose to research Brunei, as it is one country that still maintains an absolute monarchy as its political system.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.19 Investigation: other legal and political systems

Your research should address the following points: 1. Political system

• What type of political system does the country have (e.g. democracy, monarchy, • • • •

SA PA M P G L ES E

•

dictatorship, federation, republic)? Describe the executive branch (e.g. President, Prime Minister, monarch, ministers) and their powers. Describe the legislative branch (e.g. parliament, congress). Is it unicameral or bicameral? What are its main functions? Explain the judiciary’s role and its independence. What are the main political parties and how do they influence how Australia is governed? How are elections conducted? Discuss who can vote and election frequency.

2. Legal system

• What is the basis of the country’s legal system (e.g. common law, civil law, • • • • •

religious law, Customary Lore)? Describe the hierarchy of courts and their jurisdiction. What are some key laws or codes underpinning the legal system? Discuss how laws are made and enforced. What protections are provided for citizens’ rights (e.g. a bill of rights or human rights provisions)? How is the legal profession regulated?

3. Additional aspects

• Discuss any recent reforms or significant changes in the political or legal system. • Describe how the political and legal system impacts everyday life or any major issues facing the system.

The report

Deliverable: prepare a report (1000 words) summarising your findings, supported by credible sources such as government websites, international organisations and appropriate media sources.

➜

Figure 4.19.2 What are the key features of your chosen country’s legal and political systems?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

307

308

Chapter 4 The legal and political environment

4.20

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about the legal and political environment? Copy the table and fill it out by outlining your understanding. Aim for two points per topic

Topic

What I have learned

The purpose of laws

Criminal and civil laws Statute law

Common law

Customary Lore

The hierarchy of Australian courts The factors changing laws

The Constitution and its impact on Australia’s democracy

The House of Representatives and the Senate Separation of powers

The role of the individual in a democracy Types of voting systems

The formation of government

Visible thinking routine Connect, extend, challenge

This exercise in visible thinking asks you to think about how the concepts in this chapter have expanded your understanding of how the legal and political environment works. Using the question prompts, write a paragraph explaining what you previously knew about the topic and connecting what you now understand about the topic to your own experiences. 1.

Connect: how does what you learned in this chapter connect to what you already knew about the legal and political environment?

Extend: what new ideas have extended or deepened your thinking?

Challenge: what is still challenging or confusing? What questions do you now have?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

4.20 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Define the phrase presumption of innocence.

Outline how a bill becomes law.

SA PA M P G L ES E

What is Customary Lore?

List one example of a law that changed due to technological advances.

Recall one explicit human right protected in the Constitution.

Identify the two main chambers in a bicameral parliament building.

List the three branches of government.

Summarise why High Court decisions are final.

Recall at what age Australians must enrol to vote.

10.

List two features of the preferential voting system.

11.

Define what is meant by a hung parliament.

12.

Describe the importance of independents in parliament.

➜ Figure 4.20.1 The

Sydney Harbour Bridge lit up on 10 December 2025, to mark the first day of the national social media ban for children under 16. The new online safety laws are a direct result of laws being changed and amended to keep up with technological changes.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

309

310

Chapter 4 The legal and political environment

DOC

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Download single paragraph model

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Discuss the key differences between laws and non-legal rules. Model answer: Consumers in society follow both laws and non-legal rules, and these differ in how they are created, enforced and applied. Laws are formal rules made by parliaments and courts that everyone must follow, while non-legal rules, such as school or household rules, only apply to specific groups. These differences matter because breaking a law can lead to legal penalties, while breaking a non-legal rule usually results in consequences set by the group, such as a detention or team warning. This distinction is supported by the way laws are backed by the legal system and government authority, while non-legal rules rely on agreed expectations within organisations or social groups. For example, a road law requiring drivers to wear seatbelts applies to all road users and is enforced by police, whereas a school rule about uniform only applies within that school community. In this way, the key differences between laws and nonlegal rules relate to who creates them, who must follow them and how they are enforced.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Examples: provide credibility and illustrate the argument

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments Linking sentence: reconnects to the topic sentence using the language of the question

Structured-response questions

DOC

Identify the main principles of the rule of law.

Outline how criminal law and civil law differ in their purposes and processes.

Describe the primary processes involved in making statute law and common law.

Explain how Australian law can be at odds with Customary Lore of Aboriginal and Torres Strait Islander Peoples.

Extended-response question 1.

Download extendedresponse worksheet

Although young people constitute an important segment of the electorate, they may choose not to engage in voting. Discuss the possible impacts of this decision on the political process, representation and society. Download the worksheet from the Interactive Textbook for a scaffold to help you plan your extended response.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

The work environment

Lessons Setting the scene: the work environment – what is it?

5.2

What are the different types of work and work arrangements?

5.3

How does work contribute to wellbeing and society?

5.4

Who are the stakeholders in the workplace and what are their roles?

5.5

How has the nature of work changed and what will it look like in the future?

5.6

Skills focus: what jobs and skills will be needed in future Australia?

5.7

What are the legal rights and responsibilities of employers and employees?

5.8

Site study: safe workplaces

5.9

What types of employment contracts exist and how do they work?

SA PA M P G L ES E

5.1

5.10 Why do employment disputes happen and what causes them? 5.11 How are employment disputes resolved? 5.12 How do people get paid for work?

5.13 How do payslips and payment summaries communicate earnings, and what are our tax obligations? 5.14 Investigation: positive work environments 5.15 Chapter review

Teachers access the Online Teaching Suite to:

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

312

Chapter 5 The work environment

5.1

Setting the scene: the work environment – what is it?

Learning intention

Success criteria

In this lesson, you will start to build a basic understanding of the work environment and its different components covered in this topic.

❏ I can name different elements of the work environment that I will study in this topic.

SA PA M P G L ES E

What is the work environment?

➜

Video 5.1.1 Setting the scene: the work environment

Writing focus 5.1 Question words work tasks or services performed by an individual or organisation in exchange for payment

You will be a member of the workforce at some point in the future. You probably have had some thoughts about what types of job you would like to do and where it might lead you in life. Some students in the class may have casual or part-time jobs; some may have been helping in the family business for many years. Work is an important part of many people’s lives. Every day you are surrounded by workers. Every day you have interactions with workers (hint: your teacher is a worker). You will be a member of the workforce one day, if you are not already. In Commerce, the work environment includes all the physical, psychological and social conditions in which employees perform their jobs. In this topic, you will learn about different facets of the work environment, including categories of work and workplaces, rights and responsibilities, and the importance of work to society.

Activity 5.1.1

Recall, think, apply 1.

work environment the physical, social and psychological conditions in which an employee performs their job

While work has been around for centuries, the world of work and employment, as well as the workplace, has changed a lot over the past centuries. Can you recall some of the reasons why?

➜

Figure 5.1.1 A nineteenth-century textile factory and a modern textile factory

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.1 Setting the scene: the work environment – what is it?

313

You would have learned about some of the ways that work changed in your history lessons when you studied the Industrial Revolution. Since those times, even more change has come about. This can be seen in the two images of textile factories in Figure 5.1.1. Write down the changes you think you will come across in your capacity as a worker in the next 20 years.

The work environment has many aspects. Look at the images in Figure 5.1.2 and consider which areas of the work environment they apply to. B

SA PA M P G L ES E

➜

Figure 5.1.2 Key aspects of modern employment: workplace safety, protection from discrimination and harassment, evolving work trends, employment contracts, taxation, payment methods, and resolving workplace disputes In your workbook, write down which image (A to G) corresponds with each of the following areas and explain why. a. The legal rights and responsibilities of employees – safety b. The legal rights and responsibilities of employees – protection from discrimination and harassment c. The changing nature of work and how it is likely to change in the future d. The types of employment contracts e. Taxation f. The different ways in which people are paid for work g. Disputes in the workplace Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

314

Chapter 5 The work environment

5.2

What are the different types of work and work arrangements? Success criteria

In this lesson, you will learn about the different types of employment and their arrangements that exist in the work environment.

❏ I can identify and describe different types of work and work arrangements.

SA PA M P G L ES E

Learning intention

Starter activity

Consider the various occupations and jobs carried out by your family, friends and neighbours. 1.

Do they all have similar jobs? Does every person work the same number of hours each day or week? Are all their jobs permanent, or do some of your family, friends and neighbours work casually or only as needed? If you were to group their different types of work, what categories or job titles would you use? Jot down some ideas.

What is work?

Writing focus 5.2 Transitional phrases

A broad definition of work is any activity or task that a person does to complete a job, or achieve a goal, both paid and unpaid. However, in a commercial context, work refers to tasks or services performed by an individual or organisation in exchange for payment. It involves carrying out specific activities, projects or jobs that contribute to business operations, production or service delivery, often under agreed terms and conditions. Work can be classified into various categories based on factors such as the number of hours worked and whether the individual is employed by a business or engaged on a contract basis for a specific job or project. The nature of work and employment arrangements can differ significantly depending on the industry, role and organisational requirements. In contemporary settings, these arrangements are frequently tailored to accommodate both the needs of the employer and the preferences or circumstances of the employee.

Types of work categories

Work categories are generally classified as follows:

• Permanent work: employees have ongoing employment until they resign, retire or • • •

are terminated under specific conditions. Full-time work: permanent employees who work the standard hours set by the employer, typically around 38 to 40 hours per week. Part-time work: permanent employees working fewer hours than full-time, usually on a regular but reduced schedule. Casual work: employees engaged on an irregular or as-needed basis without guaranteed ongoing employment.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.2 What are the different types of work and work arrangements?

315

• Contract work: employees or contractors hired for a fixed term or specific project • • •

with defined deliverables and duration. Temporary (temp) work: similar to contract work but often arranged through an agency and usually for shorter periods. Freelance or gig work: self-employed individuals undertaking short-term assignments or projects for various clients. Apprenticeship and traineeship: positions combining work with formal training, designed to support career entry or skill development.

The pros and cons of gig work:

SA PA M P G L ES E

what you need to know

As the gig economy continues to expand, more people are turning to gig work to earn income. While gig work offers many benefits, it also comes with some drawbacks that workers need to consider.

Advantages of gig work

Disadvantages of gig work

One of the biggest positives of gig work is its flexibility. Gig workers often have the freedom to choose when, where, and how much they work, making it easier to balance work with other life commitments. This can help improve work–life balance for many workers.

However, gig work is not without challenges. A lack of steady income is a major concern, as earnings can be unpredictable and irregular, which can mean financial uncertainty for many. Another downside is that gig workers usually do not receive benefits such as paid leave or superannuation, which more traditional employment offers. Another issue is job security, as gig workers typically have no guaranteed ongoing work or long-term contracts. They may face limited legal protections related to workplace rights and conditions, which can leave them vulnerable to exploitation. Finally, without a traditional workplace environment, gig workers might miss out on social interaction as well as professional networking opportunities that can be important for career growth. With the gig economy expanding, it is important for anyone thinking about this kind of work to be aware of both its benefits and challenges. Whether viewed as a temporary option or a long-term career path, carefully considering these factors can empower individuals to make well-informed decisions about their employment.

Gig jobs also offer variety, with a range of different tasks and projects that can keep work interesting and help develop a range of skills. For those who value independence, gig work can be appealing as they can operate as independent contractors, giving them greater control over their work.

In addition, gig work can provide a valuable source of extra income for people who have other jobs or are between jobs. Gig work has low barriers to entry – often requiring minimal qualifications or start-up costs – which means gig jobs are accessible to a wide range of people.

Types of work arrangements

Work arrangements refer to the location and structure of an employee’s work. Common types include:

• Onsite work: employees perform their duties at the employer’s premises. • Remote work: employees work from a location outside the employer’s premises, • •

often from home. Hybrid work: a mix of both onsite and remote work. Shift work: employees work in scheduled shifts to cover different times of the day. This is usually in industries that require 24/7 coverage. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

316

Chapter 5 The work environment

• Flex time: employees have flexible start and finish times within agreed boundaries. • •

This is favoured by workers who may be studying or have family commitments. Job sharing: two or more employees share the responsibilities of a single full-time role. This type of work is often favoured by employees who have family commitments, are studying, have sporting commitments, or are transitioning towards retirement. Compressed work week: employees work longer hours each day but fewer days per week, such as four 10-hour days.

Review 5.2 Knowledge and understanding

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

SA PA M P G L ES E

Online quiz

Thinking, researching and communicating

Knowledge and understanding 1.

2. 3.

Copy and complete the following cloze passage in your workbook. Work is defined as any activity or task that a person does to complete a job or achieve a _________, both paid and unpaid. However, in a commercial context, work refers to tasks or services performed by an individual or organisation in exchange for _________. It involves carrying out specific activities, projects or jobs that contribute to business operations, production or _________delivery, often under agreed terms and conditions. Work can be classified into various categories based on factors such as the number of _________ worked and whether the individual is employed by a business or engaged on a _________ basis for a specific job or project. The nature of work and employment arrangements can differ significantly depending on the industry, role and _________ requirements. In contemporary settings, these arrangements are frequently tailored to accommodate both the needs of the employer and the preferences or _________ of the employee. Outline the different ways that work can be classified. In your workbook, copy and complete the following table to match each scenario to the correct job arrangement.

Job arrangement

Scenario

a. Job sharing

Jill works a 35-hour week over four days in her position in a large telecommunications business.

b. Flex time

Sam is a teacher who works two days a week. He shares his work timetable with Cass, who works three days a week.

c. Compressed work week

Layla works two days in her organisation’s main office and two days in her home office.

d. Remote work

By working an extra hour a day, Alex is able to have a nine-day fortnight.

e. Shift work

In his job as an editor, Billy is able to work from home.

f. Hybrid work

In her role as a police officer, Yuen works four nights and four days in a fortnight.

Thinking, researching and communicating 1.

Imagine that a friend who is entering the workforce is thinking of working in the gig economy. They have asked your advice about whether this is a good decision. Compose an email to your friend providing the advantages and disadvantages of this area of work. Set out your email so that it is easy for your friend to read and understand. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.3 How does work contribute to wellbeing and society?

317

How does work contribute to wellbeing and society?

5.3

Success criteria

In this lesson, you will learn about how work contributes to both an individual’s and society’s wellbeing.

❏ I can outline different ways that work contributes to the wellbeing of both individuals and broader society.

SA PA M P G L ES E

Learning intention

Starter activity

Morality, creativity, spontaneity, lack of prejudice, acceptance of facts

Self-actualisation

Self-esteem, respect, achievement, confidence

Esteem

Friendship, family, intimacy, sense of connection with others

Love/belonging Safety

Security of body, of employment, of resources, of the family, of health, of property

Physiological

Air, food, water, shelter, clothing, sleep

➜

Figure 5.3.1 Maslow’s hierarchy of needs

Look closely at Figure 5.3.1 Maslow’s hierarchy of needs. 1.

What does it tell you about the reasons why people work? Where do you think you will fit in the diagram when you start work? Why?

Different reasons for working

As seen in Figure 5.3.1, people work for different reasons. This can be because they need to satisfy basic needs and wants to survive. Other people may have paid off their house, may have savings in the bank and they may work because it makes them feel good – they derive satisfaction from their job. Other employees usually fall somewhere between these categories. If an employee likes their job, it can have many benefits to both individual wellbeing and society.

The contribution of work to individual wellbeing Many people work because it provides financial security. Employment provides an income and allows individuals to afford necessities such as housing and alleviate financial stress. This is essential for maintaining health and wellbeing. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 5.3 Transitional phrases

318

Chapter 5 The work environment

Individuals also work because meaningful work gives them a sense of purpose, achievement and self-worth, which can positively impact their self-image and self-esteem. In addition, the workplace can provide opportunities for social interaction, fostering a sense of belonging and community that is vital for mental health.

SA PA M P G L ES E

Figure 5.3.2 Work can provide a sense of personal purpose, supports the economy and encourages social stability. ➜

For many workers, jobs provide routine and structure, which helps with mental health and stability. Additionally, work offers opportunities for learning new skills, career development, and personal growth through training, coaching and challenging work.

The importance of work to society

Work can have benefits beyond individual wellbeing; it can also contribute to the whole of society. It does this in the following ways:

• Economic productivity: the workforce drives the economy, creating goods

•

and services that contribute to a nation’s prosperity. This is because employees contribute their skills, labour and expertise to produce goods and services that meet consumer demand. When the workforce is productive, output grows, driving economic expansion, improving living standards and creating national wealth. As productivity improves, the economy gains through greater profits, expanded exports and enhanced competitiveness on the global stage. Social stability: widespread employment and income can lead to greater social stability, because when many people have jobs and earn reliable incomes, they are better equipped to meet their basic needs, support their families and participate actively in their communities. Employment reduces poverty and inequality, which helps lower crime rates, social tensions and unrest. Stable employment fosters a sense of purpose and belonging among individuals, contributing to stronger social cohesion and community wellbeing. Governments also benefit, as fewer social welfare interventions are needed when more citizens are economically self-sufficient. Innovation: an educated, skilled and motivated workforce is a key driver of innovation and technological progress. When employees are provided with training, resources and opportunities, they can generate new ideas, enhance processes and develop innovative products. Innovation boosts efficiency, expands market opportunities and helps tackle important societal issues like environmental sustainability and healthcare. Companies that foster creativity and invest in the growth of their workforce often gain a competitive advantage, contributing to economic growth and improving the quality of life overall. Broader impacts: employee satisfaction has far-reaching impacts beyond the workplace itself. When workers feel valued, supported and motivated, their productivity and quality of work improve. This often means better customer service, higher product quality and increased reliability.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.3 How does work contribute to wellbeing and society?

Review 5.3

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Video 5.3.1 Productivity and mental health ➜

SA PA M P G L ES E

•

These things build strong customer loyalty, and loyal customers contribute to steady business revenues and expansion opportunities. As businesses grow and succeed, they can offer more jobs and invest further in their communities, creating a positive cycle that benefits the whole of society. Government income: individuals’ income tax is the single most important source of national government revenue. The Australian Treasury has stated that since the mid1970s individual income tax “has consistently raised around half of the Australian Government’s tax receipts and continues to be a stable and predictable source of revenue”. This income allows the Australian Government to fund its spending on major areas like social security and welfare (e.g. pensions, JobSeeker), health (e.g. Medicare, hospitals), defence, education and infrastructure.

319

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

4. 5.

Outline the benefits that individuals derive from work. How does the workforce contribute to a nation’s economic productivity? Outline the broader social and business benefits that result from employee satisfaction. Discuss how customer loyalty and business growth could be affected by the satisfaction of employees. Explain how individual income tax contributes to the Australian Government’s revenue and why this is important for funding public services.

Thinking, researching and communicating

CVGT Employment is a not-for-profit Australian organisation that helps people find meaningful work and connects jobseekers with employers, offering free support for various groups, such as youth, people with disabilities, or those re-entering the workforce. It operates across Victoria, New South Wales and Tasmania. On its website, it states that the 10 benefits of being employed are: 1. Keeps you busy, challenges you and gives you the means to develop yourself 2. Gives you a sense of pride, identity and personal achievement 3. Enables you to socialise, build contacts and find support 4. Provides you with income to support yourself and explore your interests 5. Builds up your skills and knowledge 6. Can improve your physical and mental health 7. Increased happiness due to sense of belonging 8. Security from a steady and reliable income 9. Adding to your history of employment strengthens your resume for future job opportunities 10.Increased self-esteem due to a daily purpose and contribution to society.

➜

Figure 5.3.3 The benefits of being employed. Content courtesy of CVGT Employment. Source: ‘Why Work? 10 Benefits of Being Employed’ (cvgt.com.au). 1. 2.

Look at each item on the list and construct one to two sentences to expand on each point. If you were to choose three items from the list important to you, what would they be and why? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

320

Chapter 5 The work environment

5.4

Who are the stakeholders in the workplace and what are their roles? Success criteria

In this lesson, you will learn about the different types of stakeholders in the work environment.

❏ I can state the meaning of stakeholder, as well as identify the types of stakeholders and outline their roles in relation to the workplace.

SA PA M P G L ES E

Learning intention

Starter activity

In this lesson, you will be learning about stakeholders. The word “stake” can have different meanings and usage. Can you think of some of these?

➜

People may say that they have a lot at stake, or they are staking out their land to show its boundaries, staking a plant to provide support, and that they have a stake in an investment. With all this in mind, what do you think the word “stakeholder” in the work environment context may mean?

Figure 5.4.1 A stakeholder?

What is a stakeholder?

Writing focus 5.4 Developing sentences

stakeholder person or group that has an interest in a company and can be affected by its actions, such as employees, customers, owners or investors

A stakeholder is any individual, group or organisation affected by or interested in an organisation’s actions. This includes internal parties, such as employees and owners, and external parties, like customers, suppliers and the local community.

Workplace stakeholders

Workplace stakeholders are those people or groups who are connected to a workplace and who are affected by what happens at work. This includes employees, managers, employers, and sometimes even the government, customers, suppliers and unions. They all have an interest in how the workplace is run and the decisions made there.

Internal stakeholders: employees, managers and employers An employee is someone who works for the business. Managers are supervisors of business operations. The higher a manager is in the organisation’s hierarchy, the more important the decisions they make. Managers are also employees of the business. Employers are the owners of the business. They usually delegate the running of the business to the managers. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.4 Who are the stakeholders in the workplace and what are their roles?

321

The collective term for managers is “management”. In some businesses, usually small to medium ones, the owners also have management roles.

Figure 5.4.2 I am a worker. My role as a stakeholder is to produce goods and services. My goal as a stakeholder is to earn as much income as I can for my labour.

SA PA M P G L ES E

➜

The relationship between stakeholders can be a complicated one, as sometimes their work goals can conflict, despite all wanting the business to remain in operation. For example, employees want to derive maximum reward (in the form of income) from their job, but employers want to have maximum profit from the business. As profit is income minus expenses, and worker payments are an expense, the employee and employer goals are at odds. It is the job of managers to handle this imbalance and find a way to keep owners and workers happy. (You will look at workplace issues and resolutions later in this topic.)

However, as all parties are impacted by the business operations, they have a vested interest in ensuring that their actions do not undermine the success of the business. If the business fails, the employees will no longer have an income; nor will the managers. The employers will not gain a profit from the business but may, in fact, owe money. As stakeholders, their decisions influence the organisation, and they are likewise influenced by the outcomes of the organisation’s activities.

Figure 5.4.4 I am a manager. My role as a stakeholder is to manage the business. My goal is to ensure that workers’ and owners’ goals do not conflict so that the business remains operational. Trying to keep everyone happy can impact on my own work satisfaction. ➜

Various other individuals and groups have an indirect interest in a business. When a business ceases operations or decides on which products to produce, both customers and suppliers feel the effects. The government also plays a role as a stakeholder, since it establishes laws governing workplace relationships and collects taxes from both employees and business owners. Consequently, these stakeholders are all indirectly influenced by the work environment. Additionally, unions (also known as trade unions) advocate for workers’ interests and participate in activities such as wage negotiations and resolving disputes. Should their members face job losses, the unions themselves will be affected as they are stakeholders in the employment relationship.

Figure 5.4.3 I am an owner/employer. My role as a stakeholder is to run the business. My goal is to have sales be greater than expenses so that I receive as much profit as possible for my investment in the business. ➜

External stakeholders: customers, suppliers, government and unions

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

322

Chapter 5 The work environment

Review 5.4 Knowledge and understanding

Online quiz

Thinking, researching and communicating

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1. 2.

Define the business term stakeholder. Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

SA PA M P G L ES E

a. An employee is someone who owns the business. b. Managers supervise business operations.

c. The higher a manager is in the organisation’s hierarchy, the more important the decisions they make.

d. Managers are not employees of the business.

e. Employers are usually the owners of the business.

f. Employers always run the daily operations of the business themselves. g. The collective term for managers is “management”.

h. In small and medium businesses, owners sometimes also take on management roles. i. Employees and employers always have the same goals for the business.

j. Employees want to earn the maximum income from their job. k. Employers want to maximise profits for the business.

l. Worker payments are considered an expense for the business.

m. Managers are responsible for balancing the interests of employees and employers.

n. If a business fails, employees, managers and employers will all be negatively affected.

o. Stakeholders do not influence the organisation’s operations.

p. Stakeholders have no interest in the success of the business.

Distinguish between internal and external stakeholders.

Thinking, researching and communicating 1.

Write an extended response to the following question. Different stakeholders in a business want different things. Explain why the goals of these groups can sometimes conflict with each other, yet ultimately the business survival is their main goal. Use examples of stakeholders in your answer. a. Remember to have an introduction where you briefly outline what you will be writing about. b. Have three to four body paragraphs where you define stakeholders and explain why their goals conflict. c. Provide relevant examples. d. Refer to the goal of business success. e. Have an effective conclusion. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.5 How has the nature of work changed and what will it look like in the future?

5.5

323

How has the nature of work changed and what will it look like in the future?

Learning intention

Success criteria

In this lesson, you will learn about the changing nature of work over time and future changes.

❏ I can describe the ways in which work has changed and outline possible future changes.

SA PA M P G L ES E

Starter activity

Look at Figure 5.5.1. 1.

Have you ever been to a restaurant where your order was taken by a robot waiter and delivered by a robot waiter? Do you think this is the future of restaurants?

Why or why not?

Discuss this with another student to hear their ideas.

➜

Figure 5.5.1 A robot waiter

How the work environment has changed

The Industrial Revolution of the eighteenth and nineteenth centuries had a strong influence on the nature of work. Prior to this, most people worked in agriculture or handcrafted goods at home or in small workshops. The Industrial Revolution introduced large-scale manufacturing in factories, shifting work from rural farms to urban industrial centres. It also saw the introduction of machines, such as the steam engine, the spinning jenny and the power loom, which dramatically increased production capacity. In addition, manual labour was often replaced or supplemented by machinery, changing workers’ roles to machine operation and maintenance. Thus, the nature of the work environment changed dramatically and has continued to change over the past two centuries. The last century has seen the nature of work continue to significantly change. This is due to various social, technological and economic developments. Here are some of the reasons why and the ways that work has evolved:

• Technology and automation

• •

In the early twentieth century, work was largely manual and industrial, involving manufacturing and agriculture. The rise of computers, automation and artificial intelligence has transformed many industries, and so reduced the need for repetitive manual tasks, and has increased demand for technology skills. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 5.5 Developing sentences

324

Chapter 5 The work environment

• Shift from manufacturing to services

• •

Modern countries have moved from being primarily manufacturing-based to service-oriented. Jobs in healthcare, education, finance and information technology have seen large increases.

• Work environment and structures

• •

Traditional 9-to-5 office jobs were prevalent from the 1950s to the 2000s. Increased flexibility now exists, with remote work, freelancing and gig economy roles, especially accelerated by digital connectivity.

• Globalisation

•

SA PA M P G L ES E

Work has become more global, with companies outsourcing jobs and teams working across countries and time zones – leading to a more global workplace. Skills and education Businesses, workers and governments have placed a greater emphasis on lifelong learning and advanced education. Soft skills, critical thinking and adaptability have become as important as technical skills.

•

antidiscrimination against unfair treatment of people because of factors such as their race, gender or sexuality

➜

Video 5.5.1 Changing technology

• •

• Workplace diversity and inclusion

• • • • • • • •

Increased participation of women and marginalised groups in the workforce. More attention to equal opportunity and anti-discrimination policies.

Job security and employment patterns Shift from long-term, stable employment towards more contract, part-time and freelance roles. This has led to greater flexibility but also concerns about job security and benefits. Work–life balance Growing recognition of the importance of work–life balance and mental health. Organisations now often provide wellness programs and more supportive workplace cultures.

Case study 5.5.1: How did COVID-19 change the workplace?

Since 2020, many changes have happened because of the COVID-19 pandemic. COVID-19 is a serious illness caused by a virus called coronavirus. It first appeared in a city called Wuhan in China at the end of 2019 and quickly spread worldwide. To stop the virus from spreading, governments, including those in Australia, put many rules in place to limit people’s movement. These rules greatly affected where and how people worked. The pandemic sped up the shift to working from home. Many organisations began allowing their staff to work remotely to keep everyone safe while continuing their work. This change led to a big increase in using digital tools such as video meetings and online collaboration platforms, making work more flexible. To support remote work, companies invested more in technology such as cloud services and better IT systems. For those still working at their workplaces, new health and safety rules were introduced, including better hygiene, social distancing and health checks to reduce the chance of spreading the virus. The pandemic also made organisations pay more attention to their employees’ mental health. They started offering more support programs to help staff look after their wellbeing.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.5 How has the nature of work changed and what will it look like in the future?

325

Many organisations adopted a hybrid work model, where people could work partly from home and partly in the office. This gave employees more freedom to choose how and where they worked. However, working this way also created new challenges, such as needing to keep teams connected and communicating well, even when not physically together. This required new tools and strategies. In education, schools and universities moved students to learning from home, and many businesses also shifted their training and professional development to online formats. Overall, the COVID-19 pandemic changed how we work and learn, making remote and flexible options much more common.

The future

SA PA M P G L ES E

Following on from the changes that have occurred in the last few decades, it is to be expected that the future work environment will be shaped by ongoing technological advancements, changing societal values and economic conditions. Here are some key features that are likely to define the future of work:

• Hybrid and remote work

•

Figure 5.5.2 Working from home requires additional tools for communication and connection between colleagues. ➜

•

Flexible work arrangements will continue, with a blend of remote, onsite and hybrid models. Technology will support the ability to have collaboration across locations and time zones.

• Increased use of artificial intelligence (AI) and automation

• •

AI and automation will handle more routine and repetitive tasks, allowing humans to focus on complex, creative and strategic work. New job roles will emerge centred around managing, developing and working alongside AI systems.

• Focus on lifelong learning

• •

•

Continuous upskilling and reskilling will be essential as job requirements go through fast-paced change. Employers and educational institutions will work together more closely to provide ongoing training. Greater emphasis on wellbeing and inclusion Workplaces will prioritise mental health, diversity, equity and inclusion, fostering supportive and culturally sensitive environments. Flexible schedules and wellness programs will be standard to promote work–life balance.

• •

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

326

Chapter 5 The work environment

• Collaborative and agile workspaces

• • • • • • • •

Physical offices may be redesigned as hubs for collaboration, innovation and social connection rather than just individual work. Agile project management and team-based work will be common.

Gig economy and portfolio careers More individuals may engage in multiple part-time roles, freelance work or gig economy jobs, creating diverse career portfolios. This will demand strong self-management and digital skills.

SA PA M P G L ES E

Sustainability and social responsibility Organisations will increasingly focus on sustainable practices and ethical responsibilities as part of their core missions. Employees may expect employers to contribute positively to society and the environment.

• Advanced digital infrastructure

•

Enhanced connectivity (e.g. 5G and beyond) and sophisticated digital tools will enable more immersive virtual experiences, including virtual reality meetings and training.

Overall, if these changes live up to their predictions, the future work environment should be more flexible, inclusive, technologically integrated and focused on people-centred values, balancing productivity with wellbeing.

Case study 5.5.2: hybrid workplaces Amara’s tale

Amara works in logistics for a large organisation. She has worked for this business for 15 years. Since 2021, Amara has had a hybrid workplace where she works in the office two days a week and from home the other three days. She has a room set up in her house as a home office. Amara says that there are lots of advantages for her in having a hybrid work mode. She is at a stage in her life where most of her friends are not from work, so she doesn’t need the social aspect that an office would provide. Amara saves money and time on transport costs, which allows her more gardening and reading opportunities. The two days in the office means that she can attend meetings, talk about issues with her supervisor face to face as well as take part in office celebrations, but she enjoys the ability to work in the quiet environment of her home office. Technology allows her to have online meetings with colleagues to deal with any issues. Amara has reached the position that she wants to be in her career and is thinking of retirement in the next five years, so she finds the hybrid set-up suits her well. Charlie’s tale

Charlie also works in a hybrid work environment. He is an administration assistant in a government department and has worked in this position for six years. He has two days in the office and three days in his home office but wishes that he could be in the office more. Charlie misses the social aspect of the office environment. Prior to the organisation going hybrid, he played basketball at lunchtime at his building’s rooftop court and was part of the office afterwork trivia team. Charlie wants to go further in his organisation, but working from home means that he is missing out on mentoring from management. It doesn’t help that Charlie shares a unit with two other people, and finding a quiet place to work is difficult at times.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.5 How has the nature of work changed and what will it look like in the future?

Review 5.5 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2.

Describe how the Industrial Revolution changed the way people work. In your workbook, construct a summary table similar to the one provided about the changes that have occurred in the work environment and possible future changes. Write two to three key points against each heading.

Change

Key points

SA PA M P G L ES E

Technology and automation

Shift from manufacturing to services Work environment and structures Globalisation

Skills and education

Workplace diversity and inclusion

Job security and employment patterns Work–life balance

Hybrid and remote work

Increased use of AI and automation

Greater emphasis on wellbeing and inclusion Collaborative and agile workspaces Gig economy and portfolio careers

Sustainability and social responsibility Advanced digital infrastructure

This is an important study technique, so make sure that you put your points in your own words.

Read Amara and Charlie’s tales in Case study 5.5.2: hybrid workplaces. a. Identify the advantages and disadvantages of the hybrid work model. b. Why do you think the model suits Amara more than Charlie?

Thinking, researching and communicating

Imagine that you had to explain to a young person in 50 years’ time about the COVID-19 pandemic. 1.

What would you tell them about: a. what it was, and b. how it changed the way that work is carried out?

Write a script about what you would say. Include some examples of your own experiences.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

327

328

Chapter 5 The work environment

5.6

Skills focus: what jobs and skills will be needed in future Australia? Success criteria

In this lesson, you will examine data to see where job growth is occurring in Australia.

❏ I can outline the jobs that will be needed in future Australia and identify some of the reasons for this need.

SA PA M P G L ES E

Learning intention

Starter activity

Earlier on in the topic, you learned about the importance of work, the types of employment that people have and how the nature of the work environment is changing. Write down what jobs you think will be needed in the future and compare your list with a partner.

➜

Figure 5.6.1 Even the way that people search for a job has been changed by technology.

Employment trends and statistics

Employment trends and statistics are important because they provide information about the labour market, helping people understand what kinds of jobs are available, which industries are growing or shrinking and what skills are in demand. This information helps individuals, businesses and governments make better decisions. The following groups have an interest in what is happening in the wider work environment and use the information provided by employment trends and statistics:

• Jobseekers – to learn which jobs have good opportunities and what skills they need • • • •

to get hired or to switch careers Employers – to identify talent shortages or surpluses, so businesses can plan hiring, training and development to meet their needs Educators and training providers – to design courses and programs that teach skills that are needed in the current and future job market Governments and policymakers – to guide decisions about economic policy, workforce planning, social services and support programs to improve employment rates and the economy Researchers and analysts – to study the economy, forecast future changes and understand how work is evolving.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.6 Skills focus: what jobs and skills will be needed in future Australia?

Employment trends and statistics give valuable insights that help many people and organisations plan for the future in a changing labour market.

Jobs and Skills Australia (JSA) Jobs and Skills Australia (JSA) is an independent national body that advises the government and stakeholders on current and future workforce, skills and training needs. Its aim is to maximise the nation’s labour force through data, analysis and collaboration to address skill shortages and enhance training programs. In this capacity, JSA publishes information (Figure 5.6.2 and Figure 5.6.3) about trends in employment – for example, where future needs lie.

SA PA M P G L ES E

Projected employment growth in major occupations over five and 10 years

Professionals Managers

Community and personal service workers Technicians and trades workers

Machinery operators and drivers

Clerical and administrative workers Sales workers

Labourers

10% 13% 15% 18% 20% 23%

Projected employment growth (May 2025 – May 2030)

➜

Projected employment growth (May 2025 – May 2035)

Figure 5.6.2 All major occupation groups are projected to increase in employment over the next five and 10 years.

As shown in Figure 5.6.2, in 2025, JSA predicted that the major occupation groups to experience the highest employment growth over the next five and 10 years will include:

• Professionals are projected to increase by 456,900 people (an 11.6% rise) by 2030, • •

and by 845,300 people (a 21.4% rise) by 2035. The strongest employment growth within this group is expected in health therapy occupations, with physiotherapists leading the way, projected to grow by 33.6%. Managers are expected to grow by 143,400 persons (7.7%) by 2030, and by 279,600 persons (14.9%) by 2035. Among these, significant growth is anticipated for health and welfare services managers (27.1%), ICT managers (25.5%) and research and development managers (22.8%). Community and personal service workers are projected to increase by 122,000 persons (7.1%) by 2030, and by 236,100 persons (13.7%) by 2035. The fastest expanding occupations in this category include dental assistants (26%), nursing support and personal care workers (24.7%), and ambulance officers and paramedics (22.6%).

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

329

330

Chapter 5 The work environment

As shown in Figure 5.6.3, JSA also predicted the following lowest five level 2 occupations by projected employment growth over the next decade. Level 2 is equivalent to an Advanced Diploma or Diploma level of qualification. Lowest level 2 occupations by projected employment growth over the next decade Other labourers Factory process workers Farmers and farm managers Clerical and office support workers

SA PA M P G L ES E

Personal assistants and secretaries –8%

–6%

–4%

–2%

% growth

➜

Figure 5.6.3 Lowest five level 2 occupations by projected employment growth over the next decade

Review 5.6 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the ways that jobseekers can use employment projections data to plan their career development. Do you think there may be limitations with this? If so, write down a limitation. Look at Figures 5.6.2 and 5.6.3 and answer the following questions. a. Identify the projected employment growth trends for various occupations over the next five years. Which area is expected to have the most demand? b. Identify the projected occupations that are expected to have minimal growth over the next five years. c. Identify the projected occupations that are expected to have negative growth over the next five years.

Thinking, researching and communicating 1.

With reference to the data provided by JSA (Figures 5.6.2 and 5.6.3), think about the possible reasons behind the projected growth areas. Consider such things as social, economic and technological changes. Work with another student to discuss the reasons and then write an explanation for these changes. Visit the JSA website at: https://cambridge.edu.au/redirect/11723. a. Choose one occupation you are interested in or curious about. Identify the projected employment growth for this occupation over the next five years. b. Is the occupation expected to grow, stay the same, or decline? c. Identify the number of total job openings projected. (This usually combines growth and replacement demand.) d. According to the website, what skills or qualifications are needed for this occupation? e. Identify the factors that might influence the future demand for this occupation. (Consider technology, ageing population, new policies, etc.) Based on what you have learned about this occupation, would you consider pursuing a career in this field? Why or why not? f. What skills or education will you need to develop to succeed in this occupation? g. Outline two steps you can take this year to align your skills development with the employment trends you identified. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.7 What are the legal rights and responsibilities of employers and employees?

5.7

331

What are the legal rights and responsibilities of employers and employees? Success criteria

In this lesson, you will learn that employers and employees have both legal rights and legal responsibilities.

❏ I can outline the legal rights and the legal responsibilities of employers and employees.

SA PA M P G L ES E

Learning intention

Starter activity

Earlier in this topic, you learned that employers and employees are both stakeholders in the work environment. They both have legal rights and responsibilities to the workplace. 1.

2. 3.

What do you think these are? Talk about this with another student. Jot down some points and see if you were on track about them as they are revealed in the topic.

➜

Figure 5.7.1 Both employers and employees have legal rights and legal responsibilities.

Employer responsibilities General responsibilities

Employers have a range of legal rights and responsibilities designed to ensure fair, safe and equitable workplaces. While there can be variations depending on the jurisdiction and specific industry, in general employers must provide a safe work environment. They must also comply with employment laws. This includes providing equal opportunity and not discriminating against employees or job applicants based on race, gender, age, disability, religion or other protected characteristics. Employers must pay employees the agreed salary or wage on time, including any entitlements such as superannuation, overtime and leave payments. They should provide clear terms of employment through contracts or agreements and maintain policies on workplace conduct, grievance procedures and disciplinary processes. Employers must respect employee rights, such as the ability to join a union and take leave, and privacy rights in accordance with the law. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 5.7 Appositives

332

Chapter 5 The work environment

Employers are legally obligated to keep accurate records of employee details, wages, hours worked and compliance with workplace laws. They may also need to report certain matters to government agencies. Employers must follow fair procedures and legal requirements when terminating employment, including notice periods, severance payments and avoiding unfair dismissal.

Legal obligations

SA PA M P G L ES E

legislation a law made by parliament

The employer has a legal obligation in many of these areas. In Australia, employers’ legal rights and responsibilities are primarily covered by federal laws such as the Fair Work Act 2009, the Work Health and Safety Act 2011 and various anti-discrimination laws, along with state and territory legislation. The Fair Work Act provides minimum employment standards as set out in the National Employment Standards (NES). These standards include maximum weekly hours, leave entitlements (annual, personal/carer’s, parental), notice of termination and redundancy pay. The Act forces employers to comply with modern awards or enterprise agreements relating to pay rates, conditions and work arrangements; to pay employees at least the minimum wage and entitlements; and to avoid unfair dismissal and follow lawful termination procedures. The Work Health and Safety Act forces employers to provide a safe working environment, manage risks, provide safety training and equipment, and report workplace injuries and incidents to the correct authority. Employers must also comply with federal laws, such as the Racial Discrimination Act 1975, the Sex Discrimination Act 1984 and the Disability Discrimination Act 1992, and state legislation prohibiting discrimination, harassment and bullying. While most of the employer’s legal obligations are governed by national legislation, each state and territory also has specific laws. In New South Wales, the Work Health and Safety Act 2011 (NSW) forces employers to provide and maintain a safe work environment, which includes providing appropriate training, supervision and information to workers, consult with employees, report serious injuries and keep records of workplace injuries and safety measures.

➜

Figure 5.7.2 Employers are required to provide a safe working environment for all employees.

The Anti-Discrimination Act 1977 (NSW) prohibits discrimination on grounds such as race, sex, age, disability or marital status. Under this Act, employers must ensure that workplace policies prevent harassment, bullying and discrimination.

Employer’s rights While employers have many legal responsibilities, they also have legal rights, although these rights must involve legal and reasonable behaviour by the employer. Table 5.7.1 outlines some of these rights. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.7 What are the legal rights and responsibilities of employers and employees?

333

Table 5.7.1 Employers’ rights Right

Description

Hiring and firing

Employers can hire employees based on qualifications and job requirements. They can terminate employment for valid reasons, such as poor performance, misconduct or redundancy, as long as they follow proper procedures and legal requirements.

Setting work conditions

Employers have the right to set reasonable workplace policies, including work hours, dress codes, conduct and workplace safety rules.

Directing work

Employers can direct how work is performed, assign tasks and manage workflow to meet business needs.

Protecting Employers can enforce confidentiality agreements, protect intellectual property and take business interests action against conflicts of interest. Employers may monitor work performance and compliance with policies in a manner consistent with privacy laws.

Managing discipline

Employers have the right to reasonably discipline employees for breaches of conduct or performance issues, following fair and lawful processes. This discipline can range from warnings and retraining to termination of employment, depending on the severity of the issue.

SA PA M P G L ES E

Monitoring work

The legal rights and responsibilities of employees

Just as employers have rights and responsibilities, so do employees. In Australia, employees have specific legal rights and responsibilities designed to ensure a safe, fair and respectful workplace. These include protections around safety, discrimination and harassment.

Legal rights of employees

Table 5.7.2 outlines the legal rights of employees.

Table 5.7.2 Employees’ rights Right

Description

The right to a safe workplace

This is governed by the Work Health and Safety Act 2011 (WHS Act). Employees have the right to a safe and healthy working environment where adequate training is provided. Employees also have the right to refuse unsafe work without penalty.

Protection from Employees are protected from discrimination under laws such as the Sex Discrimination discrimination Act 1984, the Disability Discrimination Act 1992, the Age Discrimination Act 2004 and state anti-discrimination laws. These laws make discrimination based on race, sex, disability, age, sexual orientation, religion or other protected attributes unlawful in recruitment, employment conditions, promotions and termination. Protection from Harassment or bullying at work, including sexual harassment, is prohibited under federal harassment and and state laws. Employees have the right to a workplace free from unwelcome conduct, verbal or physical, that creates a hostile or intimidating environment. bullying The right to fair pay and conditions

Employees have the right to receive at least the minimum wage and entitlements as per the Fair Work Act 2009 and relevant awards or enterprise agreements. This includes a right to leave (annual, sick, parental), breaks and proper working hours.

The right to join Employees can join unions and are protected when engaging in collective bargaining or industrial action under the Fair Work Act. a union and to collective bargaining Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

334

Chapter 5 The work environment

Legal responsibilities of employees Employees also have responsibilities towards their work environment. These responsibilities include the following areas:

• A duty to take reasonable care for

SA PA M P G L ES E

Figure 5.7.3 Employees also have responsibilities towards their employer and should act in the best interests of the business. ➜

their own and others’ health and safety following health and safety policies and procedures, and the prompt reporting of hazards or unsafe conditions. This is covered by both federal and state laws, such as the Work Health and Safety Act 2011.

• Employees must obey lawful and reasonable instructions related to their work. • Employees have a duty of loyalty and honesty and to act in the employer’s best •

interests without conflict of interest. Employees should treat colleagues with respect, not engage in discrimination, bullying or harassment. This is covered by both federal and state laws, such as the Anti-Discrimination Act 1977 (NSW).

There are organisations that employees (and employers) can turn to for advice and guidance on workplace rights and responsibilities. SafeWork NSW is the state regulator for workplace health and safety, providing information and enforcement. The NSW AntiDiscrimination Board handles complaints and education on discrimination and harassment. The Fair Work Ombudsman provides guidance on Fair Work Act rights and obligations.

Review 5.7 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify the laws that both employers and employees must follow in regard to: a. safety and work b. discrimination and harassment.

In your workbook, copy and complete the following table to match the right to the appropriate description. a. Protecting business interests b. Managing discipline c. Hiring and firing d. Directing work e. Setting work conditions

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.7 What are the legal rights and responsibilities of employers and employees?

Right

335

Description The ability to terminate employment for valid reasons like poor performance, provided proper procedures are followed The ability to set reasonable policies regarding work hours, dress codes and safety rules The ability to assign tasks and manage workflow to meet business needs The ability to enforce confidentiality agreements and protect intellectual property The ability to reasonably discipline employees for breaches of conduct, following fair and lawful processes

Copy and complete the following cloze passage in your workbook. Employers have a range of legal rights and ___________ designed to ensure fair, safe and equitable workplaces. While there can be _____________ depending on the jurisdiction and specific industry, in general employers must provide a safe work __________. They must also comply with employment laws. This includes providing equal _____________ and not discriminating against employees or job applicants based on race, gender, age, disability, religion or other _______________ characteristics. Employers must pay employees the agreed salary or ___________ on time, including any entitlements like superannuation, overtime and leave _____________. They should provide clear terms of employment through _________________ or agreements and maintain ___________ on workplace conduct, grievance procedures and disciplinary processes. Employers must respect employee __________, such as the ability to join a union and take leave, and privacy rights in accordance with law. Employers are legally obligated to keep accurate ___________ of employee details, wages, hours worked and _______________ with workplace laws. They may also need to report certain matters to government agencies. Employers must follow fair _____________ and legal requirements when _________________ employment, including notice periods, severance and avoiding unfair dismissal.

SA PA M P G L ES E

Read each statement carefully. Based on the text, determine if the statement is true or false.

Statement

True or false

a. In Australia, employees have no legal right to refuse work they believe is unsafe.

b. Discrimination based on age is only unlawful if it occurs during the termination process, not recruitment. c. Employees have a legal right to a workplace that is free from bullying and sexual harassment. d. The Fair Work Act 2009 guarantees employees a right to receive at least the minimum wage and appropriate leave entitlements. e. An employee’s only responsibility regarding safety is taking care of their own health; they have no duty towards their colleagues’ safety.

Thinking, researching and communicating

Identify the appropriate advisory body for each situation in New South Wales. 1.

An employee has a complaint regarding ongoing sexual harassment in their office. Which organisation handles complaints and education on discrimination and harassment? An employer needs guidance on their obligations regarding the national minimum wage and leave entitlements under the Fair Work Act 2009. Which organisation provides this guidance? A worker notices a critical safety hazard on a construction site and wants to report it to the state regulator for enforcement and information on the WHS Act. Which organisation should they contact? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 5 The work environment

5.8

Site study: safe workplaces

Success criteria

In this site study, you will learn about the hazards that can be found in different workplaces and how to reduce these hazards.

❏ I can identify different hazards in workplaces. ❏ I can outline measures to reduce hazards in the workplace.

SA PA M P G L ES E

Learning intention

What is a site study?

A safe workplace

In this site study, you will start to think about what makes a safe workplace. As you have learned in this topic, it is the right of workers to have a safe workplace and the responsibility of employers to provide it. Employees also have a responsibility to maintain a safe workplace.

Figure 5.8.1 Construction workers wearing personal protective equipment (PPE) and working together safely to reduce hazards onsite ➜

336

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.8 Site study: safe workplaces

Although you may not be able to physically visit different workplaces to assess hazards and the measures in place to keep all stakeholders safe, thanks to technology you can carry out some virtual visits. Visit the following virtual worksites and complete the associated activities.

Site study activity 5.8.1 1.

Safety in different industries Visit the WorkSafe Victoria website at: https://cambridge.edu.au/redirect/11724. Look at these three industry sectors and complete the questions.

SA PA M P G L ES E

a. Construction industry i. What are the most common risks faced by workers in the construction industry? ii. How can construction sites minimise the risk of falls and machinery-related accidents? iii. What safety practices are recommended for handling hazardous materials on construction sites? b. Manufacturing i. How can manufacturing industries address risks associated with machinery operation? ii. What are key safety considerations for managing chemical hazards in manufacturing? iii. Why is machinery maintenance critical for workplace safety? c. Healthcare i. What are common health and safety issues faced by healthcare workers? ii. How does infection control contribute to workplace safety in healthcare settings? iii. What strategies are recommended for preventing workplace violence in healthcare?

Young worker case studies Look at the case studies of young workers at: https://cambridge.edu.au/redirect/11725. Choose one of the stories and complete the following activities.

a. Outline the facts of the workplace situation. b. Describe how the employer responded to the situation. c. Do you think that the situation could have been prevented before it started? How? Discuss your thoughts with another student. d. Predict what might happen if the situation was ignored.

Hazard identification

a. The SafeWork NSW website (https://cambridge.edu.au/redirect/11726) provides opportunities to “spot the hazard”. Choose one of the workplaces and play the game. b. Imagine that you are the WHS officer and write a report to management about the hazards and why and how they should respond to them.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

337

338

Chapter 5 The work environment

5.9

What types of employment contracts exist and how do they work? Success criteria

In this lesson, you will learn about the different types of contracts that employees make with their employer.

❏ I can describe the different types of employment contracts.

SA PA M P G L ES E

Learning intention

Starter activity

In this lesson, you will learn about different employment contracts. Often in life we shake hands on agreements, but is this suitable for deciding on work conditions? As you have learned, both employers and employees are stakeholders in the work environment, and they may have conflicting goals. Does this mean that the contract between them needs to be a written one? Jot down your ideas on this.

➜

Figure 5.9.1 Different types of employment contracts, including permanent, fixed-term, casual and freelance agreements, define the terms of work between employees and employers.

Employment contracts

Writing focus 5.9 Appositives

Employment contracts are formal agreements between an employer and an employee that outline the terms and conditions of employment. They play an important part in clearly defining job responsibilities, working hours, salary, benefits and other important details. In doing this, an employment contract protects the rights of both the employer and the employee, and they help prevent misunderstandings or disputes by having agreed-upon terms in writing. For an employee, a contract offers job security by establishing terms for hiring and termination. An employment contract will also ensure compliance with workplace laws and regulations. In summary, employment contracts create a clear, legal agreement that supports a fair and respectful work relationship. Different types of employment contracts exist to suit the different needs of employers and employees. Various jobs and work situations need different kinds of agreements, such as full-time, part-time, casual or fixed-term contracts. These options provide flexibility in working hours, length of employment and job duties, allowing both employers and employees to choose what works best for them. These contracts have different names, such as awards, industry agreements and enterprise agreements, depending on how they are formed and who they cover.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.9 What types of employment contracts exist and how do they work?

339

Types of contracts Awards Awards are legal documents that set out the minimum terms and conditions of employment for specific industries or occupations. They can also be known as industry agreements. The purpose of awards is to provide a safety net of minimum employment standards. They apply nationally and cover employees working under certain industries or job roles. The content of an award includes minimum wages, working hours, leave entitlements, overtime rates, allowances and other employment conditions. Awards are established and regulated by the Fair Work Commission.

SA PA M P G L ES E

Enterprise agreements

Enterprise agreements are negotiated agreements made between an employer and a group of employees, who are often represented by unions, at a workplace or enterprise (business organisation) level. The award will apply specifically to the employees covered by the agreement within that enterprise. Its purpose is to create flexible and customised employment conditions that fit the specific needs of the business. Instead of having many different awards for different jobs, one agreement covers the whole organisation. For the agreement to be valid, it must be approved by most employees and the Fair Work Commission.

Common law contracts

These are individual employment contracts regulated by common law principles rather than statutory awards or agreements. This type of employment contract will usually cover workers when there are no applicable awards or agreements. The contract will outline specific terms and conditions of employment agreed between the employer and employee. They have the advantage that they can be customised to suit the individual circumstances but cannot provide conditions below the minimum standards set by awards or legislation. Common law contracts are governed by contract law principles and industrial relations law.

Review 5.9

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

common law a system of laws based on customs and court decisions rather than on written laws made by a parliament

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the role of an employment contract.

Thinking, researching and communicating 1.

In your workbook, copy and complete the summary table provided.

Name of employment contract Definition Purpose Who it covers Content Legal authority

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

340

Chapter 5 The work environment

5.10

Why do employment disputes happen and what causes them?

Learning intention

Success criteria

In this lesson, you will learn about the reasons for disputes within the work environment.

❏ I can identify and outline different reasons that disputes occur in the work environment.

SA PA M P G L ES E

Starter activity

Zain, a full-time warehouse employee at Global Logistics, approached his payroll manager, Susan, with his most recent payslip in hand, looking frustrated. “Susan, my pay seems short again,” Zain explained, pointing to discrepancies in the “Overtime” and “Leave” sections. “Last week, I worked two extra evening shifts that were approved by my supervisor, which should total 12 hours at the time-and-a-half penalty rate. I’ve only been paid for eight hours at my ordinary rate, and my sick leave balance hasn’t updated either.” This scenario is one reason that disputes arise in the workplace. 1.

Identify other reasons that would cause an employee to conflict with their employer. The way that an issue is dealt with can also lead to disputes. Outline what you would do if you were Susan.

Employment disputes

Writing focus 5.10 Transitional phrases

Earlier in the topic, the concept of the different goals of stakeholders was discussed. These differences can lead to disputes within the work environment. In addition, the different personalities in a workplace can lead to conflict. Whatever the reason for the dispute, it is important that managers are aware of the causes so that they can take a proactive approach in resolving them. Employment disputes can arise for a variety of reasons. Some common causes include remuneration disagreements, discrimination and harassment problems, and issues over termination of employment. These disputes often stem from communication breakdowns, management practices, unclear policies or lack of compliance with employment laws. Addressing them promptly and fairly is important to maintain a positive workplace environment.

Reasons for disputes Remuneration remuneration money paid to someone for their work or services

Remuneration refers to the reward that a worker receives in return for their work effort. Remuneration disagreements arise about pay rates, salary increases or bonuses. They can be related to unpaid wages, overtime or entitlements such as allowances. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.10 Why do employment disputes happen and what causes them?

If the employment contract is old or lacking in detail, issues may arise over clarity about remuneration packages or benefits.

Discrimination Workplace disputes can also occur if a worker feels that they have been treated unfairly based on characteristics such as age, gender, race, disability, sexual orientation, religion or marital status. Conflict between employer and employee can also arise if there is a failure to provide equal opportunities for hiring, promotion or training, or there exists a hostile work environment due to discriminatory practices.

Harassment

SA PA M P G L ES E

Conflict can happen in the workplace between employer and employees, and between workers when there is unwelcome conduct that offends, humiliates or intimidates an employee. This behaviour includes sexual harassment, bullying or other forms of verbal or physical abuse. Disputes will occur if employees feel that there is a failure of the employer to take appropriate action to prevent or address harassment.

Unfair dismissal

Unfair dismissal is when there is a termination of employment without a valid reason or due process. Before an employee is dismissed, the employer must follow proper disciplinary procedures. Disputes will arise if the dismissal has not followed this process and or it breaches the terms of an employment contract or relevant laws.

Dismissal based on discriminatory reasons or retaliation

This occurs when an employee is terminated because of personal characteristics, such as age, gender, race or disability, or because they made a complaint or exercised a workplace right. Such dismissals are unlawful, as they breach anti-discrimination laws and workplace protections.

Other reasons for disputes

Disputes can also occur over working conditions related to health and safety concerns, working hours and the overall workplace environment. They can happen in regard to performance management where there are disagreements regarding poor performance ratings, disciplinary actions, warnings or demotions. Work–life balance issues relating to flexible working requests or excessive working hours can also be a source of tension and may lead to disputes.

Consequences of disputes Disputes can have the advantage of bringing to the fore workplace issues that need to be addressed and sorted out, but they can also have negative effects on the workplace. If not attended to at the basic level, they can escalate to the level where the worker (and manager) may take sick leave or even leave the organisation. This is expensive to the organisation, as it means replacement and recruitment costs. Tension in the workplace can also affect the culture (feeling) of the organisation, leading to a general feeling of discontent among workers, which can result in absenteeism and resignations. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

341

342

Chapter 5 The work environment

If the issue is not resolved, it can start to involve more than one employee. Whole groups of workers may decide that the issue affects them as well and take action to sort it out. This could involve stop-work meetings to discuss the issue and even strike action, where the workers withdraw their work effort for a period of time. At this point, external parties such as trade unions and employer associations may become involved, and this will affect the working relationship between employers and employees.

SA PA M P G L ES E

An organisation that has unhappy workers, high staff turnover and interruptions to the production process will lose customers. Thus, it is crucial that management recognises the sources of disputes and has solid grievance procedures. This will be looked at later in this topic.

Review 5.10

Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Copy and complete the following table in your workbook, defining the terms in your own words and including a sentence on how each area may lead to conflict in the work environment.

Term

Definition (in your own words) Potential dispute cause (one sentence)

a. Remuneration

b. Unfair dismissal c. Harassment

d. Stakeholders e. Grievance procedures

f. Work–life balance

Thinking, researching and communicating

Read each of the following scenarios. For each one, answer the following questions. 1. 2. 3.

What is the primary reason for the dispute? Which consequences might arise if this isn’t resolved? What proactive approach should the manager or human resources (HR) manager have taken to prevent this before it escalated?

• Scenario A (remuneration/contract clarity): an employee discovers their new colleague with the

exact same job title and experience level is being paid 15% more, and the company’s pay scales are not public. The original employee confronts their manager angrily. • Scenario B (harassment/hostile environment): a team frequently makes jokes about a new employee’s religious attire and dietary restrictions. The employee complains to the HR manager, who initially downplays the issue as “just banter”. • Scenario C (unfair dismissal/due process): a manager fires an employee on the spot after catching them using social media during work hours, without prior warnings, a performance review or reference to the company handbook. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.11 How are employment disputes resolved?

5.11

How are employment disputes resolved? Success criteria

In this lesson, you will learn about the types of grievance procedures that are used to settle workplace disputes.

❏ I can state the importance of using grievance procedures to settle workplace disputes and outline the different types used.

SA PA M P G L ES E

Learning intention

Starter activity 1.

How do you settle disputes with other people or between others? Look at the image in Figure 5.11.1 of two people arm wrestling. Is this the best way to settle a workplace dispute (or any dispute)? Why or why not?

➜

Figure 5.11.1 An ill-advised method of settling an office dispute

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

343

344

Chapter 5 The work environment

Grievance procedures provide a formal framework for employees to confidentially report workplace concerns, such as unfair treatment, safety issues or harassment. These systematic processes are vital for maintaining a fair and healthy work environment, especially as they provide for the internal resolution of conflicts before they escalate into serious legal issues or staff turnover.

Communication

Negotiation

Conciliation and arbitration

Mediation

➜

SA PA M P G L ES E

Writing focus 5.11 Transitional phrases

As seen in an earlier lesson, disputes can happen in a workplace for several reasons. It is important that management understands the causes of conflict as well as having measures to solve it. The method of solving these disputes is called grievance procedures and includes negotiation, mediation and arbitration as part of the resolution process.

Figure 5.11.2 Steps in a grievance procedure

Grievance procedures

To be successful in the workplace, grievance procedures must be formalised by being included in written human resource processes and applicable to all employees. They must be systematic as well, with a step-by-step resolution process. In this way, they will be taken seriously by everyone and there will be a greater chance of a successful resolution.

Pay or wage disputes

Unfair treatment, workload or management decisions

Common types of issues addressed by grievance procedures

Violations of employment contracts of company policies

Bullying, harassment or discrimination

Unsafe working conditions or environment issues

➜

Figure 5.11.3 Common types of issues

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.11 How are employment disputes resolved?

345

Communication The first step in the grievance procedure process is communication between the parties involved in the conflict. This is important as it is an internal and low-cost way of dealing with workplace problems. Managers should ensure that they understand the issue before they organise a meeting to resolve the issue. If they are concerned about this meeting, managers should seek advice from such organisations as the Fair Work Ombudsman and Fair Work Australia. Both employers and employees can seek advice from these organisations.

SA PA M P G L ES E

The Fair Work Ombudsman (FWO) is the Australian Government’s national workplace relations regulator. The FWO’s main functions include providing information and education to employers and employees about workplace laws, helping to resolve workplace issues and enforcing compliance with the Fair Work Act. In this role, it provides advice on dealing with workplace disputes. It recommends that the first step is to identify the issue, then to check which area of employment the grievance relates to. The FWO emphasises the need to check the relevant employment law to ensure that the business is not breaching it. The next step is for the relevant manager or supervisor to sit down and discuss the issue with the aggrieved worker to see if the issue can be worked out at this level. If there is still tension, more senior management may become involved, and the worker may be supported by their union representative or a support person. At this point, the grievance procedure has moved to the next step: negotiation.

Negotiation

If the issue cannot be resolved by talking over the problem, the next step is negotiation. This method of resolving disputes is where the parties involved discuss the issue and try to negotiate a solution. This step is still at the internal level of the business and is aimed at finding mutually agreeable solutions to workplace issues. It is a crucial step that focuses on problem-solving, communication and compromise to resolve conflicts efficiently and avoid escalation. Successful negotiation should result in all parties feeling good about the outcome – a “win-win” outcome. If the issue does escalate, it can lead to absenteeism and/or industrial action such as stop-work meetings, work to rule and even strikes. When management and the employee (or employees) cannot resolve the situation, the next step is to use mediation.

Mediation

If negotiation fails, mediation offers an alternative internal solution. It involves a neutral third party who facilitates communication and guides the parties towards a resolution. Mediation can be especially helpful when emotions run high or when the parties cannot reach a mutually acceptable solution on their own. The mediator does not act for either party or provide advice but instead encourages them to examine the issues involved, and to listen to each other. It has the advantage of providing clear lines of communication and may lead to the parties walking away feeling that there is a “winwin” solution. However, mediation does not always work, and if this happens, the parties may have to go through a conciliation and arbitration process to solve the dispute. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

negotiation a discussion between two or more parties to reach an agreement and resolve a conflict without going to court mediation a process where a neutral third person helps people in a dispute to communicate and reach an agreement

346

Chapter 5 The work environment

Conciliation and arbitration

SA PA M P G L ES E

➜

Workplace disputes cannot always be resolved within the organisation. They will sometimes have to involve external agencies such as the NSW Industrial Tribunal. When this happens, it first uses conciliation in the process. Conciliation is like mediation in that a third party assists in resolving the dispute, but the conciliator is appointed by an industrial tribunal and takes on a more assertive role in trying to get the Figure 5.11.4 Concillation and arbitration may be necessary, final steps in parties to come to a reasonable solution. When resolving a dispute. the resolution process becomes external to the conciliation organisation and decisions become imposed by third parties, the solution is not always where a thirdone that will suit everyone involved and may no longer be win-win. party appointed by an industrial tribunal helps people in a dispute by suggesting solutions to help them reach an agreement

arbitration where a judge intervenes and decides in order to resolve a dispute

If no solution is found by conciliation, the issue goes to arbitration. Arbitration involves a judge listening to both sides and deciding on the outcome. Sometimes the judge tells the parties to go back to conciliation, but if this fails, the arbitration judge makes the final decision. The disadvantage of this is that the parties have lost control of the process and the final decision may not suit the workplace, which could lead to future workplace disputes.

Review 5.11 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

4. 5.

Outline why initial communication is important in dealing with a workplace issue. Before organising a meeting to resolve an issue, what must a manager ensure? Identify the main functions of the Fair Work Ombudsman. Outline the differences between mediation, conciliation and arbitration. Construct a flow diagram showing the grievance procedure process. Include an advantage and disadvantage of each stage.

Thinking, researching and communicating 1.

Look at the following scenarios and decide what is the cause of the conflict. How should management deal with each situation? Choose one of the scenarios and write a script between the manager and worker that will bring the situation to a satisfactory solution. Ask another student for feedback on your script. a. Scenario A: an employee claims their manager consistently assigns them the worst shifts without cause. b. Scenario B: two employees are in a heated argument over shared equipment usage. c. Scenario C: a worker believes they are being underpaid compared with the national minimum wage.

Compose an email to send to employees at a workplace, setting out the grievance procedure process. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.12 How do people get paid for work?

5.12

347

How do people get paid for work?

Success criteria

In this lesson, you will learn about the different ways that people get paid and why their incomes may differ. You will also learn about how workers are notified of these earnings.

❏ I can outline the different ways that people get paid and the reasons for these differences as well as the methods used to communicate earnings, including payslips and an end-of-year payment summary.

SA PA M P G L ES E

Learning intention

Starter activity

The highest paid jobs in Australia in 2025 were the following: 1.

2. 3.

Neurosurgeon $604,582 Anaesthetist $426,894 Financial dealer $341,789

The lowest paid jobs were fast-food cook/dishwasher, who were paid by the hour and earned potentially around $40,000 a year, and beauty therapists/hairdressers, who earned around $38,000 a year. Why do you think there is such a large difference in the earnings of these workers?

Getting paid for work

People can be paid for their work in several different ways, depending on the job, industry and employment arrangement. The specific amount of money an individual earns is determined by several factors.

Industry standards

➜

Certain industries (e.g. mining, IT, finance) often have higher average pay rates due to demand for specific skills and the profits that they make. For example, mining companies may pay premium salaries to attract experienced engineers and geologists due to the hazardous nature and critical importance of the work. Similarly, the IT sector requires advanced technical expertise and constant upskilling, leading to competitive salaries. Finance roles often involve managing large financial assets, justifying higher remuneration. Industries set pay benchmarks based on market competition, profitability and the need to retain top talent.

Writing focus 5.12 Developing sentences

Figure 5.12.1 Mining is one industry with a higher average pay rate.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 5 The work environment

Occupation and skills Specialised skills or qualifications can lead to higher earning potential. The required pay level for a specific job is often outlined in industry awards. For instance, certified accountants, registered nurses or certified project managers may earn more than their counterparts without such credentials. Industry awards, enterprise agreements or professional bodies often outline the minimum pay levels and conditions for particular occupations, ensuring that workers receive fair compensation for their expertise and responsibility level.

Experience and education Generally, higher levels of experience and education lead to increased pay as an individual’s expertise grows. Experience brings deeper knowledge, problem-solving ability, and efficiency, all of which add value to an employer. Similarly, higher education (e.g. bachelor’s degrees, postgraduate qualifications) usually equips workers with specialised knowledge and critical thinking skills, making them suitable for more complex roles. Employers often structure pay scales so that salaries increase as employees progress from entry-level to more senior positions, reflecting their growing contribution and competence.

SA PA M P G L ES E

348

Location

Pay rates can be influenced by the cost of living and local labour market conditions in different geographic regions of Australia. For example, wages in metropolitan areas like Sydney and Melbourne may be higher than in regional or remote areas to compensate for higher housing costs and living expenses. However, remote or rural areas with labour shortages in key sectors may offer higher wages or additional incentives to attract workers. Local economic factors, availability of skilled workers and demand for certain jobs influence regional pay differences.

Performance

For roles involving bonuses or commissions, individual or company performance can significantly impact total earnings. In some roles, especially those involved in sales, senior management or project delivery, remuneration includes a performance-based component such as bonuses, commissions or profit sharing. Individual performance targets, team achievements or overall company profitability can have a significant impact on total earnings beyond base salary.

Different types of payments Depending on the type of work that people carry out, they will get different forms of payments, as seen in Figure 5.12.2. Not everyone is able to earn an income due to such reasons as their health, their skills and training and the state of the economy. In these circumstances, the federal government will provide a basic income and other benefits to them until they are able to work again. This affords a quality of life and makes for a more equal society. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.12 How do people get paid for work?

Hourly wage

Salary

I am a carpenter employed by a building company, and I get paid an hourly wage. This means that I get paid a fixed amount for each hour that I work.

We are fruit pickers; we get paid a piece rate. This means that we get paid a certain amount for each basket of fruit that we pick.

I am a teacher; I receive a salary. This is a fixed amount of money regularly (usually weekly, fortnightly or monthly), regardless of how many hours I work.

Commission

Bonus

Royalties

I am a real estate agent. Along with a basic salary, I get paid a commission, which means that I get a percentage of the sale price of each property that I sell.

We work in a large international business. If we exceed our business targets, we receive a bonus, which is additional to our negotiated salaries.

I am a writer. I am paid per project or assignment rather than a fixed regular wage. I also get royalties, which are a percentage of my book sales.

Stipend

Tips

Rent

I am an apprentice baker. I receive a stipend, which is a fixed, small, regular payment given to me by the bakery as I complete my studies.

I am a waiter. Along with my hourly wage, I receive tips, which are extra money given to me by customers for good service.

I am a landlord. I receive rent in return for allowing people to live in my properties.

SA PA M P G L ES E

Piece rate

➜

Figure 5.12.2 Different forms of payments Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

349

Chapter 5 The work environment

Each payment method has different implications for job security, tax and benefits. When a worker earns money from completing a job, they will normally receive some form of notification about this payment. It is important that these have transparency and help employees understand their earnings, tax obligations and benefits. These days, most worker payments involve some form of electronic payment and notification, which assists record keeping. The main methods used to communicate earnings to employees include:

• Payslips

• •

A payslip is a detailed document provided to employees each pay period (weekly, fortnightly or monthly). It shows the employee’s gross earnings (total pay before deductions), any deductions (such as tax, superannuation, insurance, or loan repayments), and the net pay (the amount the employee takes home). Payslips also often include information like hours worked, overtime, leave balances and the pay period dates. Payslips can be provided in paper form or electronically via email or an online payroll portal. End-of-year payment summary (payment summary or income statement) This document summarises all the earnings and deductions for the entire financial year. It is used by employees to complete their tax returns and shows total gross income, tax withheld and other relevant amounts. In Australia, the end-of-year statement is often referred to as a payment summary or now more commonly an income statement under Single Touch Payroll (STP) reporting. Employers provide these either in paper form or electronically, and employees can also access their income statements via the Australian Taxation Office (ATO) online services.

SA PA M P G L ES E

350

• •

•

• • • •

WELL-PAYING JOB PTY LTD AUSTRALIA (ABN 1234 5678 123) PAYSLIP FOR THE WEEK ENDING 19.04.2026 – 26.04.2026 (Last name, First name) Employee ID: 12345678

Status: Full-time Title/Award: Well Pay. Agreement Pay Date: 27.04.2026 Description Weekday Base Rate Additions/Deductions First Aid Supervisor Laundry Allowance TAXABLE GROSS AMOUNT Tax NET PAY Paid to: ABC Bank Acct No. 2134 8594 BSB. 123-456 SUPERANNUATION Superannuation guarantee: Crescent Wealth Acct. 1234 5678 Leave Entitlements Days Entitled Total 8 3,692.31 Sick Leave (non-vesting) $ 33 Annual leave $ 15,320.77 0 Long-service leave $ Total Leave Entitlements (to-date) $ 18,923.08

Quantity

1 1

Rate

Hours

5.879 2.456

10.00%

Amount $

2,600.00

$ $

235.16 98.24

$ –$ $ $

2,933.40 625.71 2,307.69 2,307.69

293.34

YEAR-TO-DATE (FY2025/26)

Gross Pay $ 129.069.60 Tax –$ 27,531.14 $ – Additions/Deductions (after tax) $ 101,538.46 Net Pay Superannuation Payments (employer contribution) $ 12,906.96 Superannuation Payments (salary sacrifice) $ –

➜

Figure 5.12.3 A sample payslip

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.12 How do people get paid for work?

Review 5.12 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Copy and complete the following table to match the pay type with its correct description. a. Wages b. Salary c. Piece rates d. Commissions

Description

SA PA M P G L ES E

Pay type

Payment based entirely or partially on sales volume or revenue generated Payment determined by the physical amount of work produced, such as items picked or packed A fixed annual amount paid in regular instalments, regardless of exact hours worked in a pay period Payment calculated purely on the number of hours an individual has worked

Read the following scenarios and indicate the factor that is influencing their pay level. a. A graduate working as a financial analyst earns a higher starting salary compared with a graduate starting in an entry-level hospitality role. b. A retail manager in Sydney earns a higher salary than a retail manager in a small regional town for the same job title. c. A software engineer moves from a junior role to a senior management position, receiving a substantial raise. d. A construction worker earns a higher hourly rate for having a specialised licence to operate heavy machinery. e. An employee in a sales job receives a large bonus cheque after their company achieves record quarterly revenue.

Thinking, researching and communicating 1.

In your own words, define the following terms: a. Payslip b. Gross earnings c. Net pay d. End-of-year payment summary.

➜

Figure 5.12.4 It is important to understand these key terms before you begin your working life! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

351

352

Chapter 5 The work environment

5.13

How do payslips and payment summaries communicate earnings, and what are our tax obligations? Success criteria

In this lesson, you will learn about the methods used to communicate earnings, including payslips and an end-of-year payment summary. You will also learn about the purpose and importance of taxation and tax obligations of workers.

❏ I can outline the different methods that are used to communicate earnings to workers. ❏ I can explain the purpose and importance of taxation as well as the obligations that workers have in this area.

SA PA M P G L ES E

Learning intention

Starter activity

Look at the image in Figure 5.13.1. 1.

2. 3.

What does it tell you about how people feel about paying taxes? What would happen if income earners did not pay taxes? List five things provided by the government that may be taken away or reduced without funding through taxation.

➜

I wish complaining about taxes was tax-deductible!

Writing focus 5.13 Creating topic sentences

Figure 5.13.1 A common lament during the tax season

Even if they don’t like paying them, most people realise that there is a need to pay taxes to the government. This is because taxation is vital for workers and society as it serves as the main way that governments finance public services and infrastructure, promote wealth redistribution to reduce inequality, and maintain economic stability. Thus, while taxes reduce workers’ disposable income, they benefit the whole of society by providing collective benefits that are unattainable by individuals alone.

Purpose of taxation for workers For individual workers, taxation is more than just a compulsory payment, it represents a meaningful contribution towards building and maintaining a fair society. For society (which includes workers), taxation carries out the following functions.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.13 How do payslips and payment summaries communicate earnings, and what are our tax obligations?

353

Funding public services

• Healthcare (hospitals, medical treatments) • Education (schools, universities, research • •

initiatives) Infrastructure (roads, railways, public transport, bridges) Public safety and security (police, fire services, defence forces, judiciary)

SA PA M P G L ES E

Providing social welfare and safety nets ➜

A substantial share of taxes is allocated Figure 5.13.2 Public infrastructure, like the new Sydney Fish Markets, can be to social security programs, pensions and built or repaired using money gained through taxation. unemployment benefits, providing financial protection during illness, retirement or job loss.

Economic management

Governments use taxation and fiscal policies to stop the economy from swinging between highs and lows (creating a roller-coaster of job security and prices).

Shaping behaviour

Taxation can discourage unhealthy habits (such as through high taxes on tobacco and alcohol) or encourage beneficial actions (like tax breaks for environmentally sustainable investments or retirement savings).

Importance of taxation for workers

Taxation plays a very important role in shaping workers’ quality of life, their economic steadiness and future opportunities.

Civic duty and social contract

Paying taxes is a civic responsibility that supports the society’s effective functioning and ensures a stable environment for all.

Reducing inequality

Progressive tax systems require higher earners to contribute a larger share, which helps fund welfare programs and subsidies, fostering social fairness and reducing income disparity.

Securing a stable future Tax revenues provide a foundation for national development, helping to create a predictable and resilient framework that sustains essential services and growth prospects for future generations. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 5 The work environment

Tax obligations when working Understanding your individual tax obligations is important. Below is an overview of key points related to tax obligations, including applying for a tax file number (TFN) and lodging a tax return.

Applying for a tax file number (TFN)

• A TFN is a unique identifier issued by the Australian Taxation Office (ATO) to • •

individuals and organisations. A person must apply for a TFN as soon as they start or plan to start working in Australia. They can apply for a TFN online through the ATO website, by visiting a post office, or through a registered tax agent. An employer will need the TFN for tax purposes to deduct the correct amount of tax from an employee’s income.

SA PA M P G L ES E

354

•

Tax obligations when working

• When starting a new job, a worker must provide the employer with a tax file number • • •

declaration form, which includes the TFN and residency status. The employer will use this information to withhold the correct amount of tax from the employee’s wages or salary (PAYG withholding). Tax is deducted based on the income earned and the tax-free threshold eligibility. Individuals should keep accurate records of their income and any work-related expenses.

Lodging a tax return

• At the end of the financial year (which runs from 1 July to 30 June), workers need to • • • •

lodge a tax return with the ATO. The tax return reports on income, tax withheld, deductions and any other relevant financial information. Individuals can lodge their tax return online using myTax on the ATO website, through a registered tax agent, or by paper form. The deadline for lodging a tax return is usually 31 October following the end of the financial year, unless a tax agent is used and has arranged an extended lodgement time. After lodging the return, the ATO will assess it and inform the worker of any tax refund or additional tax owed. An employer requires the TFN to correctly withhold tax from a worker’s salary or wages.

Failure to meet tax obligations There can be extra costs if an individual does not meet their tax obligations. Failure to lodge your tax return on time or to pay your tax means the government (the ATO) can charge money as a penalty. It might also add extra interest to the amount owed. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.13 How do payslips and payment summaries communicate earnings, and what are our tax obligations?

355

Failure to meet taxation deadlines can lead to fines that become larger over time. If a person owes tax and doesn’t pay, the ATO can take money from their wages, take assets, or put a claim on their property to get the money back. The ATO may also closely scrutinise future tax returns. In addition, if someone avoids paying taxes on purpose or lies about their tax, the government can take them to court. This could mean big fines or even jail time. Thus, it’s important to lodge your tax return on time and pay your tax. If you’re having trouble paying, you can talk to the ATO. It can help with payment plans or advice.

Review 5.13 Knowledge and understanding

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

SA PA M P G L ES E

Online quiz

Thinking, researching and communicating

Knowledge and understanding 1.

Identify if the following statements are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. Most people accept paying taxes despite not liking it because it reduces their disposable income.

b. Private business profits are funded by taxes.

c. Taxation helps stabilise the economy by smoothing economic fluctuations. d. Taxation shapes individual behaviour by encouraging beneficial actions through tax policies. e. The social purpose of taxation for workers is to eliminate the need for public services. f. T he term “progressive tax system” means that lower earners pay more taxes than higher earners. g. Taxation increases economic disparity across society.

h. Paying taxes supports the stable functioning of society and benefits everyone. i. T axes help secure a stable future for workers by allowing governments to cut spending on public infrastructure. j. Taxation funds collective benefits that individuals cannot achieve on their own.

Thinking, researching and communicating 1. 2.

Outline some of the consequences of not meeting individual tax obligations. Compose a longer response to the following question: Explain why it is important for individuals to meet their tax obligations. In your response, discuss the role of individual taxes in funding public services and infrastructure, the impact of tax compliance on economic stability and social fairness, and the consequences of failing to meet tax responsibilities. Use examples to support your answer.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 5 The work environment

5.14

Investigation: positive work environments

By completing this investigation, you will have the opportunity to consolidate the ideas learned through this chapter, and demonstrate your understanding of Commerce concepts and skills. This investigation is designed to be completed over multiple weeks, as you complete the chapter.

Investigation topic: what makes a positive work environment?

SA PA M P G L ES E

356

Aim: to investigate and analyse the characteristics of a positive and productive work environment and understand how it impacts employee wellbeing and performance. This task requires you to select a workplace to research. This could be your current place of work, a company you are interested in, or a generic work environment such as an office, retail store, school or factory.

Research areas

Gather information on the following aspects of the workplace environment:

• Physical environment

• • • •

Consider factors like workspace layout, lighting, noise levels, cleanliness, safety and access to facilities (e.g. rest areas, kitchens). Work culture Explore the company’s values, communication style, teamwork, management style and employee engagement activities. Health and safety Identify policies or practices in place to ensure worker safety, ergonomics and wellness programs. Work–life balance Investigate flexibility in working hours, leave policies and support for personal needs. Employee support Look into professional development opportunities, counselling services and feedback mechanisms.

Methods of research Use a combination of the following methods:

• online research (company websites, reviews, articles) • interviews or surveys with employees (if possible) • observation (if you have access to the workplace) • reviewing government or industry reports on workplace standards. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.14 Investigation: positive work environments

Analysis Answer the following questions based on your research:

• What features make this workplace environment positive or negative? • How does the environment affect employee motivation and productivity? • What improvements could be made to enhance the work environment? • How does the workplace support workers’ physical and mental wellbeing? Presentation Prepare a report or presentation summarising your findings. Include:

SA PA M P G L ES E

• an introduction to the workplace you researched • key strengths and weaknesses of the work environment • suggestions for improvement • conclusion reflecting on the importance of a good work environment. Length

➜

Your report should be approximately 500 to 800 words or a five- to sevenminute presentation.

Figure 5.14.1 From safety to fairness, workplaces shape people, society and the way work evolves.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

357

358

Chapter 5 The work environment

5.15

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about the work environment? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Types of work and work arrangements

Impact of work on individual wellbeing and society Internal and external stakeholders The future of work

Legal rights and obligations of employers and employees Workplace safety

Employment contracts

Employment disputes: consequences and resolutions Payment types

Tax obligations

Visible thinking routine Compass points

This exercise in visible thinking asks you to think deeply about the concepts introduced to you in this chapter and evaluate them. Write down your responses to the following prompts. 1.

What excites you about joining the current work environment?

What do you find worrisome about joining the work environment? Is there a downside?

What else do you need to know to help you understand the work environment?

What is your stance about the work environment in Australia? Do you think changes are needed, and if so, what needs to change?

5.15 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Define the term work environment.

List one advantage and one disadvantage of gig work.

Define the term stakeholder.

Explain why hybrid work might suit some employees more than others.

Identify one occupation group projected to grow and one reason for that growth.

Outline one legal right of employees under Australian law.

Recall one common workplace hazard in construction.

Summarise the difference between awards and enterprise agreements.

Identify one reason why remuneration disputes occur.

10.

Identify the legislation that entitles employees to receive at least the minimum wage.

11.

Recall when a person needs to apply for a Tax File Number (TFN).

12.

Identify the document provided at the end of the financial year that summarises your earnings.

SA PA M P G L ES E

➜ Figure 5.15.1 Uber

Eats delivery couriers are gig workers who access work opportunities on the delivery app. This is an increasingly popular form of employment, but gig workers don’t have access to some protections under Australian employment law.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

359

360

Chapter 5 The work environment

DOC

Download single paragraph model

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Discuss the need for both employer and employee rights and responsibilities in the workplace.

SA PA M P G L ES E

Model answer: Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Examples: provide credibility and illustrate the argument

Employers and employees both require clear rights and responsibilities in the workplace because these ensure fair treatment, safe conditions and productive working relationships. Employer rights allow businesses to direct work, set expectations and manage performance, while employee rights protect workers’ safety, job conditions and entitlements such as pay and leave. When both parties meet their responsibilities, such as employers providing a safe workplace and employees following lawful and reasonable instructions, it helps prevent conflict and reduce risks. These rights and responsibilities are supported by workplace laws, including work health and safety requirements and employment standards, which outline minimum conditions and clarify what each party must do. For example, an employer must provide proper safety equipment on a construction site, while employees must use that equipment correctly and follow safety procedures. In this way, clear rights and responsibilities for both employers and employees are essential for safe, fair and effective workplaces.

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments

Linking sentence: reconnects to the topic sentence using the language of the question

Structured-response questions 1.

Describe how work and the workplace can take different forms.

Discuss how working contributes to: a. individual wellbeing

b. economic benefits for society c. societal wellbeing.

Outline the elements typically included in an employment contract.

Outline how employees and employers should ensure they comply with their tax responsibilities and briefly state the purpose of taxation.

Extended-response question 1.

Workplace disputes can significantly impact organisations. Outline common causes of disputes and discuss strategies to resolve them, explaining why clear grievance procedures are essential and support a positive workplace culture.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

5.15 Chapter review

Options focus areas Online-only chapter

SA PA M P G L ES E

6. Our economy 7. Running a business 8. Promoting and selling 9. Investing 10. Law in action 11. Political and community involvement 12. The travel consumer 13. Towards independence

Online-only chapter

➜

Image: Newcastle, the second-largest city in New South Wales, is a major city centre with connections to surrounding regional and rural communities. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

361

Chapter 5 The work environment

Chapter

Our economy

Lessons 6.1

Setting the scene: how do we understand the economy?

6.2

How does Australia’s economic performance compare with India’s economic performance

SA PA M P G L ES E

362

6.3

What are the effects of demographic changes, such as an ageing population and immigration, on Australia’s economic performance?

6.4

How does the government intervene in the economy to improve economic performance and living standards?

6.5

Why does Australia trade with other nations?

6.6

What does Australia trade and who do we trade with?

6.7

Skills focus: how do governments make decisions to solve economic problems?

6.8

Case study: the value of Aboriginal and Torres Strait Islander Peoples’ Cultural arts in the international market

6.9

Investigation: Australian farmers as global climate leaders

6.10 Chapter review

This digital chapter can be accessed via Cambridge GO

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

Running a business

Lessons Setting the scene: what if the next successful business millionaire is you?

7.2

Skills focus: what financial terms are used in the business world?

7.3

What is a small business and how can you start one?

7.4

Why is it important to select an appropriate ownership structure when starting a small business?

7.5

How can you choose between starting, buying or franchising a business?

7.6

How do location, finance options and laws affect small businesses?

7.7

Rules, tax and staff: how can you run a business legally?

7.8

How can marketing grow your business?

7.9

How do finances drive success?

SA PA M P G L ES E

7.1

7.10 Site study: how does a real business operate?

7.11 Investigation: how do you run a market stall?

7.12 Chapter review

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

364

Chapter 7 Running a business

7.1

Setting the scene: what if the next successful business millionaire is you? Success criteria

In this lesson, you will learn how personal interests, skills and talents can be developed into small business ideas.

❏ I can identify at least one skill, hobby or interest that could become a business idea. ❏ I can explain how small businesses can start from simple ideas and everyday skills.

SA PA M P G L ES E

Learning intention

What does it take to successfully run a business?

➜

Video 7.1.1 Setting the scene: running a business

Writing focus 7.1 Question words

entrepreneurship the process of identifying opportunities and creating value by starting and growing ventures, often by innovating and taking calculated risks

Many people who own their own business like the freedom as they can choose their own hours and build something that they have created. Of course, owning your own business is not always easy. It takes hard work, lots of planning, being adaptable and flexible, having problem-solving skills and a willingness to embrace risk. Understanding entrepreneurship is essential for anyone considering this journey, as it highlights both the benefits and responsibilities involved in successful business ownership. Throughout this chapter, you will be designing a business and holding a school market stall to sell your product. To do this, you will need to know more about small businesses, including human resources, operations, marketing and finance.

Figure 7.1.1 Running a small business takes ingenuity, adaptability and resilience, but it can be very rewarding. ➜

marketing the activities a business does to tell people about their product or service so they will be encouraged to buy them; for example, advertising or promoting

Starting your own business means taking charge of what you do and how you do it. Instead of working for someone else, you make the decisions, follow your ideas and even turn your hobbies or passions into something that earns money.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.1 Setting the scene: what if the next successful business millionaire is you?

365

Could it be you? What if the next trending small business didn’t start in a corporate office, but in your bedroom, your garage or even on your phone?

SA PA M P G L ES E

In one regional town, a student started a sneaker-cleaning service for classmates who wanted their white shoes to look brand new. Another teen created custom gaming controllers with unique designs and LED lights. Another student who liked cooking began selling late-night “study snack” boxes during exam season. Down the street, a fitness lover launched a weekend boot camp just for school students. Someone else turned their love for social media into a small business managing Instagram pages for local shops. There was even a pet photographer who specialised in funny holiday portraits for dogs.

Figure 7.1.2 In a small business, presentation of the product is just as important as the product itself. ➜

Each of these businesses began with one simple idea: solve a problem or offer something unique. None of them needed a huge budget, just creativity, effort and confidence.

So, what about you? Could your talent for editing videos, designing nails, thrifting vintage clothes, building PCs or making custom playlists become a niche business? The next small business success story might already be sitting in this room.

Activity 7.1.1

Generate, sort, connect, elaborate 1.

Generate: after reading the examples in the text, make a list of small business ideas that someone your age could start. Write down as many ideas as you can, aiming for at least eight.

Sort: share your list with a partner or small group. Work together to sort all the ideas into different categories: for example, skill-based, creative, administration, consulting, retail, personal services, or even another category.

Connect: discuss the patterns you notice in your ideas. Write three sentences explaining the connections you found.

Elaborate: choose one idea from your list and expand on it. Answer the following questions. a. Why might people want this product or service? b. What problem does it solve? c. What would you need to get started? d. How could you make this business stand out from other businesses? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

366

Chapter 7 Running a business

7.2

Skills focus: what ﬁnancial terms are used in the business world? Success criteria

In this lesson, you will learn some financial terms and apply them to a scenario.

❏ I can identify and define financial terms. ❏ I can apply financial terms in a practical scenario.

SA PA M P G L ES E

Learning intention

Starter activity

Teen entrepreneurs 1.

Identify two reasons a teenager might have to start a small business.

Identify one challenge a teenager might face when running a business while at school.

Describe two skills a young person could learn from running a business.

Explain why adult support might be helpful for a teen business owner.

income money you receive, usually from work or business

expenses the costs or money spent to run a business, organisation, or personal life, such as things like rent, bills, salaries, supplies and other necessary items or services

Why is it useful to know financial terms?

Understanding financial terms is important because it helps people make smart decisions about money, whether they are managing their own finances or running a business. Knowing terms like income, expenses, profit and cash flow makes it easier to understand where money comes from and where it goes. This helps people budget properly, avoid debt, and make better plans.

profit money you have left after you pay for all your expenses cash flow money coming in and going out of the business

budget a plan that outlines how much money will be earned and spent over a certain period debt when you owe money to someone you borrowed from

➜

Figure 7.2.1 People use financial terms every day in the business world.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.2 Skills focus: what financial terms are used in the business world?

assets something a business or individual owns

SA PA M P G L ES E

For example, a 15-year-old has a part-time job and earns around $150 a week. This is called income. The 15-year-old wants to save money but keeps running out of cash. After learning financial terms, they realise they are spending $120 a week on food, entertainment and transport (expenses). This helps them understand that they only have $30 left to save. Now, they can:

Figure 7.2.2 All business owners need to understand financial terms in order to create usable budgets to ensure their business continues to grow. create a simple budget reduce unnecessary spending save money for something important, like a new phone. ➜

• • •

Knowing financial terms helps people see clearly how money is earned and spent, so they can make better money decisions in everyday life. Let’s relate this to a small cafe. The cafe earns $5000 a month from selling food and drinks (income). However, the cafe owner notices there is very little money left in the bank. After understanding financial terms, the owner realises the cafe spends $4700 on expenses such as rent, wages and supplies. By understanding financial terms, the cafe owner can see that the cafe is only making a $300 profit and may have cash flow problems if bills are due before customers pay. Now, they can:

• create a budget • reduce unnecessary expenses • adjust prices or increase sales.

Understanding financial terms and tools like assets, liabilities, inventory and financial statements including balance sheets, cash flow statements and income statements makes it easier to understand how a business operates. These terms and tools help business owners make informed decisions, track performance, control costs and avoid financial trouble.

Activity 7.2.1

Understanding financial terms 1.

Copy and complete the following table in your workbook. Match each of these financial terms with its correct definition and give an example for each term:

• income • expenses • profit • assets

367

• liabilities • budget • cash flow • inventory

• balance sheet • income statement • cash flow statement.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

liabilities amounts a company owes that it must pay in the future inventory stock financial statements a set of reports that show how a business is managing its money balance sheet a financial statement that shows what is owned, what is owed and what is left over at a specific time cash flow statement a financial statement that shows how money comes in and goes out over a period of time income statement a financial statement that shows how much money a business made and spent over a period of time (profit or loss)

Chapter 7 Running a business

Term

Definition

Example

A financial statement that shows a business’s financial position at a specific point in time A financial statement that shows a business’s financial performance over a period of time Money a business owes to others A plan showing expected income and expenses for a period of time Things a business owns Stock or equipment for the business

SA PA M P G L ES E

368

The movement of money into and out of a business over time

A financial statement that shows cash coming in and out of a business What is left after subtracting expenses from income Money spent by a business so it can operate

Money earned from selling goods and services

Activity 7.2.2

Young entrepreneurs on the rise: teens turn ideas into income

Across Australia, a growing number of teenagers are discovering that running a small business isn’t just for adults. From lawn-mowing services to handmade jewellery and digital design, teens are learning how creativity, planning and responsibility can turn simple ideas into real income. Schools and community programs are encouraging this shift, helping young people understand budgeting, marketing and the legal steps required to operate safely and ethically. For many teens, the biggest challenge is balancing schoolwork with business commitments. Time management, customer communication and keeping accurate financial records quickly become essential skills. But the rewards are significant: confidence, independence and a head start on future career pathways. With the right support from parents and teachers, young entrepreneurs are proving that age is no barrier to innovation. Look at the traffic-light system in Figure 7.2.3 and apply this to different businesses that you could start up. Red light: Stop and think

Orange light: Proceed with caution

Green light: Go for it

• Business ideas that might be unsafe or illegal • Activities requiring adult licences or contracts • Selling products without permission at school or online

• Services that need supervision, like babysitting or pet care • Handling money or online payments responsibly • Managing time so schoolwork doesn’t suffer

• Simple, low-risk ideas like crafts, tutoring or yard work • Seeking advice from trusted adults • Keeping clear records of earnings and expenses

➜

Figure 7.2.3 Use the traffic light system to determine the right business idea for you as a young person.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.2 Skills focus: what financial terms are used in the business world?

369

Copy and complete the table in your workbook to sort these business ideas into traffic-light categories:

• dog-walking service • selling homemade candles at school • babysitting without telling an adult • online tutoring for younger students • mowing lawns for neighbours • selling food without a licence • designing digital art for commissions. Orange light (allowed with supervision or planning)

Green light (go ahead – simple, safe and low-risk)

SA PA M P G L ES E

Red light (not allowed or unsafe)

Describe a simple business you could run now.

a. List the resources you would need to start this business up. b. Identify one risk and one benefit of starting this business. c. Explain whether this business belongs in the red, orange or green light category.

Review 7.2

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the reasons that a person may start their own business.

Identify as many financial terms as you can think of and write a definition for each term.

Identify three possible sources of income for a small cafe and list three expenses it might have.

A cafe earns $500 per day and spends $350 per day. Calculate the profit per day.

Identify two assets a cafe may own and two liabilities it may have.

Explain what a budget is and why it is important for a cafe.

Thinking, researching and communicating 1.

Explain the importance of financial statements in a small business.

Analyse how misunderstandings of key financial terms could affect the decisions made in a small business.

Propose one way a small business could improve its finances and identify the financial terms and tools that would help support it to do so.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

370

Chapter 7 Running a business

7.3

What is a small business and how can you start one? Success criteria

In this lesson, you will learn about the characteristics of a small business and how to start a small business.

❏ I can explain characteristics of small businesses. ❏ I can identify ways to find business opportunities and start a small business.

SA PA M P G L ES E

Learning intention

Starter activity

Imagine you wake up tomorrow morning, and you are a 23-year-old who is starting their own business.

• What are you selling? • Who are your customers? • What makes your business so special?

➜ 1.

Figure 7.3.1 What will make your small business stand out and succeed? Individually, think about: a. what product or service you are offering b. who your customers are.

Turn to the person next to you and share: a. your business idea b. a challenge you think you may face.

Discuss your ideas with the class and invite your classmates to offer suggestions on how they could be improved. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.3 What is a small business and how can you start one?

371

What are the characteristics of a small business? Figure 7.3.2 outlines the key characteristics of a small business.

Size and ownership

• Small businesses employ fewer than 20 people. The businesses are owner-managed,

meaning that the owner is responsible for running the operation of the business daily. • This allows owners to have direct control over decisions and the day-to-day running of the

business.

SA PA M P G L ES E

• Each small business focuses on serving its local community, rather than operating at a regional level or throughout Australia. Market focus • This local focus allows them to build strong relationships with customers that live and work nearby.

Writing focus 7.3 Transitional phrases

• Products and Small businesses offer specialised products and services. • The products and services offered are designed to meet the specific needs of the local services community.

• Small businesses are flexible and for success they must adapt quickly to changes in Flexibility and customer preferences and demand. adaptability • This allows them to adjust their products or services to better suit their customers.

Resources

• The resources of small businesses are limited and rely mainly on owner investment. • This means the owner must be careful at budgeting and often use word-of-mouth promotion as they cannot afford expensive advertising campaigns.

Customer interaction

• Personalised customer service is a strong characteristic of small businesses. This is because the owner deals directly with customers and knows what the customer needs. • This personalised service helps build a strong relationship between the business owner and the customer and trust within the community.

➜

Figure 7.3.2 Characteristics of a small business

Activity 7.3.1

Working independently or in groups, download one of the case studies provided in the Interactive Textbook, and answer the questions that follow. 1.

For your case study:

a. What is the business called? b. How many employees does the business have? c. Who manages the business? d. What products do they offer? e. Who does the business sell to? f. How flexible is the business in responding to customers’ needs or changes? g. What are the advantages and challenges the business faces?

2. 3.

Choose a spokesperson to share your case study and answers with the class. As a class, discuss the common characteristics that appeared in the different case studies.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

DOC

Download Activity 7.3.1 worksheet

372

Chapter 7 Running a business

What opportunities are there to start a small business? Most opportunities to start a small business occur because potential business owners identify an unmet need or a change in the market. Gaps in the market allow for new or improved products and services that better suit customer needs. Ideas for small businesses include the following.

• Retail: either online or

SA PA M P G L ES E

•

through a shop. Examples include a clothing shop, handmade crafts and beauty products. Hospitality: often food and beverage. Examples include a cafe, a food truck or a catering service. Personal services: a lot of people are time-poor, so personal services can assist this need. Examples include cleaning, pet grooming, personal training, gardening and tutoring.

•

➜

Figure 7.3.3 Proud shop owners check the quality of their products

• Consulting and freelancing: specific expertise can create job opportunities.

customer an individual who purchases a good or service competition the level of rivalry from other businesses offering similar products feasibility study an evaluation of whether a project or idea is practical and viable

pricing how much to charge for a product or service

•

Examples include marketing, graphic design, landscaping, technology and finance. Health and wellness: health awareness has been a prominent industry in the last 10 years. Examples include fitness coaching, yoga, mental health coaching, career coaching and selling products that align to health awareness.

Why is conducting a feasibility study through market research important before starting a business? For a business to be successful, market research is crucial as it helps determine whether a business idea is likely to succeed. It allows a business to understand customer wants or preferences, examine the competition and assess demand for a product or service. It also reduces the risk of failure by identifying potential problems early, such as regulatory issues, economic conditions, low demand or strong competition. A feasibility study also helps assess the level of competition, appropriate pricing and the best target market. By analysing this information, business owners can make informed decisions about whether to go ahead with an idea, adjust it or abandon it altogether. Overall, market research ensures that business decisions are based on data rather than assumptions, increasing the chance of long-term success.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.3 What is a small business and how can you start one?

Steps for completing a market research feasibility study

373

revenue money that a person or business earns

Figure 7.3.4 outlines the steps for completing a market research feasibility study. 1. Define the purpose of the study What do you want to learn?

Who are the customers?

What are their wants?

What is the timeframe?

2. Conduct online research for the industry you are interested in What is the market size?

What are the trends?

What regulations are required?

Who are the competitors?

SA PA M P G L ES E

3. Identify the target market and define the characteristics of your potential customers

Demographics

Location

Income

Preferences

Behaviours

4. Design the research methodology to find out further information

Interview individuals or groups

Conduct surveys

5. Collect the data on the target audience

Surveys

Interviews

Observations

Online research

6. Analyse the data by identifying key elements

Patterns

Trends

Relevant insights

7. Evaluate the market potential

Is there demand for the product or service?

What pricing would be required?

How much competition exists?

8. Conduct a financial analysis

Estimate the costs, revenues and profitability of the product or service 9. Identify the risks and challenges

What are the barriers to opening the business?

What are the financial risks?

How big are the competitors?

10. Prepare a feasibility report Summarise the findings, conclusions and recommendations

Outline the next steps if the business proceeds

11. Make an informed decision Use the report to decide whether to proceed, modify or abandon the business ➜

Figure 7.3.4 Steps for completing a market research feasibility study

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

374

Chapter 7 Running a business

Common risks and challenges for small businesses Starting a business is exciting, but also risky. Figures 7.3.5 and 7.3.6 show common problem areas that cause small businesses to close. Understanding these risks helps entrepreneurs make better decisions and avoid mistakes. Market research is essential because, as the large number of businesses opening and closing each year shows, the environment is highly competitive. Research helps a business check if there is enough demand, what customers want and how strong the competition is before they start. This constant change in the small‑business sector reinforces why careful planning and informed decisions are vital for long‑term success.

Number of businesses

SA PA M P G L ES E

Reasons for businesses to fail

Poor financial management Competition Poor marketing

No market need Weak business model Management issues

500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

Small business entering and exiting in Australia, 2024

Small businesses entering the market

Small businesses exiting the market

➜

Figure 7.3.6 In 2024, approximately 440,000 small businesses entered Figure 7.3.5 Why do small businesses fail? This diagram shows the most common types of problems that cause small businesses to close. the market in Australia and 360,000 small businesses exited the market.

Review 7.3 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Outline four characteristics of a small business. Explain two reasons why small businesses fail.

Why is a feasibility study important prior to opening a small business?

Thinking, researching and communicating 1.

Thinking about your local community, identify a local business and describe how this local business fits the definition of a small business.

Discuss how independent ownership shapes the decision-making process in a small business and explain one potential advantage and one potential challenge of this characteristic.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.4 Why is it important to select an appropriate ownership structure when starting a small business?

375

Why is it important to select an appropriate ownership structure when starting a small business?

7.4

Success criteria

In this lesson, you will identify different ownership structures and explore the range of business options available.

❏ I can describe different ownership structures for businesses. ❏ I can outline the advantages and disadvantages of different business options.

SA PA M P G L ES E

Learning intention

Starter activity

Example: Bella’s Homemade Treats

Read the following example and identify whether it meets the criteria of a small business. If the example does meet the criteria, describe the characteristics of the small business.

➜

Figure 7.4.1 Bella’s Homemade Treats – does it operate as a small business or not?

Bella loves baking and decides to start her own business selling homemade cookies and cakes. She operates from her kitchen at home and sells her products at the local farmers’ market and through social media. Bella is the sole owner and manages everything herself, including baking, marketing and customer service. She currently employs two friends to help with packaging during busy periods. With limited funds, Bella purchases ingredients in small quantities to manage costs. Her business serves customers mainly within her local community. 1.

Does Bella’s Homemade Treats qualify as a small business?

What are the characteristics of Bella’s Homemade Treats? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

376

Chapter 7 Running a business

The importance of selecting the correct business structure Writing focus 7.4 Transitional phrases

The business structure also affects taxation, legal obligations and the ability to raise finance. Different structures are taxed differently and have varying set-up costs and reporting requirements. Selecting an appropriate structure helps a business meet legal requirements, manage risk, and support future growth and long-term success.

SA PA M P G L ES E

liability the fact that someone is legally responsible for something

It is important to select an appropriate business structure because it affects how a business is owned, managed and legally operated. The business structure determines who is responsible for debts, how decisions are made and the level of personal liability faced by the owner. Choosing the right structure can help protect personal assets and ensure that the business operates efficiently.

Types of business structure

Business structures determine how a business is legally organised. Having the correct business structure affects the business’s management, how it is taxed and the liability. The most common business structures are shown in Figure 7.4.2.

Main legal structures for small businesses

Sole trader

Partnership

Private company

Main legal structures for small businesses

➜

Figure 7.4.2 Main legal structures for small businesses Sole trader

Partnership

Private company

Sole trader

A sole trader is the simplest and most common type of business structure in Australia. It is owned and operated by one person and is the easiest and cheapest business structure to establish. The owner:

• makes all the business decisions, from the day-to-day running of the business to •

organising the finance and all resources is legally responsible for the business and there is no legal separation between the owner and the business – the owner and the business are treated as the same legal entity

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.4 Why is it important to select an appropriate ownership structure when starting a small business?

377

• has unlimited liability, so if there is a lot of debt it will come from the owner’s • •

personal assets can use their individual tax file number (TFN) to lodge tax returns doesn’t need a separate bank account, although this is advisable to ensure that Main legal structures small businesses and expenses are accounted for. business forincome

Examples of sole include tradespeople and hairdressers. Sole trader PartnershiptradersPrivate company

Partnership A partnership is a business structure where two or more people own and operate the business together.

SA PA M P G L ES E

• The partners share the responsibilities of running the business, including making • • • • •

decisions, contributing money and skills, and managing the daily operations. Profit and loss are usually shared between the partners according to an agreed arrangement. A partnership, like a sole trader, is easy and inexpensive to set up, although there is a requirement for an Australian Business Number (ABN), which is used for all business dealings. The Australian Taxation Office (ATO) requires a partnership tax return to be lodged each year, where each partner pays tax on their share of the net partnership of income that is received. Each partner is responsible for their own superannuation. The partnership must register for goods and services tax (GST) if there is an annual turnover of $75,000 or more. Partnerships can be general, where all partners have unlimited liability, or limited, where some partners have limited liability.

Examples of partnerships include family businesses and professional services such as accounting.

➜

Figure 7.4.3 In a partnership business structure, two or more people share the responsibilities of running a business. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Australian Business Number (ABN) a unique 11-digit number that identifies your business goods and services tax (GST) a tax that is added to most products and services you buy or sell in Australia annual on a yearly basis

Main legal structures for small businesses

378

Chapter 7 Running a business Sole trader

Partnership

Private company

Private company proprietary limited (Pty Ltd) showing that the company is private and the owners’ liability is limited to the money they invested and not more

• A private company is not listed on the stock exchange and is defined by proprietary • • • •

limited (Pty Ltd) after its name. It can have up to 50 non-employee shareholders. A private company is more expensive and complex to set up, and has more legal and reporting commitments than a sole trader or partnership. Funds must come from the shareholders and not the public. The liability of each shareholder is the amount they have invested. A private company must have at least one director (who manages the business) and secretary, and shareholders are bound by the company’s constitution on whether they can sell their shares or not.

SA PA M P G L ES E

shareholder a person who owns shares in a company and therefore gets part of the company profits and the right to vote on how the company is run

A private company is a type of company that is registered under the Corporations Act 2001 (Cth).

DOC

Private companies are commonly used for small to medium businesses, family-owned companies, startup businesses and professional service firms.

Activity 7.4.1

Business ownership structure matching game

Download Activity 7.4.1 worksheet

Access the Interactive Textbook to download the scenario cards and ownership structure cards (or do this on a worksheet). 1.

Your teacher will distribute the business scenario cards and ownership structure cards. Each scenario describes a different business idea.

You are to match the scenario with the most appropriate ownership structure.

Write one or two sentences explaining your choice using business terminology (the glossary is a good place to assist).

At the end of the activity, you will review your matches. Discuss any differences in opinion and why different ownership forms can be suitable.

Take it further: try creating your own business scenarios and challenge your classmates to match them with a suitable ownership structure.

Review 7.4 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify the different types of business structures available in Australia.

Outline three characteristics that distinguish a sole trader from a private company ownership structure.

Describe the main differences between a sole trader and a partnership as business ownership structures.

Explain one advantage and one disadvantage of forming a partnership when starting a business.

Thinking, researching and communicating 1.

Using the internet, research the importance of the Australian Taxation Office.

Write a paragraph explaining the meaning of “limited liability” and why it is an important feature of a private company. Be sure to use clear business terms in your explanation. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.5 How can you choose between starting, buying or franchising a business?

7.5

379

How can you choose between starting, buying or franchising a business? Success criteria

In this lesson, you will compare starting, buying and franchising a business to understand their advantages and disadvantages.

❏ I can identify the advantages and disadvantages of starting, buying or franchising a business. ❏ I can compare these options to identify the best choice in different situations.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Think of a business idea for your market day.

In your workbook, write down colours that you would like to associate with your business idea.

Next, write down any images that you think would go nicely with your idea.

Write down as many business names as you can think of.

Do any colours or images or symbols match your business name?

We will come back to this later in this chapter.

What are the advantages and disadvantages of starting a new business compared with purchasing an existing business? When someone wants to run a business, they usually choose one of two options: Writing focus 7.5 Developing sentences

1. buying an existing business 2. starting their own business from scratch.

Both choices have advantages and disadvantages.

Buying an existing business

Some advantages and disadvantages of buying an existing business are displayed in Figure 7.5.1.

The business already has established customers, so money should start coming in straight away. You can look at the financial reports and see if the business is worth buying. You will have the staff, equipment and suppliers in place for you to go in and operate from day one.

The business will usually cost more money due to goodwill. You may inherit problems like a bad reputation, old equipment or unhappy staff. You may need to ask why the owner is selling and complete due diligence as it could be that the business is struggling or a major franchise is entering the area. You also may need to make some changes to the shop and existing systems, which could take longer than expected.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Disadvantages

Advantages

➜

Figure 7.5.1 Advantages and disadvantages of buying an existing business

goodwill the intangible value of a business beyond its physical assets, such as its brand, loyal customers, good reputation and employee talent

380

Chapter 7 Running a business

When looking at purchasing an existing business, ensure that you check the financial records of previous years, why the owner is selling, what is included in the price and if there are any debt or legal problems.

Starting your own business This means you are creating a new business idea and building it from the very beginning. By starting your own business, you have full control over everything. You choose the name, the products, the colours of the brand and logo, and how it runs in its daily operations. As you are starting the business from scratch, it may take longer to grow than you first anticipated.

SA PA M P G L ES E

The cost of starting your own business can therefore be considerably less than purchasing an existing business. You are in total control of all aspects of the operations of the business. You can be as creative as you would like and can try new ideas to suit the business or its target audience. The biggest disadvantage is that it is usually a while before you make money and you must do everything yourself. This includes the finances, the ordering of supplies, making the products (if this is the industry you are in), marketing the products and even hiring staff. It also takes time to get customers, and there is a higher risk of failure. The Australian Bureau of Statistics (ABS) states that around 25% of new businesses fail in their first year. This increases to 52% failing or closing by the fifth year of operation.

What are the advantages and disadvantages of buying a franchise?

franchise a business model where a person pays to operate under an established brand and system franchisor owns the brand and business system

franchisee buys the right to operate a franchise (often as a Pty Ltd company)

A franchise is a business arrangement where the franchisor (the owner, e.g. McDonald’s) licenses the franchisee (another party) to operate a business using the franchisor’s brand, system and intellectual property in return for fees and ongoing obligations. A franchise is a good way to start your own company and have a better chance of success as you are using an established brand, and their business model, along with the franchisor’s support and training. The franchisor:

• allows the franchisee to use their marketing strategies, which can include a • • •

protected geographic area to limit competition of the same brand and customer base, which can reduce risks when commencing a business provides the training, ongoing support and resources to assist the franchisee effectively in operating their business ensures that all franchisees adhere to the franchising code of conduct because if the business does not go well, it can affect the overall brand oversees the franchisee’s performance and protects the integrity of the brand, often resulting in restrictions on what the franchisee can and cannot do.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.5 How can you choose between starting, buying or franchising a business?

381

In return, the franchisee:

• pays an initial fee to the franchisor • must operate the business exactly according to the franchisor’s system • must use the approved suppliers and meet all performance and reporting

➜

SA PA M P G L ES E

•

requirements along with meeting all brand standards pays ongoing fees, often a percentage of the turnover, and marketing levies, and has limited independence as they must follow strict rules in relation to pricing, suppliers, products and promotions.

Figure 7.5.2 Some examples of different franchises available in Australia. Jim’s Mowing image credit to Jim Penman.

The main points of purchasing a franchise compared with purchasing an independent business are summarised in Table 7.5.1. Table 7.5.1 A summary of purchasing a franchise compared with purchasing an independent business Franchise

Independent business

Proven system

Full control

Brand recognition

Build from scratch (if new)

Ongoing fees

No royalties

Less flexibility

More flexibility

Support provided

You are on your own

Why would a business owner buy a franchise?

There are franchises in an array of industries, which means that prospective franchisees can find something that aligns with their interests and skills. It is often easier to access finance because banks are more likely to lend money to franchisees. The financial history of the franchise can help with loan approvals. In Australia, franchises are governed by the Franchising Code of Conduct, enforced by the ACCC, meaning that franchises are more regulated than normal businesses. This code of conduct allows for both the franchisor and franchisee to build trust so that the business is more sustainable. Franchises suit people who prefer structure and guidance, are comfortable following systems and want a lower-risk – but not risk-free – investment compared with a start-up or independent business. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

suppliers people or businesses that provide goods or materials to another business

382

Chapter 7 Running a business

Steps to buying a franchise Figure 7.5.3 outlines the steps to buying a franchise. 1. Research and choose the right franchise Decide on the industry that suits your skills and interests (e.g. food, retail, services, fitness or lawn care)

Compare the different franchise systems

Check the brand reputation, number of existing franchisees, the failure/closure history

Speak to current and former franchisees

2. Confirm your budget and funding

SA PA M P G L ES E

Costs usually include initial franchise fee, fit-out and equipment, Understand how the franchise is funded – from personal savings, stock, marketing fees and working capital (the money to cover bank loans or approved franchisor lenders day-to-day operations) 3. Apply to the franchisor

Gather all information about the franchise

Submit a franchise application

Sit an interview with the franchisor; they will also complete a background check (including finances)

4. Legal requirements

If successful, you will be given legal documents 14 days before signing the agreement

Disclosure document

Franchise agreement

Key fact sheets

5. Get professional advice from a franchise lawyer and an accountant

Verify the financial figures

Know the term length and renewal rights, exit and resale conditions, territory protections, fee increases and any dispute resolution processes

6. Sign the franchise agreement

Pay the franchise fee (you have a 14-day cooling-off period after signing) 7. Set up your business structure

Obtain an ABN, a TFN, register for GST, open business bank accounts and arrange insurance

8. Training and site set-up Complete the franchisor training

Fit out the shop

Hire staff

9. Open and operate ➜

Figure 7.5.3 Steps to buying a franchise

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.5 How can you choose between starting, buying or franchising a business?

383

Advantages and disadvantages of owning a franchise Figure 7.5.4 outlines the advantages and disadvantages of owning a franchise.

SA PA M P G L ES E

High upfront and ongoing costs Limited independence Profit not guaranteed Contract restrictions Dependence on the franchisor Ongoing compliance and reporting

Disadvantages

Established brand and reputation Proven business model Training and ongoing support Easier access to finance Marketing and buying power Exclusive territory (some franchises grant a protected geographic area, which can limit competition)

Advantages

➜

Figure 7.5.4 Advantages and disadvantages of owning a franchise

Activity 7.5.1

Researching a franchise

Use the information in this chapter and a franchise of your choice to explore how franchising works in Australia and answer the following questions. 1.

Define a franchise.

Identify the roles of a franchisor and a franchisee.

Explain what a franchise agreement includes.

Discuss two advantages and two disadvantages of buying a franchise.

Explain the support a franchisee typically receives (for example, training, branding and system).

Select a well-known franchise and write a brief overview of how franchising helped it grow.

You can download the worksheet from the Interactive Textbook to complete an extended research report. The full task can be completed as either a written report, an oral presentation or a digital project.

Review 7.5

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

DOC

Download research report worksheet

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Define a franchise and identify the main participants involved in franchising.

Outline the typical steps an owner must follow to become a franchisee.

Explain the advantages and disadvantages of owning a franchise compared with starting an independent business.

Thinking, researching and communicating 1.

Under what circumstances might starting your own independent business be a better option than buying a franchise? Explain your reasoning, considering the advantages and disadvantages of both.

Discuss the main differences between a franchise and an independent business in terms of brand recognition, operational control and financial obligations. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

384

Chapter 7 Running a business

7.6

How do location, ﬁnance options and laws affect small businesses? Success criteria

In this lesson, you will learn how to select a good location to enhance business success, to understand various financing options available for businesses, and explore the different laws that impact business operations.

❏ I can identify key factors that influence the success of a business location. ❏ I can evaluate and compare different finance options available for starting or running a business. ❏ I can explain important laws and regulations that affect how a business operates.

SA PA M P G L ES E

Learning intention

Starter activity

Thinking about your market stall, consider your responses to the following prompts. 1.

What is your business idea for your market day?

What is your target market?

How feasible is it to have this product or service?

Design a feasibility study you can do within your school.

We will come back to your notes later in this chapter, as you prepare for market day.

Choosing a business location

Writing focus 7.6 Developing sentences

Choosing the right location is one of the most important decisions for a small business. The location can affect how many customers a business gets, how much money it makes and whether it succeeds or fails. There are several factors to consider when choosing a business location.

➜

Figure 7.6.1 When it comes to business success, location matters.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.6 How do location, finance options and laws affect small businesses?

Figure 7.6.2 outlines some key factors. • A business should be located near the people most likely to buy its products or services. For example, a cafe needs to be where people walk past, while an online business does not rely on foot traffic.

Visibility and foot traffic

• A location that is easy to see and has lots of people passing by can attract more customers. • Businesses hidden from view may struggle to get noticed.

Cost of the location

• Rent and other costs must be affordable. If the location is too expensive, the business may not make enough profit to survive.

Competition

• Having similar businesses nearby can be helpful because it attracts customers to the area, but too much competition can reduce sales.

➜

SA PA M P G L ES E

Target customers

Access and convenience

• Customers are more likely to visit a business that is easy to reach, with nearby parking or public transport.

Size and layout

• The premises should be suitable for the business and allow space for staff, customers and future growth.

Rules and regulations

• Businesses must follow local council rules, such as zoning laws and trading-hour restrictions.

Figure 7.6.2 Factors to consider when choosing the location of your business

A good location can increase customer numbers, and thereby increase sales and overall profits. A poor location can limit visibility, raise costs and make it difficult for a business to survive. Therefore, choosing the right location plays a major role in the long-term success of a small business.

Activity 7.6.1

Choosing a business location

Choose one small business type from the following list:

• bakery • clothing boutique • hardware store • coffee shop • gym.

Use a printed or digital map of your local area to answer the following questions. 1.

Identify the business type and the location you would choose.

Explain why this location suits the business and its customers.

List two advantages and two disadvantages of this location.

Describe how the location could affect the success of the business.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

385

386

Chapter 7 Running a business

Evaluation of finance options, including bank loans and seeking investors When starting or expanding a business, owners need to choose the best way to finance their business. There are many ways to get money, and each way has its own advantages and disadvantages. It is important to carefully evaluate each option to ensure the success of your business.

Personal savings

SA PA M P G L ES E

This means using your own money to start a business. The advantages of this are that you can keep full control over the business and don’t owe anyone any money. The disadvantage of this is that if the business fails, you will lose all the money that you have invested into the business. This option is best suited for small businesses that don’t need much money to set up.

Family and friends

Family and friends may lend you some money. The disadvantage of this is that money problems can affect relationships. The advantage is that the repayments are often more flexible with lower interest. This is best for the early stages of a small business, when professional funding is difficult.

Bank loans

➜

A bank loan is when a business borrows money from a bank and agrees to repay Figure 7.6.3 Bank loans are one option when it comes to financing your business. it over time with interest. This option allows the owner to keep full control of the business because the bank does not own any part of it. However, loan repayments must be made regularly, even if the business is not making a profit. Banks may also ask for security, such as property, which increases risk for the owner.

Government grants

grant funding provided to a business, usually by a government or organisation, to support a specific project or purpose

The government can provide grants to assist new businesses. The advantage of a grant is that the money does not have to be paid back. The disadvantage is that only certain types of businesses qualify, and the application process is very strict. The industries can change depending on what the government wants to promote.

Government subsidy This is a form of financial assistance provided by the government to an industry. It aims to reduce costs and encourage certain economic activities. The advantage of this is that they usually don’t have to be paid back. However, the application process is strict, and you may need to apply within set timeframes. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.6 How do location, finance options and laws affect small businesses?

Crowdfunding This involves asking people for money online to contribute to your business. The main advantage is that you can raise money without giving away the ownership of the business. It also can help you to test if people like your idea or not. The disadvantage is that the crowdfunding campaigns take time and effort, while success is not guaranteed.

Investors

SA PA M P G L ES E

These are wealthy individuals who invest in new businesses in exchange for part of the business. Investors can provide money and advice; however, the owner loses some control over the business, and a portion of the profits will be given to the investor.

Finance options

Personal savings

Friends and family

Bank loans

Government grants and subsidies

Crowdfunding

Investors

➜

Figure 7.6.4 Options to finance a business

Activity 7.6.2

Finance options for a new business

Consider the common finance options for starting a small business:

• personal savings • family and friends • bank loans • government grants or subsidies • crowdfunding • investors. Answer the following questions. 1.

Identify two finance options that could help someone start a small business.

Explain one advantage and one disadvantage of each option you chose.

Decide which finance option you would use to start a business and justify your choice.

Laws affecting the operation of a small business Small businesses must follow a range of laws to ensure that they operate legally, ethically and responsibly. These laws protect not only the business owners, but also consumers, employees and the wider community. Understanding these laws helps businesses avoid penalties and maintain a positive business reputation.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

387

388

Chapter 7 Running a business

Business registration and business laws Before operating a business, it must be properly registered. A business must complete the following:

• apply for an Australian Business Number (ABN) with the Australian Securities and • •

Investments Commission (ASIC) register a business name with ASIC (if trading under a name other than the owner’s personal name) obtain relevant licences or permits (such as food safety supervisor course, music licence, outdoor dining permit).

SA PA M P G L ES E

Consumer laws All Australian businesses must comply with the Australian Consumer Law and ensure that all goods are safe and fit for purpose, avoid misleading and false advertising, and provide refunds, repairs and replacements when required.

Employment laws

➜

Employment laws apply when a business hires workers or employees. The Fair Work Act 2009 protects workers’ rights Figure 7.6.5 ASIC is Australia's integrated corporate, markets, financial services and consumer and ensures fair treatment in credit regulator. Joe Longo, pictured here, is the current chair of ASIC. Sarah Court starts as ASIC Chair the workplace by regulating on 1 June 2026. minimum wages, employment conditions, working hours and leave entitlements, and ensuring protection from unfair dismissal and discrimination.

Work health and safety laws

PAYG withholding where businesses withhold tax from payments to employees or contractors and send it to the ATO on their behalf

Work health and safety (WHS) laws protect the health and safety of employees and customers by providing a safe working environment. Businesses must identify hazards and manage risks, provide safety training and protective equipment, and report serious workplace incidents.

Taxation laws Businesses must meet their taxation obligations of paying income tax, registering for and collecting GST (if required), paying employee tax through PAYG withholding and keeping accurate financial records.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.6 How do location, finance options and laws affect small businesses?

389

Privacy laws The Privacy Act 1988 states that businesses that collect personal information must protect it by storing it securely, only using it for lawful purposes and respecting customer privacy.

Environmental laws Environmental laws protect the environment and promote responsible business behaviour. This means that businesses must reduce pollution and comply with all environmental laws.

SA PA M P G L ES E

Activity 7.6.3

Laws affecting small businesses 1.

Explain why a small business needs an ABN.

Describe how the Fair Work Act 2009 protects employees in small businesses.

Outline how WHS laws help keep employees and customers safe.

Review 7.6

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify two key factors to consider when choosing a location for a small business.

Describe how the location of a business can impact both customer access and operating cost.

Discuss the advantages and disadvantages of using a bank loan versus crowdfunding to finance a new small business.

Assess how choosing an appropriate finance option can influence the future growth and stability of a small business. Support your answer with examples.

Identify one law that regulates employment in small businesses.

Describe why it is important for small businesses to comply with consumer protection laws.

Thinking, researching and communicating 1.

Imagine your small business is starting to grow rapidly, but your current finance option has high interest rates and strict repayment terms. How might this situation affect your decision-making and business strategy moving forward? Explain your reasoning.

Research and explain how digital business locations (such as online stores or social media platforms) have changed the traditional considerations for choosing a physical business location.

Write a short letter to a new small business owner explaining the importance of complying with workplace health and safety laws. Your letter should be clear, professional and persuasive.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

390

Chapter 7 Running a business

7.7

Rules, tax and staff: how can you run a business legally? Success criteria

In this lesson, you will learn what GST is and how it impacts businesses. You will also explore what factors must be considered when staffing a small business.

❏ I can define GST in my own words. ❏ I can explain why GST exists and how it affects consumers and businesses. ❏ I can identify key factors involved in staffing a small business.

SA PA M P G L ES E

Learning intention

Starter activity

To recap what you have learned in previous lessons, answer the following questions. 1.

Identify and define three different ways to fund a business. How will your market stall be funded?

Outline three legal obligations that must be followed when starting a business. Are there any legal obligations your market stall will need to meet?

What is the goods and services tax (GST)?

Writing focus 7.7 Appositives

The goods and services tax (GST) is a 10% tax added to most goods and services sold in Australia. It affects businesses and consumers in different ways. The business collects the tax on behalf of the government and consumers pay the tax. Understanding the impact of GST helps explain how government taxation influences economic activity. GST is to be added for any business earning over $75,000 a year.

➜

Figure 7.7.1 The GST applies to most items you buy in Australia.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.7 Rules, tax and staff: how can you run a business legally?

Impact of GST on businesses Businesses play an important role with GST as they are responsible for collecting GST on behalf of the government. For this reason, businesses must add an extra 10% on most products. There are some products that are exempt from GST, such as basic food, healthcare and education, but everything else must have 10% GST added to its final price. If a business hasn’t put GST on a product, it may need to adjust prices to include it, which can make the product more expensive.

SA PA M P G L ES E

GST is a type of compliance that the business must follow, so the business must maintain accurate records and lodge business activity statements (BAS). A BAS is used by the business to report on all taxes and payments it has made. If the business pays GST on stock or rent, it can claim that GST back. Businesses collect GST on sales and claim credits for GST paid on purchases, which can affect cash flow timing. Small business owners who do not have a finance background may need to hire accountants or tax agents to manage their GST compliance.

Impact of GST on consumers

The impact of GST on consumers is the increased prices they pay for goods and services, thus increasing the cost of living. The higher prices due to GST may influence consumer spending patterns, possibly reducing the consumption of some goods and services. In the example shown in Table 7.7.1, a clothing store sells a T-shirt priced at $50 before GST. The store must add the 10% GST onto the price of the T-shirt, then $5 GST is collected and paid to the government by the business in its BAS. The consumer pays an extra $5 for the GST. Table 7.7.1 Example of GST impact on the sale of a T-shirt T-shirt original cost

$50

10% GST

Final price

$55

Another example is shown in Table 7.7.2. In this case, the cafe must send the $0.50 GST to the government through its BAS. In turn, when the cafe buys its supplies like milk and coffee, it pays GST on these items. The cafe can then claim back this GST on its business expenses in its BAS. The cafe acts as a middleman, collecting GST from customers and passing it on to the government, while claiming GST credits on its costs. Table 7.7.2 Example of GST impact on the sale of a cup of coffee Coffee

$5.00

10% GST

$0.50

Final price

$5.50

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

391

Chapter 7 Running a business

Activity 7.7.1 How GST affects businesses and consumers 1.

Describe what GST is and why the government collects it.

Explain one way GST affects how a business sets its prices or manages its costs.

Outline how GST can influence the prices consumers pay.

Assess whether GST has a bigger impact on businesses or consumers. Justify your view.

Factors to consider when staffing a small business Staffing is an important consideration for a small business. Choosing the right employees helps the business operate efficiently, provide good customer service and achieve its goals. When staffing a small business, owners must consider several key factors. Figure 7.7.2 outlines some key considerations when staffing a business.

SA PA M P G L ES E

392

Business needs

• What are the roles, skills and experience required to meet the business goals and operations? • For example, if you run a cafe, you may need baristas, a chef and servers with good customer service skills.

Budget

• Staffing is the biggest expense in any business, so setting a maximum amount on this, which includes salaries, employee benefits and training costs, is important. This way you know how much is required for all other operational requirements. • You must ensure that you are complying with employee laws when hire staff.

Cultural fit

• To ensure lower staff turnover, choose employees who align with your business values and work culture. • For example, an outgoing and chatty person may thrive in a hospitality role, but struggle in a data-entry role that requires a lot of focus.

Flexibility

• Do you need full-time, part-time or casual staff based on workload fluctuation? • During holiday and other busy times, you may need to hire casual staff in addition to your regular team to ensure that customers are served promptly.

• Ensure that the business complies with all employment laws, awards, regulations, contracts Legal requirements and WHS. Training and • Plan any training needs to help staff and to ensure that your business grows. development Labour market

• Where do you find suitable staff? • Is it through a recruitment agency, industry magazines, advertising online or through word of mouth?

➜

Figure 7.7.2 The factors business owners should consider when staffing a business

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.7 Rules, tax and staff: how can you run a business legally?

393

Activity 7.7.2 Choose one of the staffing examples included in this lesson and answer the questions. 1.

Identify the key staffing factors that matter most in your chosen scenario.

Explain how these factors influence the hiring decision.

Propose one practical way the business could address one of these staffing factors.

Assess how an effective hiring decision could support the long-term success of the business.

Review 7.7 Thinking, researching and communicating

Knowledge and understanding

Students can access sample responses and results online

SA PA M P G L ES E Online quiz

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Define the role of businesses in the collection and management of GST.

Discuss the impact of GST on small business owners, including how it might affect their operations and the need for financial assistance.

Explain how GST affects consumer prices and how this may influence consumer spending behaviour.

Summarise the types of products that are exempt from GST and how this exemption affects pricing strategies for businesses.

Summarise the different staffing options a small business owner might consider to address fluctuating workloads.

Define cultural fit in the context of staffing a small business and explain why it is important.

Discuss the importance of considering budget and legal requirements when staffing a small business.

Thinking, researching and communicating 1.

Identify the factors that affect small business hiring decisions and analyse how these factors shape the selection of suitable employees.

Imagine a small business that does not follow legal requirements when hiring. Discuss why it is important for a small business to consider legal requirements when hiring employees.

➜

Figure 7.7.3 What hiring decisions might have gone into selecting this employee?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

394

Chapter 7 Running a business

7.8

How can marketing grow your business? Success criteria

In this lesson, you will learn about different marketing strategies and how they influence people’s buying decisions.

❏ I can explain different marketing strategies and how these strategies can attract customers.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Imagine you just made a new product – for example, a unique snack, mini game or phone case. How would you get people to buy it? Write your answer on a sticky note.

How would you advertise the product that you have invented? Write your answer on another sticky note.

Collect the slips and read a few aloud. Discuss as a class how you reach people, make them want to buy your product and grow your business.

Note down five ideas that you can use to promote your stall or product on market day.

Selecting and implementing appropriate marketing strategies to attract customers and sell goods and services

Writing focus 7.8 Appositives

Marketing is the process of attracting customers and encouraging them to buy goods and services. For a business to be successful, it must carefully select and implement marketing strategies that suit its product, target market and budget. Before choosing a marketing strategy, a business must consider several factors. Figure 7.8.1 outlines some of these. • This is the group of customers a business wants to attract. Target market • When designing a product, the business needs to consider the age, gender, income and interests of its customers, where the customers live and how they shop.

• Different products require different marketing approaches, and marketing should Type of product highlight the key benefits of the product or service. • For example, food businesses focus on quality and price, whereas technology or service products focus on features and innovation.

Budget

• Small businesses often have limited marketing budgets, so they must choose affordable strategies that still reach their target market. • Some considerations that businesses need to include are the cost of advertising, the value for money and the expected return on the investment.

➜

Figure 7.8.1 The factors considered when forming a marketing strategy

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

➜

SA PA M P G L ES E

7.8 How can marketing grow your business?

Figure 7.8.2 Business people brainstorming strategy and new ideas

Marketing strategies

Marketing strategies are the methods businesses use to attract customers and sell goods and services. To be effective, businesses usually use a mix of strategies known as the marketing mix.

Marketing mix: the 4 Ps

The marketing mix is the combination of strategies a business uses to promote and sell its goods or services. It helps businesses meet customer needs and achieve their goals. In simple terms it is how a business decides what to sell, how much to charge, where to sell it and how to tell customers about it. Price: How much the customer pays

Product: What the business is selling

The marketing mix

Promotion: How the business advertises and communicates with customers

Place: Where and how the product is sold

➜

Figure 7.8.3 The marketing mix is summarised using the 4 Ps model.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

395

396

Chapter 7 Running a business

Product

SA PA M P G L ES E

➜

The product is what the business is selling. Strategies for product include offering high-quality products, adding features or benefits, packaging and branding, and providing warranties or afterhours service. For example, the product decisions for a pair of sports shoes could include how comfortable and durable the shoes will be, the sizes and colours the sports shoes come in, where the brand and logo are fitted on the shoe and if there are any extra features such as cushioning or weatherproof materials. The business must design and improve the sports shoes according to customer needs so that they stand out from their competitors.

Figure 7.8.4 Shops use promotions to sell their products.

Price

Price is how much customers pay for the product. Strategies for pricing structures include those shown in Figure 7.8.5.

Competitive pricing

• Pricing their products similar to their competitors’ prices. For example, a shoe store company wants to sell running shoes for $120. Other similar brands sell their running shoes from around $100 to $130. To stay competitive, the company decides to price its shoes at $110, which is similar to its competitors, as this way customers are more likely to choose the company’s shoes as they are at a similar price.

Discount pricing

• A pricing strategy where a business reduces the original price of a product for a short period to encourage customers to buy. It lowers the price to increase its sales. For example, the price ofa pair of sports shoes is $120; however, during a sale period the business discounts the sports shoes to $60 (50% off). This discount encourages customers to make a purchase. • Discount pricing is used to increase sales quickly, to attract price-sensitive customers, to clear old or excess stock, when you are starting out in a new area and want to have your product known, and to compete with other businesses.

Penetration pricing

Premium pricing

• Where a business starts with a low price to encourage customers to try the product. This pricing strategy is often used when a new product first enters the market. For example, a new sports shoe brand enters the market. Well-known sports shoes are selling between $100 and $130. This new sport shoe brand initially sells its shoes for $70 to attract customers to the lower price. Once the brand becomes more well known, the price may increase. • Penetration pricing is used to attract new customers, compete with established brands, build brand awareness and attract market share.

• A pricing strategy where a business sets a high price to reflect the high quality, exclusivity or strong brand image. The business charges more because the product is seen as more exclusive or better. An example is a professional sports shoe designed for elite athletes priced at $250 whereas regular sports shoes cost around $120. • The higher price suggests better quality and advanced technology, the product performs better and target customers are willing to pay more for the premium product.

➜

Figure 7.8.5 The different pricing strategies companies use to attract customers and encourage purchases Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.8 How can marketing grow your business?

397

Place (distribution)

➜

SA PA M P G L ES E

Place or distribution is how the product reaches the customers. The strategies could include selling the product in physical stores, selling the product online or through websites and apps or even selling for home delivery. Businesses are now selling more online as it is convenient and can reach more customers. For example, a sports shoe is sold in sporting stores, online through the company website and at shopping centres and shoe stores. This allows for the sports shoe to reach maximum sales by ensuring that all the target market is reached.

Promotion

Figure 7.8.6 In-store is just one place that these shoes will be sold.

Promotion refers to the ways a business advertises and communicates with customers to make them aware of its products or services, persuade them to buy, and encourage repeat purchases. Effective promotion targets the right audience, increases sales and brand awareness, and helps the business stand out from its competitors. There are several ways that promotion occurs, with the most common promotion strategies being those shown in Figure 7.8.7.

Advertising

• Where a business pays to inform or persuade customers about the product or service. Its primary aim is to raise awareness and attract customers. • Examples include television advertisements, social media posts, posters, billboards newspapers and magazines.

Sales promotions

• A short-term incentive designed to encourage immediate purchase of a product or service. Its purpose is to boost sales quickly and attract new customers. • Examples include discounts, vouchers and "buy one get one free" special offers.

• Activities that create a positive image of the business and will build customer trust. It improves the reputation of the business and its branding and strengthens customer Public relations relationships. • Examples include sponsoring sports events, charity campaigns and media releases.

• The face-to-face interaction where a salesperson directly promotes and sells products to consumers. The salesperson is there to explain the product benefits and persuade Personal selling customers to purchase the product. • Examples include staff demonstrating products instore and sales representatives visiting clients. Digital marketing

• Where online platforms are used to reach and communicate with customers. The main aim of digital marketing is that it reaches a wide audience quickly and allows for target marketing. • Examples of digital marketing include social media marketing, email campaigns and influencer promotions.

➜

Figure 7.8.7 The different methods a company uses to promote its brand and goods and services Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

promotion activities that influence consumers’ awareness, interest and purchase decisions

398

Chapter 7 Running a business

Activity 7.8.1 Applying the marketing mix

Choose a real or hypothetical product. Use the 4 Ps framework to answer the following questions. Identify the target market for your product.

Describe the key features of the product that appeal to this target market.

Explain the pricing strategy you would use and why.

Outline where and how the product should be sold to reach customers effectively.

Select one promotional method and justify why it suits your target market and budget.

SA PA M P G L ES E

Review 7.8 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the key factors a business must consider before selecting an appropriate marketing strategy to attract customers and sell goods and services. Discuss how the target market influences the selection of marketing strategies for a business. Include examples to support your answer. Explain the concept of the marketing mix (4 Ps) and how each element contributes to attracting customers and increasing sales.

Describe four different pricing strategies businesses use and explain how each strategy can impact customer purchasing decisions.

Discuss the importance of promotion in marketing. Describe at least three different promotion strategies and explain how they help a business attract and retain customers.

Explain how digital marketing differs from traditional marketing methods and discuss its advantages in reaching target customers effectively.

Explain how a business can effectively communicate its marketing message to its target market using a combination of promotion strategies. Provide examples of how different methods (such as advertising, sales promotions and digital marketing) can be used together to increase customer engagement and sales.

Thinking, researching and communicating 1.

Write an informative article aimed at new business owners about the advantages and challenges of digital marketing compared with traditional marketing methods. Include examples and suggestions for how to effectively integrate both methods in a marketing strategy.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.9 How do finances drive success?

7.9

399

How do ﬁnances drive success?

Success criteria

In this lesson, you will learn how financial statements can assist business decisions, understand the key features of different financial statements and select a financial management strategy to improve business success.

❏ I can explain why businesses use financial statements. ❏ I can describe how financial information helps managers make decisions. ❏ I can identify different types of financial statements. ❏ I can describe the key features and information shown in each financial statement. ❏ I can analyse financial information to identify business strengths and weaknesses.

SA PA M P G L ES E

Learning intention

Starter activity

Connect, sort, predict

What do you recall from the skills content? Below are six common financial terms you may have seen before:

• income • expenses

• assets • liabilities

• cash flow • profit.

Connect: write down one thing you already know about these terms (a meaning, an example or where you’ve seen it used).

Sort: sort the six terms into two groups in your workbook: Group A: things a business owns or owes

Group B: money going in or out of a business.

Predict: write one sentence predicting why a business might need financial statements such as income statements, balance sheets or cash flow statements.

List as many expenses as you can think of for your market day stall.

The purpose and use of financial records

Financial records are documents that record a business’s income (money that comes into a business), expenses (money that goes out of a business), assets (what the business owns) and liabilities (what the business owes). Tracking all money transactions:

• assists in financial management such as budgeting, forecasting and providing any • •

financial insights to the business ensures compliance with all legal and regulatory requirements such as to ASIC and the ATO promotes accountability as all funds are documented, which assists in making decisions about the business and monitoring business performance over a period of time Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 7.9 Creating topic sentences

400

Chapter 7 Running a business

• helps prepare the main financial statements like • • •

balance sheets, income statements and cash flow statements, which supports informed decisionmaking facilitates internal and external audits and helps prepare and file tax returns accurately provides evidence of financial stability when seeking funding can resolve disputes or legal claims related to financial transactions.

The key features of financial statements and how to interpret them

SA PA M P G L ES E

➜

Figure 7.9.1 Sample of a balance sheet

There are several key features of financial statements that are important if you are to fully understand how your business is operating.

Cash flow statement

A cash flow statement shows you the money that comes in and out of the business. It is:

• the easiest to understand as it shows how a business uses its cash and if it is

managing its cash efficiently a good assessment as to the liquidity of a business (liquidity is how quickly an asset can be turned into cash) created to cover a specific time period, such as weekly, monthly or quarterly, and it allows a business to track cash changes over time.

• •

The common features of a cash flow statement are shown in Figure 7.9.2. Cash inflows

The money coming into the business. This shows how a business earns money. Examples include cash sales, payments from customers and loans received. Cash outflows

The money leaving the business. This shows where a business spends its money. Examples include rent, wages, utility bills and payments to suppliers. Opening cash balance The amount of cash the business has at the beginning of the period. It shows the starting point for the business’s cash position. Closing cash balance The amount of cash left at the end of the period. It shows whether the business has enough cash to continue operating.

➜

Figure 7.9.2 The elements of a cash flow statement

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.9 How do finances drive success?

The net cash flow is the difference between cash inflows and cash outflows. There is a positive net cash flow if more cash is coming in than going out and a negative cash flow if more cash is going out than coming in. For example, a small business starts the month with $1000. It has cash inflows of $2000 and cash outflows of $1500. The net cash flow is $500 and a closing balance of $1500. The net cash inflow is $2000 − $1500 = $500. Tables 7.9.1 and 7.9.2 are examples of cash flow statements. Table 7.9.1 Simple cash flow statement (monthly)

SA PA M P G L ES E

Business: Carman’s Cafe Period: January 2027 Amount ($)

Opening cash balance (from previous month)

1000.00

Cash inflows Cash sales

2000.00

Cash outflows Expenses

1500.00

Closing cash balance

1500.00

Table 7.9.2 The cash flow statement can also be written in an annual format. Month

Dec

Jan

Feb

Opening cash balance (from previous month)

$1000.00

$1500.00

Cash inflow

$2000.00

Cash outflow

$1500.00

Closing cash balance (this $1000.00 balance goes to the next month)

$1500.00

Mar

Apr

May

Balance sheet

A balance sheet is a financial statement that shows what a business owns and what a business owes at a specific point in time. It can be viewed as a snapshot of the business’s financial position on a particular day. There are three parts to a balance sheet:

1. Assets: these are things that the business owns or controls that are worth money. Examples are cash, equipment, inventory and vehicles. 2. Liabilities: this is what the business owes. Examples are loans, money owed to suppliers and bills that haven’t yet been paid. 3. Owner’s equity: this is the owner’s investment in the business. It is what is left for the owner once all debts have been paid.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

401

Chapter 7 Running a business

Table 7.9.3 is an example of a simple balance sheet. Table 7.9.3 Simple balance sheet. In this example, the business owns $10,000 worth of assets, it owes $4000 and the owner’s share of the business is $6000. Business: Carman’s Cafe As at: 30 June 2017 Assets

Amount ($)

Cash

4000.00

Equipment

5000.00

Stock (inventory)

1000.00

Total assets

10,000.00

Liabilities

Amount ($)

Loan

3000.00

Accounts payable (money owed)

1000.00

Total liabilities

4000.00

Owner’s equity

Amount ($)

Owner’s equity

6000.00

SA PA M P G L ES E

402

Income statement

➜

Also known as a revenue statement or profit and loss statement, an income statement shows how much money a business makes and how much it spends over a period of time. Basically, it tells us whether the business is making a profit or making a loss. An income statement shows how well a business is performing. Figure 7.9.3 Every income statement should show the various sectors It is used for owners to make where a business is making money and spending money. decisions, to plan and for tax purposes. There are three parts to an income statement: 1. Income (revenue): income is the money that is earned from sales – for example, the sale of goods and the fees for services. 2. Expenses: these are the costs of running the business – for example, rent, wages, electricity, stock and supplies.

3. Profit or loss: profit is earned if the income is greater than the expenses, whereas loss is made when the expenses are greater than the income. To calculate this, the simple formula is: Profit (or loss) = Income – Expenses Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.9 How do finances drive success?

Table 7.9.4 Simple income statement Business: Carman’s Cafe 2017 For the month of June Amount ($)

Sales revenue

5000.00

Total income

5000.00

Expenses

Amount ($)

Rent

1500.00

Wages

1800.00

Utilities (electricity, water, phone)

400.00

Stock and supplies

500.00

Total expenses

4200.00

SA PA M P G L ES E

Income

For example, looking at the income statement shown in Table 7.9.4, the profit and loss calculation is: Profit (loss) = Income – Expenses $5000 – $4200 = $800 profit

The cafe earned $5000 in income; it spent $4200 on expenses and has made a profit of $800. Table 7.9.5 summarises the key features of an income statement, a cash flow statement and a balance sheet. Table 7.9.5 Comparison of financial statements Financial statement

What it shows

Time focus

Key information

Its importance

Income statement

How much money the business earns and spends

Over a period of time

Shows if the Income, expenses, profit business is profitable or loss

Cash flow statement

How much cash comes in and out of the business

Over a period of time

Cash inflows, cash outflows, opening and closing balance

Helps ensure that the business can pay its expenses on time

Balance sheet

What the business owns and owes

At a specific point in time

Assets, liabilities, owner’s equity

Shows the business’s financial position and stability

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

403

404

Chapter 7 Running a business

Activity 7.9.1 Understanding financial statements

Use the financial statement examples in this chapter to answer the following questions. 1.

Identify the purpose of an income statement, a balance sheet and a cash flow statement.

Describe one key feature of each statement that helps a business understand its financial position.

Explain why a small business needs to compare its income and expenses regularly.

Identify two items that appear on a balance sheet and outline what each item shows about the business.

Explain how cash inflows and outflows affect the closing cash balance in a cash flow statement.

SA PA M P G L ES E

Financial management strategies to improve business performance A business can look successful but still run out of cash. It may be able to make a profit but still have poor cash flow. It may have strong assets but also be high in debt. This is why it is important for a business to use all three financial statements to understand how well the business is operating. Figure 7.9.4 outlines strategies that small businesses often use to improve performance.

Managing cash flow

• The purpose of managing cash flow is to prevent the business running out of cash and help operate smoothly. This means a business needs to keep track of the cash coming in and going out. • To successfully do this, a business must monitor the cash inflows and cash outflows regularly. It will need to ensure that bills are paid on time, and that any non-essential spending is delayed if cash is low.

Cost control

• This can be called controlling expenses. This is a strategy of keeping expenses as low as possible without affecting the quality of products or services. • Lower expenses mean higher profits.

Budgeting

• A budget is a plan that shows how much money a business expects to earn and spend over a period. Budgeting helps a business control its expenses and income and make sure it doesn’t spend more than it earns by planning and staying in financial control. • A budget can be created for the business to compare actual spending with what it has forecast and adjust the spending if the costs are higher than expected. Throughout the year, the owner regularly compares the actual income and expenses with the budget. • If spending is higher than planned, the business may need to reduce costs in other areas or find ways to increase sales.

Using financial records

• Keeping and using financial statements is a strategy to ensure that all money transactions are accurate. This provides information for improved decision-making and ensuring legal compliance.

Managing debts and loans

• By managing debts and loans correctly, financial pressure is reduced as money is used wisely and all debts are paid on time. • It ensures that unnecessary loans are not taken out, there is a regular repayment plan, and high interest debts are paid off first.

Profit planning

• Businesses set targets for how much profit they plan to make. • Profit planning helps businesses make better choices, such as setting prices, deciding how to sell their products and when to offer promotions and discounts to attract customers, reducing waste and negotiating better supplier deals.

Using financial ratios

• Businesses can use financial ratios to see how well they are doing compared with their history or other businesses. • Financial ratios help managers make informed decisions to improve the business.

Regularly reviewing performance

• A business should regularly track how it is performing financially. • This helps keep the business on track to meet its financial goals and can identify areas where improvement is needed.

➜

Figure 7.9.4 Strategies small businesses often use to improve performance

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.9 How do finances drive success?

Everyday examples of financial management strategies in action Managing cash flow An ice-cream business will make more money in summer than in winter. The ice-cream business must ensure that it will be able to cover all expenses during the winter period.

Cost control

SA PA M P G L ES E

A bakery makes and sells cakes and biscuits. The owner notices that the cost of ingredients like flour, sugar and eggs has gone up, which reduces profit. To manage costs, the owner decides to buy ingredients in bulk from suppliers who offer discounts, and compares prices to find the best deal. The owner also reduces waste by measuring ingredients carefully and saves electricity by switching off ovens and lights when they’re not needed. By doing these things, the bakery can lower monthly expenses and still make quality products while keeping profits steady.

Budgeting

The owner of a clothing store can improve business performance by creating a budget at the start of the year. This budget estimates how much money the store will earn from selling clothes and how much it will spend on things like buying stock, paying staff, rent and advertising. An example budget is shown in Table 7.9.6. Table 7.9.6 An example budget

Surfing and Snow Clothing Store Expected income

$200,000.00

Expenses

Inventory

$40,000.00

Staff wages

$100,000.00

Rent

$30,000.00

Marketing

$10,000.00

Other costs

$10,000.00

Total expenses

$190,000.00

Estimated profit

$10,000.00

Using financial records

A cafe keeps financial records such as sales receipts, bills and bank statements, and at the end of each month the owner reviews them to see how much money the cafe earned from selling coffee and food and how much it spent on ingredients, rent and wages, which helps show whether the cafe made a profit or a loss. From reviewing the records, the owner noticed that electricity costs were high and compared different electricity plans to reduce expenses. These financial records also help the owner prepare reports for the accountant and plan for taxes.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

405

406

Chapter 7 Running a business

Managing debts and loans

SA PA M P G L ES E

The owner of a small business selling homemade candles originally takes out two loans: a small bank loan with low interest to buy supplies and a credit card for extra funding, which has a much higher interest rate. Each month, the owner carefully tracks these debts using a repayment plan on their laptop and uses direct debit so no payments are missed and no late fees are added. The owner also pays any extra money towards the credit card loan first because its interest rate is higher, which saves money over time and ensures that the debt keeps shrinking rather than growing. After a year, the owner has paid off the expensive credit card loan and is left only with the lowinterest bank loan, which is easier to manage. By managing debts and loans wisely, making repayments on time, avoiding unnecessary new loans and paying off highinterest debts first, the owner reduces financial pressure and can use more money to grow the business.

Profit planning

➜

A local clothing store wants to increase its annual profit by 20%, so it sets a profit target and develops a plan to reach it. The store reviews its costs and decides to slightly increase the price of popular T-shirts that are in high demand. It also plans to sell products both in-store and online to reach more customers. To attract buyers during slower periods, the store uses seasonal promotions, such as offering discounts on shorts Figure 7.9.5 Small businesses should assess their costs and their opportunities in order and T-shirts in winter. The owner to profit plan. looks for ways to reduce waste by reviewing utility charges and turning off electrical appliances when they are not in use. The store also negotiates better deals with suppliers by buying T-shirts in bulk to reduce initial costs.

Using financial ratios

A milk bar owner measures the milk bar’s ability to pay short-term debts by checking the current ratio. If the ratio is below 1, it means the milk bar may struggle to pay its bills on time, so the owner may decide to improve cash-flow management.

Regularly reviewing performance A small retail clothing business conducts monthly financial reviews to track its performance. The store owner notices that sales are lower than expected while expenses stay the same. By reviewing this data, they identify that a recent marketing campaign was less effective than planned and that staffing costs were high due to over-scheduling. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.9 How do finances drive success?

407

The owner updates the marketing strategy to focus more on social media promotions and adjusts staff shifts to match peak shopping hours. They also monitor inventory turnover to avoid excess stock tying up cash. Through these regular reviews, the clothing store stays on track to meet its financial goals and can quickly address any issues to improve overall profitability.

Activity 7.9.2 Using the example provided about using financial records (or another small business example in this lesson), answer the following questions. Identify two financial problems the business is facing.

Explain how one financial management strategy (such as budgeting, cash flow management or cost control) could help address one of these problems.

SA PA M P G L ES E

Propose one action the business could take to improve its financial position next quarter and justify why it would help.

Assess why relying only on profit figures can be misleading when judging a business’s financial health.

Review 7.9

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

accounts receivable money that is owed to you

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify the four main types of financial information recorded in financial records.

Describe the purpose of financial records in a business.

Discuss how financial records assist a business owner in managing cash flow and improving profitability.

Identify the three main financial statements prepared from financial records and state their importance.

Summarise four financial management strategies businesses use to improve performance.

Discuss why a business can be profitable but still face cash flow problems.

Discuss the importance of regularly reviewing financial performance in a business.

Thinking, researching and communicating 1.

Evaluate how understanding both the income statement and cash flow statement helps a business owner make better financial decisions. Provide examples to support your answer.

Research and describe three financial ratio analyses commonly used by businesses to evaluate their financial performance. Include how each ratio is calculated and what it indicates about the business.

Read the following statement and explain what it means in your own words. “A business may show a profit on paper but have poor cash flow if money is tied up in accounts receivable or assets, or if it pays bills before receiving payments.”

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 7 Running a business

7.10

Site study: how does a real business operate?

Learning intention

Success criteria

In this lesson, you will attend a business site and explore how a real business operates.

❏ I can identify key business areas. ❏ I can describe how products are made, sold and delivered.

SA PA M P G L ES E

408

Exploring how a real business works

A site visit gives you the chance to see how a real business operates in the real world. Before you go, you will prepare like a business consultant so that you know what to look for and what questions to ask. To get ready, your class will complete an activity designed to help you think like a business owner.

Class brainstorm: if you ran the business you’ve chosen for a day, what would you need to make it successful? Choose one student to be the classroom writer. They will be recording everyone’s ideas on the board. Copy the table below on the board for the classroom writer to fill out. Marketing

Staffing

Operations

Finance

As a class, brainstorm what it takes to run the business successfully and place each suggestion under the appropriate heading. Here’s a guide to what should go under each column.

• Marketing: how does the business attract and communicate with customers? • •

•

(Examples include signs, social media or promotions.) Staffing: how many people work there, and what roles do they perform? How do they interact with each other and with customers? Operations: how does the business manage its day-to-day activities? What processes, tools or technology are used to make or sell products or services? Finance: how does the business handle money, pricing and costs?

This helps you understand what to look for during the site visit. You will observe how the business handles marketing, staffing, operations and finance, then compare what you think a business needs with what you see in action. Under each of the four categories, write down one question you want to find out the answer to during your visit. These questions will guide your observations and help you think like a business analyst. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.10 Site study: how does a real business operate?

Prepare for your visit You will have the opportunity to explore how a real business operates and to learn about marketing, staffing, operations and finance firsthand. This could be:

• a local corner shop • a business in a shopping centre • several small businesses so you can compare different approaches.

SA PA M P G L ES E

Before the visit, set up your workbook with a title page with your details, a page for your pre‑visit questions, separate pages to record your observations in each area, and a final reflection page for what the business does well, the challenges it faces and what you learned.

The site visit

➜

Figure 7.10.1 Be sure to pay close to attention to all aspects of Remember, the business is still how the business is run, including what the owner and other potential running and serving real customers, workers might be doing in-store. so it is important to always be respectful and professional. The following are some tips to keep in mind.

• Listen carefully: pay attention to instructions from staff and your teacher. • Ask questions politely: wait for an appropriate moment and use polite language. • Stay in your group: don’t wander off or distract staff. • Be mindful of customers: avoid blocking entrances or talking loudly near them. • Take notes quietly: use your workbook without disturbing the business. • Say thank you: always thank the staff for letting you visit. Following these guidelines will ensure that you get the most out of the visit while showing respect for the business and its employees.

If an in-person visit isn’t possible

You can still complete this activity by exploring businesses through:

• Google Maps and Street View • business websites and menus • virtual tours • online photos of shopfronts and interiors.

You can also observe businesses in your local area as a homework task. Take notes, sketch layouts and record answers to questions just as you would during a real site visit.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

409

Chapter 7 Running a business

Bringing it all together By the end of this activity, you should be able to:

• identify how real businesses manage marketing, staffing, operations and finance • compare different businesses and notice what they do differently • connect what you observe to the concepts you have learned in class. Your observations will help you build a deeper understanding of how small businesses work in real life and prepare you for the market day project.

Site study activity 7.10.1 Observing how a business operates

SA PA M P G L ES E

410

Following your site visit, use your observations to answer the following questions. Operations 1.

Describe the key processes you observed in how the business makes or sells its products or services.

Identify the equipment or technology the business uses.

Explain whether the business is in a good location and why.

Marketing 4.

Identify the main product or service offered.

Explain how the business sets its prices.

Describe how the business promotes its product or service.

Discuss what attracts customers to this business.

Explain how the branding helps the business appeal to its customers.

Staffing 9.

Identify the roles staff perform in the business.

10.

Describe how staff interact with each other and with customers.

Finance 11.

Explain how the business appears to manage its costs or keep track of money.

Reflection 12.

Describe one thing the business does well.

13.

Outline one challenge the business might face.

14.

Explain how the characteristics of a business owner are shown in this business.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.11 Investigation: how do you run a market stall?

7.11

411

Investigation: how do you run a market stall? Success criteria

In this lesson, you will learn how to start a business from scratch, gaining practical skills in marketing, staffing, operations and finance.

❏ I can explain key business areas. ❏ I can plan a simple business. ❏ I can show how a team can work together to run a business. ❏ I can outline simple cost, pricing and profit considerations.

SA PA M P G L ES E

Learning intention

Bring your business idea to life

After learning about how businesses operate, you are ready to create and run your own business as part of your school’s market day! This is a real-world project where you and your team will: 1. plan a product or service 2. organise your stall 3. manage money 4. promote your idea and work together to run your business successfully.

This project mirrors how a real small business operates. Your teacher will act as the legal, government and finance regulator, approving business names, checking licences (such as food safety requirements) and helping you keep your business compliant, just like in the real world. You will develop practical skills in:

• marketing (promotion, branding, target market) • staffing (roles, teamwork, communication) • operations (production, set-up, customer service) • finance (budgeting, pricing, profit, cash handling).

You will also build important work-ready capabilities, including collaboration, leadership, resilience and problem-solving. Your teacher will outline the timing for preparation, set-up, trading and reflection. You can download a project workbook from the Interactive Textbook to help guide your planning and record your decisions.

Market day project guide The following structure is provided to support you, but your team has freedom to be creative, innovative and entrepreneurial!

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

DOC

Download project workbook

Chapter 7 Running a business

Your challenge Your team will design and operate a small business stall for market day. Your aim is to offer a product or service that meets the needs of your school community, can be produced with a simple budget and is safe and appropriate for the event.

Run your own mini business Your team will:

• select a business idea • plan your marketing, staffing, • • • •

operations and finance prepare your stall trade during market day record your sales and costs reflect on your performance.

SA PA M P G L ES E

412

➜

Figure 7.11.1 School market day

Steps to help you succeed

1. Form your team and allocate roles

Decide who will be the marketing manager, finance manager, production manager or any other roles your business needs. Each role has responsibilities that contribute to the team’s success.

• Marketing manager: responsible for promoting the team’s products or services • •

by creating attractive posters, engaging customers and implementing strategies to draw visitors to the stall. Coordinates advertising efforts and ensures clear communication of key messages. Finance manager: manages the budgeting and financial aspects, including calculating costs, setting prices, tracking sales revenue, handling money during the market day, and preparing a simple profit and loss summary after the event. Production manager: oversees the preparation and quality of products or services. Ensures that all materials and supplies are ready and available on time. Coordinates the production process so the team can meet customer demand efficiently.

2. Generate and research ideas

Brainstorm possible products or services, research your target market and check what is achievable within your budget and skills.

3. Prepare your legal requirements Register your business name with your teacher (acting as ASIC) and check whether you need permission or licences, particularly if selling food.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.11 Investigation: how do you run a market stall?

4. Plan your budget and pricing Estimate costs for ingredients, materials or supplies. Set a selling price that covers costs and allows for profit. Create your financial plan using what you have learned.

5. Develop your marketing strategy Design posters, slogans or visual elements that attract customers. Work out where and how you will promote your stall.

6. Organise your stall set-up and operations

SA PA M P G L ES E

Decide how your stall will look, what equipment you need and how you will serve customers efficiently and safely.

7. Market day trading

Set up your stall, serve customers, handle money carefully and keep records of sales.

8. Reflect and review

After market day, complete your financial statements, compare your actual results with your budget, evaluate what worked well and identify how your team could improve.

What you will create

By the end of the project, your team will produce:

• a completed planning workbook covering your business idea, roles, research, • •

budgeting, marketing and legal requirements your market day stall, including set-up, operations and promotional materials sales records and simple financial statements.

Be sure to submit the following completed documentation to the regulator (your teacher):

• income statement • balance sheet • cash flow statement.

Market day reflection

You will also complete a short project reflection. This helps you evaluate your performance and understand how your business decisions affected your results.

Answer the following questions in a brief written report 1. What went well during the day? 2. What were the challenges you faced? 3. How did you solve the challenges? 4. What information would you pass on to next year’s class to help them run a successful stall?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

413

414

Chapter 7 Running a business

7.12

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about running a business? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Entrepreneurship

Financial terms and tools

Establishing a small business Ownership structures Franchises

Financing small businesses

Taxes and employment laws Marketing

Financial record-keeping

Visible thinking routine Compass points

This exercise in visible thinking asks you to think deeply about the ideas introduced to you in this chapter and evaluate them. First, write down your responses to the following prompts. 1.

2. 3. 4.

What excites you about starting your own business? What do you find worrisome about starting your own business? What else do you need to know to help you start your own business? What is your stance about starting a business in Australia? Do you think you will one day wish to become an entrepreneur?

Now, discuss your responses with the rest of the class. Did the discussion change what you think?

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

7.12 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Define entrepreneurship.

Identify examples of an asset and a liability for a small cafe.

List two characteristics of a small business.

Describe the purpose of market research before starting a business.

Summarise why knowing financial terms helps with decision-making.

Describe what a sole trader is.

Identify an advantage and a disadvantage of buying an existing business.

Outline why a franchise may be a lower risk option for new business owners.

List two factors that influence the choice of a business location.

10.

Describe two considerations when using personal savings to finance a business.

11.

Identify what an ABN is and why a business needs it.

12.

List the 4 Ps of the marketing mix.

SA PA M P G L ES E

➜

Figure 7.12.1 From left, Cliff Obrecht, Melanie Perkins and Cameron Adams of Canva Inc. in 2024. These Aussie founders started their business in Perkins mother’s living room in Perth.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

415

416

Chapter 7 Running a business

DOC

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Download single paragraph model

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Assess how important market research is before starting a small business. Model answer: Market research is extremely important before starting a small business because it reduces risk and helps owners make informed decisions. It involves gathering information about customers, competitors and market trends so owners know what products people want and how much they are willing to pay. Without this information, owners may rely on assumptions, increasing the chance of choosing the wrong location, pricing or product mix. This is evident when businesses use research findings to estimate demand, compare competitor offerings and determine whether their idea is financially viable. For example, someone planning to open a cafe who researches the area may learn there is already strong competition and instead adjust their menu or target market. Market research is a crucial step in starting a small business because it guides decision-making, reduces financial risk, and increases the likelihood of long-term success.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Linking sentence: reconnects to the topic sentence using the language of the question

Explain: clarify, define and describe Evidence: specific, relevant evidence to support arguments

Examples: provide credibility and illustrate the argument

Structured-response questions 1.

Explain the key characteristics of a small business and discuss the importance of conducting market research and feasibility studies before starting one.

Describe the different options available when starting a small business and evaluate the advantages and risks associated with each option.

Discuss how choosing the right business structure and location can impact the success of a small business.

Identify the main legal requirements a small business must comply with. Explain the significance of maintaining accurate financial records and applying suitable marketing strategies to ensure business sustainability and growth.

Extended-response question 1.

Analyse the key factors a small business owner must consider when starting and running a successful business. In your analysis, include factors such as market research, business structure, location, funding, legal compliance, staffing, marketing and financial management.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter

Promoting and selling

Lessons Setting the scene: how did a free game make billions?

8.2

Why do businesses promote their goods and services?

8.3

How do businesses differentiate their goods and services?

8.4

Who do businesses target when promoting and selling their goods and services?

8.5

Case study: how does Netflix differentiate its service and target different market segments?

8.6

What techniques do businesses use to promote their goods and services?

8.7

Case study: how has Nike used promotional techniques to build and maintain a global brand?

8.8

Why aren’t all promotional techniques appropriate for every business?

8.9

What are the advantages and disadvantages of different promotional techniques?

SA PA M P G L ES E

8.1

8.10 Skills focus: how to evaluate the effectiveness of promotional techniques 8.11 What legal and ethical issues may arise when promoting goods and services? 8.12 What laws relate to promoting goods and services to children and young people? 8.13 What role do advertising codes and standards play in regulating advertising? 8.14 Investigation: current issues in promoting and selling 8.15 Chapter review

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

418

Chapter 8 Promoting and selling

8.1

Setting the scene: how did a free game make billions?

Learning intention

Success criteria

In this lesson, you will learn about the importance of promotion for business success.

❏ I can describe how promotion contributes to business success.

SA PA M P G L ES E

Fortnite changes gaming forever

The global video game market generated more than $180 billion in sales in 2025. Many new games, however, still end up losing money due to strong competition and high development costs.

➜

Video 8.1.1 Setting the scene: promoting and selling

In 2017, Epic Games launched Fortnite, a new game that users could download for free. Instead of relying on traditional advertising, Epic Games appealed to younger players by hosting in-game events with popular brands and celebrities and encouraging players to livestream their gameplay. Fortnite has gone on to become one of the most popular games of all time. To understand how products like Fortnite use promotion to succeed in competitive markets, we need to learn about promoting and selling.

Writing focus 8.1 Question words competition the level of rivalry from other businesses offering similar products

brand the identity and reputation of a business or product in the minds of consumers

product a good or service, or combination of both promotion activities that influence consumers’ awareness, interest and purchase decisions

➜

Figure 8.1.1 Fortnite is now one of the most popular games for young people.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.1 Setting the scene: how did a free game make billions?

Promotion is everywhere You are surrounded by promotion every day. The products you recognise are often not the best or cheapest options, but the ones that have been promoted most effectively. Can you name your favourite fast-food restaurant, sneaker brand or musician? For most people, names and logos immediately spring to mind.

Learning goals As you work through this chapter, you will be able to answer questions like:

SA PA M P G L ES E

• How do businesses use promotion to stand apart from the competition? • What promotional techniques do businesses use? • When does promotion go too far?

By the end of this chapter, you should be able to look at any promotional campaign, and be able to discuss who it is for, what techniques are being used, why they are appropriate and whether they are likely to influence consumers.

➜

Figure 8.1.2 Young consumers at a trade convention

Activity 8.1.1 See, think, wonder 1.

Look at the image in Figure 8.1.2. a. What logos or brands can you see? b. Why do you think a video game would want to partner with a popular brand? c. Why would a global brand want to be featured inside a video game? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

419

420

Chapter 8 Promoting and selling

8.2

Why do businesses promote their goods and services?

Learning intention

Success criteria

In this lesson, you will learn about why businesses promote their goods and services.

❏ I can explain the main reasons why businesses promote their goods and services.

SA PA M P G L ES E

Starter activity

Look at the images shown in Figure 8.2.1.

a. What do you notice in each image? b. What do you think each business is trying to achieve? c. Based on these examples, why do you think businesses promote their goods and services?

Write down a few points answering each question, share your ideas with a partner, and then discuss your main ideas with the class.

➜

Figure 8.2.1 Different ways businesses promote goods and services

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.2 Why do businesses promote their goods and services?

421

What is promotion anyway? Thousands of promotions are constantly competing for your attention. In this noisy environment, it’s easy for a business or its products to be drowned out. Businesses use promotion to gain attention, and to influence what consumers think and how they behave. This can help businesses to create awareness of their products, influence consumer preferences and ultimately increase sales.

SA PA M P G L ES E

In this lesson, you will learn about why businesses promote their goods and services at different stages of the consumer journey, which can be illustrated using the AIDAR model. This is a marketing framework that can be used to identify the promotional goal at different stages of the consumer journey: awareness, interest, desire, action, and retention. Awareness You know it exists

Interest You understand what it can do

Desire You want it

Action You use it

Retention You use it repeatedly

➜

Figure 8.2.2 AIDAR model representing the typical stages of a consumer journey

Why do businesses use promotion? Create awareness

The initial goal of promotion is to create awareness. Consumers can’t buy a product if they don’t know it exists. For example, before a new movie is released, trailers are typically used to ensure that people recognise the name of the movie.

Build interest

Promotion may aim to build interest by providing information about features and benefits. At this stage, consumers often ask questions, such as:

• What does the product do? • How is it different from other options? • Is it relevant to me?

For example, a mobile phone company may run social media ads highlighting the advanced features of its new smartphone, shown in Table 8.2.1.

Table 8.2.1 Features and benefits of a new smartphone Feature

Benefit

High-resolution camera

Clearer photos

Large battery

Less need to recharge during the day

Large screen

Easier to watch videos

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 8.2 Transitional phrases consumer an individual who uses a good or service goods and services goods are tangible items (like cars, food or electronics) that are produced, sold and owned, while services are intangible activities or skills (like haircuts, banking or healthcare) provided by one party to another consumer journey the stages an individual moves through from first becoming aware of a product to using it

422

Chapter 8 Promoting and selling

Foster desire Consumers may know about a product but still not want to buy it. Promotion may aim to foster desire by appealing to people’s emotions, desires or aspirations. For example, a sportswear company may sponsor successful athletes at major sporting events, linking its product with the idea of high performance.

SA PA M P G L ES E

Encourage action Promotion may aim to encourage consumers to take action, such as purchasing the product, subscribing to a newsletter or downloading an app. For example, a media company may offer a free e-book to anyone who subscribes to its newsletter.

➜

Figure 8.2.3 Carlos Alcaraz is sponsored by Nike for shoes and apparel, so you’ll always see him wearing their clothes and logo when he’s playing tennis.

Retain customers and build loyalty

customer an individual who purchases a good or service

Beyond the point of sale, promotion aims to retain existing customers and increase customer loyalty. This is important since retaining existing customers is often cheaper than attracting new ones. For example, a cafe may hand out loyalty cards that offer every tenth coffee for free.

Review 8.2 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Write a definition for promotion based on what you have learned. Summarise the stages consumers move through in the consumer journey, using the AIDAR model. Explain why promotion is important for businesses.

Thinking, researching and communicating 1.

Discuss the advantages and disadvantages of using promotion in highly competitive markets. Investigate a recent promotional campaign for a product you know well. Identify the main promotional goal. Justify your choice by providing at least two pieces of evidence from the campaign, such as specific visuals or language. Create a diagram that describes the promotional goal at each stage of the consumer journey. Include a real-world example of a promotion for each goal. Include images and concise descriptions.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.3 How do businesses differentiate their goods and services?

8.3

423

How do businesses differentiate their goods and services? Success criteria

In this lesson, you will learn how businesses differentiate their goods and services.

❏ I can define differentiation. ❏ I can describe ways that businesses differentiate their goods and services.

SA PA M P G L ES E

Learning intention

Starter activity 1.

For each pair of products in Figure 8.3.1, identify:

a. which one you would choose b. why you chose it.

Discuss your ideas with a partner, and then with the class.

➜

Figure 8.3.1 Products that perform the same function but differ in important ways

Walk into your local supermarket and you will see thousands of products for sale. Many of these products have similar features and quality. For consumers, this can make it difficult to choose between products. They may rely heavily on price when making a purchase decision. For businesses, this creates a challenge. They may need to lower their prices, leading to reduced profits. To overcome this problem, a business can differentiate its products to offer more value to consumers. Differentiation makes a product stand out to consumers, which influences them to consider, prefer and choose that product over competing products. This may allow a business to charge higher prices or increase sales. Businesses can differentiate their goods and services in multiple ways, including through branding, quality, features and benefits, customer service and availability. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 8.3 Transitional phrases quality the standard of a product, reflected in things like its durability, reliability and performance differentiate to make a good or service appear different from competitors’ products in ways that are valued by consumers features characteristics of a good or service, such as what it has or what it can do benefits advantages that a good or service provides to consumers customer service the support a business provides to consumers before, during and after a purchase decision availability how easily consumers can access a good or service, including where, when and how it is purchased

424

Chapter 8 Promoting and selling

Brand recognition

• Products with strong brand recognition are easily identified by consumers and may be perceived as having distinct attributes. Businesses can build brand recognition by using unique logos, packaging and advertising. • For example, a well-known computer company may be recognised for innovation and user-friendly design.

Features and benefits

• Unique features and benefits can better satisfy consumers. • For example, a car manufacturer may include safety features such as automatic braking, which benefits customers by reducing the risk of accidents and fatalities.

➜

Video 8.3.1 Good for the planet, good for business

➜

SA PA M P G L ES E

Quality

• Higher-quality products are often more durable, reliable or high-performing. Quality reduces risk for consumers, making them more willing to buy a product. • For example, a clothing company may use durable leather and skilled craftsmanship to produce shoes that last for many years.

Customer service

• Customer service supports consumers before, during and after a purchase. Businesses may differentiate themselves by offering faster, more helpful, more friendly or more reliable service. • For example, a fine-dining restaurant may provide personalised service by remembering customers’ preferences and responding quickly to special requests.

Availability

• Products that are easier for consumers to buy are more likely to be purchased. Convenience may be increased by making the product available in more locations, extending trading hours or providing more flexible payment options. • For example, a beverage manufacturer may ensure that its drinks are widely available in supermarkets, convenience stores, cafes, pubs and vending machines, making them easy to purchase at any time of day.

Figure 8.3.2 The main ways businesses differentiate their goods and services

Review 8.3 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Define differentiation. Describe the main ways businesses differentiate their goods and services. Outline two ways customer service could be used as a form of differentiation. Explain how strong brand recognition can allow a business to charge higher prices or increase sales.

Thinking, researching and communicating 1. 2.

Discuss the advantages and disadvantages of using quality as a form of differentiation. Investigate a good or service that you regularly use. a. Identify the good or service. b. Identify two ways the good or service is different from competitors’ products. c. Explain how you value the points of differentiation you identified in part b. Create a poster or infographic designed for young entrepreneurs that describes the five main ways businesses differentiate goods and services. Include one illustrative real-world example for each method. Use images and short written descriptions.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.4 Who do businesses target when promoting and selling their goods and services?

8.4

425

Who do businesses target when promoting and selling their goods and services? Success criteria

In this lesson, you will learn about who businesses target when promoting and selling their goods and services.

❏ I can describe a market segment using demographic, geographic, psychographic and behavioural characteristics. ❏ I can describe relevant target markets for particular goods and services.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Look at each image in Figure 8.4.1. What product is being shown?

Who do you think the product is for? Be specific. What features, design choices or branding make you think that? Discuss your ideas with a partner, and then with the class.

➜

Figure 8.4.1 Products designed to appeal to different groups of consumers

Imagine a world without targeting

Imagine a car manufacturer designing a car and trying to make it appeal to everyone: young drivers, families and business professionals.

What would happen?

• Product development would become confused. Young drivers may prefer • •

excitement, while families want safety and business professionals desire comfort. Trying to please all groups risks not satisfying any of them. Promoting the car would be expensive. The business would need to advertise using multiple media channels using different promotional messages. Consumers would be confused. They’ll wonder whether the product is for them and may decide not to buy.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 8.4 Developing sentences

426

Chapter 8 Promoting and selling

What would happen if the business identified a target market?

• The car manufacturer would save time and money because it knows who to • •

prioritise when promoting and selling the car. It can design products that satisfy the needs of a specific group of consumers. It can create promotional messages that appeal to and are likely to reach that group.

Segmenting the market Before a business can select a target market, it must first divide the whole market into segments. Businesses sometimes use the same promotional message for the whole market, an approach referred to as mass-marketing. This may be used to promote a broad product category, such as bread, milk or eggs.

SA PA M P G L ES E

target market the market segments that a business focuses on when promoting and selling its goods and services segment a specific group of consumers with similar characteristics

massmarketing promotion to the whole market using a single promotional message

However, businesses more often divide the market into segments, which are smaller groups of consumers who share similar characteristics. These characteristics can be organised into the four categories shown in Table 8.4.1. Table 8.4.1 Categories for market segmentation Demographic

Geographic

Psychographic

Behavioural

Who consumers are

Where consumers are

What consumers think How consumers act

Age

Country

Values

Product usage

Gender

State

Culture

Benefits sought

Income

Region

Lifestyle

Customer loyalty

Religion

City

Interests

Online behaviour

Occupation

Suburb

Attitudes

Special occasions

Education level

Climate

Personality

Readiness to buy

Family structure

Urban or rural

Social status

Purchasing frequency

Activity 8.4.1

Check your understanding: market segmentation 1.

Thinking about yourself, identify two of your demographic characteristics.

Identify two psychographic characteristics of a young person who enjoys surfing. Explain why businesses segment markets before selecting a target market.

Segmenting the market helps businesses to understand the needs and wants of consumers in each segment and to select a target market. For example, a streaming service may segment the market by age, recognising that younger and older viewers have different viewing preferences.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

427

8.4 Who do businesses target when promoting and selling their goods and services?

Identifying a target market After segmenting the market, businesses must select one or more segments to target when promoting and selling their goods and services. In the example shown in Figure 8.4.2, a sportswear company may target young active women in urban areas who are interested in yoga, rather than trying to appeal to everyone. Market segments

Whole market Young active women

Young male athletes

Primary target market: Young active women

Families and parents

Secondary target market: Casual fitness and lifestyle buyers

➜

SA PA M P G L ES E

Casual fitness and lifestyle buyers

Identifying target markets Young male athletes

Families and parents

Figure 8.4.2 Divide the market into segments, and then select target markets.

When deciding whether to include a market segment in the target market, businesses consider:

• the number of consumers in the segment • the needs and wants of consumers • how much consumers are willing and able •

to spend the number of competitors that already target that segment.

Targeted product design

Figure 8.4.3 A KFC restaurant with a drive-through, targeting busy workers and commuters ➜

Businesses often design different product offerings for different target markets. A product offering is the combination of products, services and experiences that a business creates to meet the needs of a particular group of consumers. An example of this is shown in Table 8.4.2. Table 8.4.2 Target markets of various KFC product offerings Product offering

Target market

Kids meals

Children under 10 years old

Everyday value

Price-conscious consumers, such as teenagers and students

Shared meals

Families or shared households

Delivery

Convenience-focused consumers, such as young professionals

Catering

Schools, sporting teams and workplaces

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

428

Chapter 8 Promoting and selling

Targeted product promotion When promoting and selling a particular good or service, some businesses focus on more than one target market.

• The primary target market is the

SA PA M P G L ES E

•

group of consumers the business prioritises when promoting and selling its products. The secondary target market includes additional groups who are also likely to buy the product or influence the purchase decision.

➜

Figure 8.4.4 A toy company will likely run their ads on TV during a time when both the primary and secondary market are watching.

By using different promotional messages for the primary and secondary target market, businesses can appeal to the secondary market without diluting their main promotional message. For example, a toy company may primarily target children with a fun message, while also communicating to parents that the toy is affordable, safe and educational. If the toy company fails to appeal to both groups, the toy is unlikely to sell.

Review 8.4 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2.

Define market segmentation. Identify two demographic and two psychographic characteristics that may be used to segment a market. Copy and complete the following table in your workbook. Briefly describe your own characteristics and identify two or more products that may be marketed to you based on each characteristic.

Form of segmentation

Who are you?

Products marketed to you

Age

Gender Income Location Lifestyle Family structure 4. 5.

Distinguish between a primary and a secondary target market. Explain why different products offered by the same business may target different market segments.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.4 Who do businesses target when promoting and selling their goods and services?

429

Thinking, researching and communicating 1.

Discuss the advantages and disadvantages of targeting a smaller market segment rather than the whole market. Investigate a recent promotional campaign for fast food, a sporting event or a video game. a. Identify the product offering. b. Describe the target market, referring to demographic and psychographic characteristics. c. Explain how the promotional message appeals to the target market, referring to visuals and language used. You have been asked to advise a local department store. For each market segment described below, create one professional presentation slide, which should:

• identify two specific products that could be targeted at this segment and include an image of each

SA PA M P G L ES E

product • briefly explain how features of each product appeal to the market segment, referring to characteristics in the table • include headings, images and concise dot points.

Market segment

Characteristics

Urban teens

• Aged 13 to 19, limited personal income • Live in urban or suburban areas • Value self-expression and peer approval • Influenced by celebrities and online personalities • Aged 21 to 35, moderate disposable income • Live in the inner city • Value convenience and quality • Regularly use online shopping and food delivery • Aged 30 to 50, children living at home • Live in suburban or regional areas • Value affordability and reliability • Influenced by family deals and loyalty programs

Young professionals

Parents with children

You are the marketing director at a fast-growing startup. The chief executive officer (CEO) has asked you to recommend a target market for a new product. Choose one product below.

Product

Description

Headphones

Wireless, sleek design, high sound quality, smart noise cancelling features, designed for use while commuting, studying or working

Meal-kit subscription

Home-delivered, designed to support nutrition, carefully portioned, quick to prepare, subscription includes access to online recipes

Write a short email (80 to 120 words) to the CEO in which you:

• identify a primary target market for the product • describe characteristics of the target market, using demographic, geographic, psychographic and behavioural characteristics • justify why this group is most likely to buy the product, referring to specific product features.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 8 Promoting and selling

8.5

Case study: how does Netﬂix differentiate its service and target different market segments?

Learning intention

Success criteria

In this lesson, you will learn about how a real-world business differentiates its product offering and segments the market.

❏ I can describe how Netflix differentiates its service and segments the market.

SA PA M P G L ES E

430

Starter activity

In 2000, Netflix offered to sell its business to Blockbuster, which was then the world’s largest video rental chain, for a mere $50 million. Blockbuster said no. Today, Blockbuster has largely disappeared and Netflix is worth hundreds of billions of dollars. 1.

Why do you think Blockbuster failed to see Netflix as a serious competitor?

Discuss your ideas with a partner, and then with the class.

How Netflix became a streaming giant Figure 8.5.1 highlights major turning points in Netflix’s development into one of the biggest entertainment companies in the world.

What does Netflix offer?

1997 Netflix launched as a DVD rental service that delivered to consumers by mail

2000 Suffering large losses during the dot-com crash, Netflix tried to sell itself to Blockbuster for $50 million but was turned down

➜

Netflix sells a subscription service to an online 2008 platform that allows consumers to access movies New technology enabled the streaming of movies and shows; Netflix starts to grow? and shows. It offers a wide range of content across many genres, countries and regions. A key 2010 part of its product offering is Netflix Originals, which Blockbuster filed for bankruptcy involves creating and distributing exclusive professionally produced content that is not available 2026 on other streaming services. This gives consumers a Netflix is a global entertainment company reason to choose Netflix, which helps to attract new operating in more than 190 countries subscribers and encourage existing users to remain subscribed. At the same time, owning its original Figure 8.5.1 Timeline showing Netflix’s evolution content reduces Netflix’s reliance on content owned by other companies. This lowers the royalty payments Netflix needs to make and reduces the risk of losing access to quality content if licence agreements expire or are cancelled. Since Netflix has a global user base, it can also add subtitles and dub original content from one region and distribute it worldwide.

Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.5 Case study: how does Netflix differentiate its service and target different market segments?

431

Who is Netflix for? Netflix is popular among teenagers and adults in countries with reliable internet access who regularly stream entertainment content and prefer the convenience of on-demand, personalised viewing. Netflix is also popular with children, who are able to access ageappropriate content through kids profiles, and with families who save money by sharing a single account with multiple user profiles.

What sets Netflix apart?

SA PA M P G L ES E

Netflix organises content and offers personalised recommendations based on a user’s age, location and viewing history to make the service more relevant and engaging, improving customer satisfaction. As a digital service, Netflix is available on demand and on a wide range of devices. This allows users to watch content at home or while travelling at any time of day. Being able to start, stop and resume content across different devices makes it easy for users to pick up where they left off. This makes Netflix more convenient than traditional television, which requires viewers to watch programs at set times. Netflix was an early leader in online streaming, which helped it build strong brand recognition. However, it’s now going up against streaming services like Disney+, Amazon Prime Video, HBO Max, Stan, Binge and Apple TV. The increasingly competitive market gives viewers more choice, and many households subscribe to more than one service. Since switching services is easy to do, Netflix cannot rely on brand recognition alone and must find other ways to differentiate its service to appeal to viewers.

Case study activity 8.5.1 1.

2. 3.

Identify two businesses that Netflix competes with in Australia. Outline the service that Netflix offers consumers. Outline three ways that Netflix differentiates its service from the competition. Describe Netflix’s target market. Refer to demographic, geographic, psychographic and behavioural characteristics. Evaluate how effectively Netflix uses differentiation to stand apart from the competition. Investigate one Netflix Originals movie or show released in recent years. Create a written response (100 to 150 words) to describe the likely target market for this content and explain how this content helps Netflix differentiate itself from other streaming services. Create a short promotional pitch for a new Netflix Originals series that you will share with Netflix executives (100 to 150 words). Your pitch should include the following.

• A hook: grab the Netflix executives’ attention. You could appeal to their emotions,

share a surprising fact or highlight a gap in the market, among other options. • The series overview: briefly describe the series and its intended target market, referring to at least two market segmentation characteristics. • The unique selling points: explain how the series is different from content offered by competing streaming services. • A call to action: propose a course of action, such as requesting that the Netflix executives greenlight a pilot episode. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

brand recognition how easily people can identify a brand when they see it

432

Chapter 8 Promoting and selling

8.6

What techniques do businesses use to promote their goods and services? Success criteria

In this lesson, you will learn about promotional techniques used by businesses to promote their goods and services.

❏ I can identify a range of promotional techniques. ❏ I can describe their main features.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Look at the image in Figure 8.6.1 and answer the following questions in your workbook. a. What type of product is shown? b. Who might buy the product? What might they use it for? c. Imagine that you own a business that sells this product. List as many ways as possible that your business could promote this product.

Discuss your ideas with a partner, and then with the class.

➜

Figure 8.6.1 A commonly used everyday product

Advertising

Writing focus 8.6 Appositives

Advertising is a paid, non-personal promotional message. It allows businesses to control the content, timing and placement of the message. It can be delivered through mass media channels or delivered direct to individual consumers. Advertising may use traditional media such as television, radio, newspapers, magazines and billboards, or digital media such as email, social media, pay-per-click search ads and online banner ads.

Hunger marketing Hunger marketing is a marketing strategy that emphasises scarcity and exclusivity to increase a product’s perceived value and to create a sense of urgency. Consumers may experience fear of missing out and feel pressure to act quickly. For example, Nike frequently releases limited-edition sneakers and uses advertising to highlight their limited availability.

8.6 What techniques do businesses use to promote their goods and services?

433

Brand partnerships Brand partnerships occur when two or more brands collaborate for mutual benefit. Some ways that a business might choose to do this are shown in Figure 8.6.2.

Sponsorships

• Sponsorship involves a business supporting an organisation, event, team or venue over time in exchange for brand exposure. It allows businesses to build brand recognition and reach specific target markets. • For example, a major hotel chain may sponsor a prominent sports ground, gaining exposure through signage, tickets and televised events.

SA PA M P G L ES E

Endorsements

• An endorsement occurs when an individual recommends a good or service. It allows businesses to build brand recognition quickly by associating with an influential public figure, such as an expert, celebrity or social media influencer. • Endorsements may be paid or organic, such as genuine product reviews.

Strategic brand partnerships

• A strategic brand partnership is a long-term collaboration where brands work together to create shared products, experiences or promotional campaigns. This allows businesses to share resources, combine audiences, and increase brand recognition and sales. • For example, LEGO partnered with Fortnite to create branded in-game experiences and physical products.

➜

Figure 8.6.2 Three different ways a brand may choose to partner with another brand for mutual gain

Content marketing

Content marketing involves creating and sharing informative or entertaining content to engage consumers and build long-term relationships. Rather than directly promoting products, businesses use content marketing to attract and retain audiences, with income generated indirectly through advertising, sponsorship or product endorsements. Examples include blogs, newsletters and podcasts. For example, a fitness company may run a YouTube channel where it shares workout routines, healthy eating tips and videos from famous athletes.

Viral marketing

Viral marketing is a marketing strategy that relies on individuals voluntarily sharing content, normally via social media. This can allow content to rapidly reach many people at low cost. To “go viral”, content must be entertaining or emotionally appealing. For example, the ALS Ice Bucket Challenge was a marketing campaign that went viral when it began in 2014. It raises awareness and millions of dollars in donations for research into Lou Gehrig's disease.

Personal selling Personal selling involves direct interaction between a business and potential customers to share information and encourage purchases. It allows the promotional message to be tailored to the specific needs of each individual consumer and is commonly used for expensive or complex products such as cars or real estate. For example, a car salesperson may explain vehicle features or offer test drives based on the needs of each customer. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

sponsorship when a business supports an organisation, event, team or venue in exchange for brand exposure endorsement when an individual publicly recommends a good or service

Chapter 8 Promoting and selling

Publicity Publicity occurs when a business receives unpaid public attention, often through traditional media channels or via social media. Businesses may attract publicity by doing something newsworthy, such as hosting a product launch, staging a stunt or supporting an environmental cause. Publicity may appear more credible than advertising, but businesses have limited control over the message. For example, a high-profile entrepreneur may attempt a record-breaking hot-air balloon flight over the Atlantic Ocean to attract global media attention.

Guerilla marketing Guerilla marketing is a marketing strategy that uses unexpected, creative and lowcost activities to attract attention and generate publicity. For example, in 1996 Richard Branson, the billionaire founder of Virgin Group, shaved his beard and wore a wedding dress to promote Virgin Brides, generating widespread media coverage without paying for traditional advertising.

SA PA M P G L ES E

434

➜ Figure 8.6.3 A public stunt staged by Richard Branson to promote his new wedding dress business

Public relations

Public relations involves planned communication used to build, maintain or repair relationships with stakeholders, such as customers, employees, the government and the general public. It focuses on managing reputation and building trust rather than generating immediate sales. For example, a cruise line may hold press conferences and issue public statements following a major accident.

Relationship marketing Relationship marketing focuses on building long-term relationships with customers to encourage loyalty and repeat purchases. This may involve using loyalty programs, personalised recommendations or after-sales service. For example, a major supermarket may operate a rewards program that allows customers to earn points redeemable for discounts. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.6 What techniques do businesses use to promote their goods and services?

435

Sales promotion Sales promotion involves offering short-term incentives to encourage immediate purchases. It is used to boost sales or clear excess stock. Examples include sales, discounts, coupons, buy-one-get-one-free offers, free samples, free trials, and competitions and giveaways. For example, a large retailer may offer significant discounts during post-Christmas sales.

SA PA M P G L ES E

Product placement

➜

Figure 8.6.4 Sales promotion is one way a business can try to Product placement involves subtly including a increase sales. product or brand within entertainment content such as movies, shows, video games, podcasts or music videos. It exposes consumers to products in desirable contexts, increasing brand recognition. For example, a longrunning action film may feature the main character driving a sports car and wearing a luxury watch.

Review 8.6

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Define advertising. Compare personal selling and sales promotion. Distinguish between publicity and public relations. Explain why personal selling is commonly used for expensive or complex products.

Thinking, researching and communicating 1.

Discuss the advantages and disadvantages of sales promotion. Investigate a business that sells a well-known brand of ice-cream, sneakers or clothing. a. Identify the business and product being promoted. b. Outline two promotional techniques that the business uses, referring to a recent example of each. c. Describe the likely target market, referring to demographic and psychographic characteristics suggested by the promotional material. d. Explain why each promotional technique is likely to appeal to the target market, referring to specific visual or language choices in each promotion. Create a poster, infographic or slide presentation that shows how different promotional techniques are used to achieve different promotional goals. It should do the following:

• describe at least three promotional techniques • identify the main promotional goal for each technique (for example, brand awareness or increasing sales) • briefly explain how each technique achieves its goal • include images, headings and concise dot points.

Chapter 8 Promoting and selling

8.7

Case study: how has Nike used promotional techniques to build and maintain a global brand?

Learning intention

Success criteria

In this lesson, you will learn about the main promotional techniques Nike has used to build and maintain a strong global brand.

❏ I can describe promotional techniques used by Nike.

SA PA M P G L ES E

436

Starter activity 1.

Look at the image in Figure 8.7.1.

a. What do you notice about the image? b. What is Nike selling in this advertisement? c. Which values does Nike emphasise most in this advertisement? d. Can you think of an athlete that fits one of these values?

Discuss your ideas with a partner, and then with the class.

➜

Figure 8.7.1 A Nike advertisement

8.7 Case study: how has Nike used promotional techniques to build and maintain a global brand?

How Nike became Nike Figure 8.7.2 outlines key moments in Nike’s early history and shows how the company evolved from a small distributor into a global sports brand. 1964 Launched by Phil Knight and Bill Bowerman, Nike was originally called Blue Ribbon Sports (BRS) and acted as the exclusive US distributor of running shoes made by Onitsuka Tiger, a Japanese shoe manufacturer. Late 1960s Slow shipments from Japan and disputes over distribution rights strained the relationship with Onitsuka.

SA PA M P G L ES E

Early 1971 Tensions reached breaking point when Onitsuka issued an ultimatum, sell Onitsuka 51% of BRS or it would distribute its shoes with other US companies. BRS faced a pivotal choice: lose control of the business or lose access to the product that generated all of its sales. May 1971

Knight and Bowerman rejected the ultimatum and launched their own running shoes under a new brand, Nike, named after the Greek goddess of victory. The Nike Swoosh logo was designed to suggest movement and speed. At the time, the new brand was entirely unknown, and so promotion became essential. Today

Nike has become a world-leading sports brand using a range of promotional techniques.

➜

Figure 8.7.2 Timeline showing Nike’s development from Blue Ribbon Sports in 1964 to a world-leading brand today

➜

Figure 8.7.3 Basketballs featuring the Nike Swoosh displayed at a US college basketball game

437

Chapter 8 Promoting and selling

Advertising core values

Failure (1997) Challenged conventional thinking by reframing failure as a necessary step on the path to success Find Your Greatness (2012) Shifted the focus away from elite athletes, emphasising everyday personal achievement

Figure 8.7.4 Examples of Nike campaigns that use different messages to inspire action, reframe failure and highlight everyday achievement ➜

Nike’s advertising campaigns rarely focus on product features or price. Instead, they build emotional connection with consumers and promote wellknown athletes who personify Nike’s core values. This approach has been evident in several iconic ad campaigns, highlighted in Figure 8.7.4.

Just Do It (1988) Encouraged people to have a positive mindset and to take action

SA PA M P G L ES E

438

➜

Figure 8.7.5 Nike advertisement portraying a woman thriving and being happy while active

Endorsing future legends

Nike uses well-known athletes to endorse its products. The most powerful example was Nike’s decision in 1984 to sign Michael Jordan, a talented but largely unproven player entering the NBA. Rather than choosing an established superstar, Nike identified Jordan’s potential and took a calculated risk by building a signature shoe line for him. As Jordan’s success grew, Nike’s advertising encouraged consumers to associate the Nike brand with Jordan’s success. This partnership shows how a carefully chosen endorsement, supported by clever advertising, can transform an athlete and a product into a global brand. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.7 Case study: how has Nike used promotional techniques to build and maintain a global brand?

Sponsoring major leagues

SA PA M P G L ES E

Nike uses long-term sponsorship agreements with major sports leagues to build brand awareness over time. This provides ongoing visibility with consumers that is difficult for rival sportswear companies to replicate. For example, as the official uniform supplier to the NBA, Nike products are worn by all teams and players during games and broadcasts. This became important in the post-COVID-19 period when Nike experienced a dip in sales growth.

➜

Figure 8.7.6 Nike-branded shoes and socks worn by a player during an NBA game

Choosing impactful product placements

Nike has used product placement sparingly, benefiting from a small number of high-profile films where the brand became part of the story itself. One iconic example appeared in Back to the Future, where Marty McFly wore futuristic self-lacing Nike shoes. Another appeared in Forrest Gump, when Forrest received a pair of Nike Cortez shoes for his longdistance running journey.

Courting meaningful publicity

Figure 8.7.7 A scene from Forrest Gump showing the Nike Cortez shoes ➜

Nike has at times courted public attention. A clear example occurred in 2018 with the Dream Crazy advertising campaign featuring Colin Kaepernick. Kaepernick had become a controversial public figure after refusing to stand during the US national anthem at NFL games to draw attention to social issues that he believed in.

439

Chapter 8 Promoting and selling

His actions triggered strong support as well as criticism. The campaign centred on the message, “Believe in something. Even if it means sacrificing everything.” As a result, it became a major news story, receiving extensive free coverage in the media.

➜

SA PA M P G L ES E

440

Figure 8.7.8 Colin Kaepernick featured in Nike’s Dream Crazy advertisement.

Using public relations

Nike uses public relations to manage and protect its brand reputation. During the 1990s, Nike faced criticism over labour conditions in overseas factories, which threatened both short-term sales and long-term trust in the brand. Nike responded by acknowledging past failures, participating in labour-rights initiatives, and committing publicly to improve working conditions. This signalled accountability and helped to restore trust.

NIKE, INC. STATEMENT ON MODERN SLAVERY AND CHILD LABOR FOR FISCAL YEAR 2025 NIKE supports human rights as defined by the Universal Declaration of Human Rights, which recognizes that “all human beings are born free and equal in dignity and rights.” We work to elevate human potential through our products, partnerships and operations, something that cannot be accomplished without a fundamental respect for human rights … We focus on working with long-term suppliers that demonstrate a commitment to engaging their workers, providing safe working conditions and advancing environmental responsibility in accordance with NIKE’s Code of Conduct and Code Leadership Standards. Our expectations include working to combat risks of forced labor and child labor. We furnish this statement pursuant to the UK Modern Slavery Act, the Australian Modern Slavery Act, the California Transparency in Supply Chains Act, and the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act.

➜

Figure 8.7.9 Excerpt from Nike public statement addressing issues of modern slavery and child labour

➜

SA PA M P G L ES E

8.7 Case study: how has Nike used promotional techniques to build and maintain a global brand?

Figure 8.7.10 A pair of Michael Jordan’s famous Air Jordans from his rookie season, on sale at auction

Case study activity 8.7.1 1.

2. 3.

Identify the original name of Nike and the year the business was launched. Outline the initial branding decisions made by Nike when it launched its own shoes. Describe two promotional techniques that have been used by Nike. Explain why Nike’s advertising campaigns differ from more conventional campaigns that tend to focus on product features or pricing. Evaluate the effectiveness of athlete endorsements as a promotional technique for Nike. View the following Nike advertising campaigns online. Tick the value(s) that each campaign highlights most strongly.

Campaign

Self-belief

Perseverance

Winning

Just Do It (1988)

Failure (1997)

Find Your Greatness (2012)

Dream Crazy (2018)

Winning Isn’t for Everyone (2024)

Investigate one Nike advertising campaign not mentioned in this case study. Identify the year it was released and the core value being promoted. Explain how the advertising campaign promotes this value. Using Nike’s iconic advertising campaigns as inspiration: a. Create an ad for Nike (hand-drawn or digital) that promotes one core value. Choose one of the following formats. • Billboard: a clear visual and original slogan. • 30-second TV ad: a six-frame storyboard. Each frame must include a rough sketch, a brief description of what is happening, and any voice-over. b. Explain how specific visual or language choices promote one core value.

441

442

Chapter 8 Promoting and selling

8.8

Why aren’t all promotional techniques appropriate for every business? Success criteria

In this lesson, you will learn about factors that influence which promotional techniques are appropriate for a business.

❏ I can identify factors that influence which promotional techniques are appropriate for a business. ❏ I can explain how specific factors affect promotional choices.

SA PA M P G L ES E

Learning intention

Starter activity

You are the manager of a small cafe near school. It has just opened and faces strong competition from nearby food outlets. You want to encourage students to visit after school. 1.

What factors would you consider when short-listing promotional techniques?

Discuss your ideas with a partner, and then with the class.

Writing focus 8.8 Creating topic sentences

➜

Imagine a toy manufacturer that has built strong brand recognition by using social media advertising and influencer endorsements. This has worked well in the past. During a sudden economic downturn, household incomes fall. Sales collapse, and the business is left with warehouses full of unsold toys. To survive, the business responds by adopting sales promotions, such as discounts and clearance Figure 8.8.1 There are some factors within a business’s sales, to appeal to more price-sensitive control when it comes to addressing challenges. consumers. By adapting, the business may be able to maintain or even increase its sales despite the challenging conditions. In this section, you will learn about a range of factors that influence which promotional techniques are appropriate for businesses in different situations. These are summarised in Table 8.8.1. Table 8.8.1 External factors lie outside a business’s control, while internal factors relate to things the business can influence. External factors Outside a business’s control

Internal factors Within a business’s control

Economic environment

Resources available

Consumers in the target market

Marketing strategy

Level of competition

Nature of the product

Laws and regulations Community expectations Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.8 Why aren’t all promotional techniques appropriate for every business?

443

External factors Economic environment Economic conditions influence consumer spending and confidence, which affects promotional choice. When income levels are high and consumer confidence is strong, businesses may focus on brand-building techniques such as advertising, sponsorships and content marketing. In weaker economic conditions, when consumers are more price-sensitive, businesses may rely on sales promotions to encourage purchases.

Consumers in the target market

SA PA M P G L ES E

The characteristics of consumers in the target market influence which promotional techniques are appropriate. When targeting high-income consumers, personal selling may be suitable for tailoring the message to individual needs. When targeting a new market segment who are unaware of the product, publicity may be suitable for attracting attention. Technology usage patterns also affect where the target market can be reached, such as through social media.

consumer confidence the degree to which consumers feel optimistic about their financial situation and the economy, affecting their willingness to spend

Level of competition

Competition affects how businesses promote their products. In highly competitive markets, businesses may adopt more aggressive techniques, such as frequent sales promotions or high-pressure personal selling. Competitor behaviour also influences promotional choice, as businesses may respond by matching discounts or advertising to protect market share.

Laws and regulations

➜

Figure 8.8.2 Business in all markets will need to assess competitor promotional Laws and regulations are rules that behaviour in order to better understand how to succeed in their promotional goals and stand limit which promotional techniques out from competitors. and messages businesses are able to use to promote goods and services. Promotions that mislead or exploit consumers are prohibited. These issues are examined in detail in Lesson 8.11.

Community expectations Community expectations are shared social standards about acceptable business behaviour. They influence how promotional techniques are perceived, and whether they are viewed as acceptable and ethical. Businesses that violate community expectations risk public backlash, which can damage reputation and reduce longterm sales growth.

Chapter 8 Promoting and selling

Internal factors Resources available Businesses possess financial, human and technological resources that can be used to support promotional activities. They influence which promotional techniques are feasible. Financial resources: The marketing budget affects the scale and frequency with which promotion can take place.

SA PA M P G L ES E

444

Human resources: The knowledge and expertise of employees determines whether certain techniques can be used effectively.

Technology: Access to technology affects promotional choice, such as the ability to run successful social media campaigns.

➜

Figure 8.8.3 The resources that can be used by a business when planning promotions

Marketing strategy

A business’s marketing strategy, its overall plan for how to promote and sell its products, influences which promotional techniques are used. Marketing strategy brings together decisions about the product, price, place and promotion and considers factors such as those shown in Figure 8.8.4. Target market

• Plans to select certain market segments

Product

• Plans for product features, quality, packaging and positioning

Price

• Plans for pricing, such as whether prices should be low-cost, competitive or premium

Place

• Plans for where, when and how the product should be sold

Promotion

• Plans for promotion, including promotional goals, the promotional message, timing of the promotion, and media channels that should be used

➜

Figure 8.8.4 The factors that successful marketing strategies must consider

8.8 Why aren’t all promotional techniques appropriate for every business?

445

Nature of the product The nature of the product may influence how it is promoted. If a product is more expensive, complex or infrequently purchased, consumers may ask more questions or require reassurance, so techniques like personal selling may be appropriate. Whereas if a product is cheaper, simpler or more frequently purchased, consumers tend to make faster purchase decisions based on habit or convenience. They may prefer more familiar or value-for-money products, making techniques like advertising or sales promotion more appropriate.

Review 8.8 Knowledge and understanding

Students can access sample responses and results online

SA PA M P G L ES E

Online quiz

Thinking, researching and communicating

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify two external and two internal factors that influence which promotional techniques are appropriate for a business in a particular situation. Outline one way laws and regulations can affect which promotional techniques a business is able to use. Explain how the economic environment can influence the appropriateness of different promotional techniques. Explain how a business’s marketing strategy can influence which promotional techniques are appropriate for that business.

Thinking, researching and communicating 1.

Analyse why two businesses selling similar products to the same target market may use different promotional techniques. You are a marketing consultant who has been asked to research two businesses that sell a similar product. Choose one product category from the following table.

Product category

Large chain

Small independent

Pies

Pie Face

Hayden’s Pies, Ulladulla

Coffee

Starbucks

Single O, Surry Hills

Burgers

McDonald’s

Bar Luca, Sydney

a. Identify and describe one promotional technique used by each business. b. Describe the likely target market of each business based on the visuals, language or tone used in a specific promotion by each business. Include evidence, such as a screenshot or direct quote. c. Based on your research, explain why the small independent and large chain may not consider the same promotional techniques to be appropriate.

You are a marketing consultant working with one large chain or small independent mentioned in the previous question as they plan a new promotional campaign. Create one presentation slide that recommends promotional techniques for the business. Your slide should:

• identify the business • recommend two appropriate promotional techniques • explain how at least two internal or external factors influence your recommendations (e.g. available resources, marketing strategy, economic environment, level of competition) • include visuals, a heading and concise dot points.

446

Chapter 8 Promoting and selling

8.9

What are the advantages and disadvantages of different promotional techniques? Success criteria

In this lesson, you will learn about advantages and disadvantages of different promotional techniques.

❏ I can identify the advantages and disadvantages of different promotional techniques.

SA PA M P G L ES E

Learning intention

Starter activity

You are the manager of a small cafe near school. It has just opened and faces strong competition from nearby food outlets. You have $2000 to promote the cafe. 1.

Choose two of the following promotional techniques available to you:

• Instagram advertising • local newspaper advertising • sponsoring a school sports event • student discount vouchers.

2. 3.

Be prepared to explain why you chose them over other options. Discuss your ideas with a partner, and then with the class.

Playing to win

Writing focus 8.9 Transitional phrases

➜

When Epic Games launched Fortnite in 2017, it entered a global video game market that was both highly lucrative and extremely competitive. At launch, they faced a clear promotional choice: focus on traditional advertising or encourage gamers to live stream in-game events. The first option would reach a large audience and give the business control over Figure 8.9.1 Fortnite is now a global sensation. the promotional message. The second option would be more affordable and closely match how young players engage online. By choosing to focus on in-game events, Epic Games was able to reach the most hardcore gamers, build credibility within the gaming community and turn influential players into enthusiastic promoters of the game. As a result, Fortnite’s popularity grew rapidly.

8.9 What are the advantages and disadvantages of different promotional techniques?

Alignment

SA PA M P G L ES E

Promotional techniques differ in how well they align with the target market and the promotional goal. Alignment with the target market refers to how well a technique matches the characteristics, habits and preferences of consumers. For example, a supplement company may use influencer endorsements from well-known personal trainers.

➜

Figure 8.9.2 An endorsement of Feastables snacks by MrBeast, a social media influencer popular with young people – an example of high target market alignment

Reach

Reach refers to the number of consumers that will see the message. Techniques with high reach can communicate with a large audience, increasing brand recognition. For example, this Doritos Super Bowl ad reached more than 70 million viewers: https://cambridge.edu.au/redirect/11744.

Credibility Credibility refers to the degree of trust consumers place in a promotional message or its source. Techniques perceived to be more credible are more likely to influence consumer attitudes and encourage purchasing decisions. A great example of high credibility in promotion is this advertisement for a Wilson tennis racquet that highlights Roger Federer’s involvement in co-designing the racquet: https://cambridge.edu.au/redirect/11745. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

447

448

Chapter 8 Promoting and selling

Affordability

SA PA M P G L ES E

Affordability refers to a business’s ability to pay for a promotion. In deciding whether a promotion is affordable, businesses consider the financial cost of the promotion, their available marketing budget and the expected benefits of the promotion. Lower-cost techniques can be used more frequently and for longer periods of time. However, expensive promotions may be viewed as affordable if the marketing budget and expected benefits are large enough. For example, a large retailer might use TV advertising to promote new products, as this is a high-reach technique expected to significantly increase sales.

➜

Figure 8.9.3 A KFC newspaper advertisement from the UK, used to regain control over public perception following negative publicity

Control

Promotional techniques differ in the degree of control businesses have over the content, timing and placement of the promotional message. Techniques that allow a high level of control enable businesses to communicate messages that remain consistent and aligned with the target market. For example, a fried chicken restaurant that ran out of chicken might use a full-page newspaper ad with a humorous but sincere apology to control the public conversation (Figure 8.9.3).

Review 8.9 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify the five main factors that affect whether a promotional technique is likely to influence the target market. Distinguish between target market alignment and credibility in the context of promotional techniques. Explain why promotional techniques that reach large audiences may not always be chosen. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.9 What are the advantages and disadvantages of different promotional techniques?

449

Thinking, researching and communicating 1.

Copy and complete the table in your workbook. Identify one advantage and one disadvantage of each promotional technique.

Technique

Advantage

Disadvantage

Advertising Endorsements Content marketing Personal selling Publicity

SA PA M P G L ES E

Public relations

Relationship marketing Sales promotion

Product placement

Copy and complete the table in your workbook. Rank the promotional techniques from most to least influential for building brand awareness. Briefly justify your ranking.

Promotional technique

Rank

Justification

Advertising

Sales promotion Endorsements

Choose one business from the following table that you did not investigate previously.

Product category

Large chain

Small independent

Pies

Pie Face

Hayden’s Pies, Ulladulla

Coffee

Starbucks

Single O, Surry Hills

Burgers

McDonald’s

Bar Luca, Sydney

a. Describe two promotional techniques used by the business. b. Outline one advantage of each technique. c. Outline one disadvantage of each technique.

You are a marketing manager working at a new online clothing retailer. The business is unknown, has a limited marketing budget and aims to increase sales in the short term. The retailer targets young women aged 18 to 25 who are active on social media and price-conscious. Create a decision matrix to compare different promotional techniques. Your decision matrix should:

• identify three promotional techniques • rate each technique (for example, high/medium/low) against at least three criteria, such as affordability, reach and credibility • recommend one promotional technique you would prioritise. Justify your choice.

450

Chapter 8 Promoting and selling

8.10

Skills focus: how to evaluate the effectiveness of promotional techniques Success criteria

In this lesson, you will learn how to evaluate the effectiveness of a promotion.

❏ I can identify the promotional goal of a campaign. ❏ I can distinguish between financial and reputational benefits and costs. ❏ I can evaluate the overall effectiveness of a promotion.

SA PA M P G L ES E

Learning intention

Starter activity 1.

In the month after a promotion, a business reports that:

• Instagram followers increased by 10% • sales remained the same • the promotion cost $50,000.

Write down your answers to the following questions:

a. Was the promotion effective? b. What extra information might you need before deciding? c. Would your answer differ if the business sells $10,000 luxury watches or $1 chocolate bars?

Discuss your ideas with a partner, and then with the class.

➜

Figure 8.10.1 Businesses use data to measure performance and evaluate the effectiveness of promotional campaigns.

Businesses use promotion to influence how consumers think and behave at different stages of their consumer journey. From a business’s perspective, there are normally more consumers at the early stages of the journey, such as awareness, than at later stages, such as repeat purchase. For this reason, businesses often represent the consumer journey as a marketing funnel, which helps them to visualise the number of consumers at each stage, design promotions to move consumers through the funnel, and identify where they drop out.

8.10 Skills focus: how to evaluate the effectiveness of promotional techniques

451

Marketing funnel

Evaluating the effectiveness of a promotion

Awareness

Businesses can evaluate the effectiveness of a promotion by addressing three questions:

Interest

1. Was the promotional goal achieved? 2. Did the benefits of the promotion outweigh its costs? 3. Overall, how effective was the promotion?

Desire

Action

Assessing the promotional goal

➜

SA PA M P G L ES E

Retention The first step is to identify and assess the promotional goal. The goal depends on which stage of the marketing funnel the promotion was Figure 8.10.2 The marketing funnel charts every stage of a aimed at. To assess whether the promotional customer’s interactions with a brand. goal was met, businesses compare performance before and after the promotion and compare the actual outcome with the hoped-for target outcome. For example, a business with 1000 Instagram followers may have a promotional goal of increasing brand awareness. The target outcome was to at least double its followers. After the promotion, its Instagram followers increased to 3000, so building to the promotional goal was achieved.

Businesses use different key performance indicators depending on the promotional goal. These are measures that show how well the goal has been achieved, such as website traffic or sales. Table 8.10.1 presents a few examples that businesses could use. Table 8.10.1 Examples of key performance indicators Promotional goal

Key performance indicators (KPIs)

Awareness

• Reach of the advertisement • Website traffic • Brand recognition (survey results) • Click-through rates • Time spent on website • Likes, comments and shares on social media • Product added to wish list • Customer reviews • Brand preference (survey results) • Subscriptions • Sales • Redemptions of promotional offers • Repeat purchases • Participation in loyalty programs • Customer satisfaction (survey results)

Interest

Desire

Action

Retention

key performance indicator a way of measuring a business’s progress towards the goal it is trying to achieve

452

Chapter 8 Promoting and selling

Weighing costs and benefits The second step is to examine whether the promotion represented good value for money by considering the benefits and costs of the promotion, as shown in Figure 8.10.3. Promotion can deliver financial and reputational benefits, but these can be hard to measure due to time lags, intangible benefits and difficulty attributing the observed outcomes to a specific promotion. Promotional techniques with greater reach, target market alignment, and credibility are more likely to deliver financial and reputational benefits. Financial and reputational costs may be caused by negative publicity, or legal or ethical issues.

SA PA M P G L ES E

Benefits of promotion The benefits of a promotion may be financial or reputational. • Financial benefits may include increased sales, market share or average spend per customer. • Reputational benefits may include increased brand recognition brand preference or customer satisfaction. Costs of promotion

The costs of a promotion may be financial or reputational. • Financial costs may include marketing expenses or reduced profit margins (where the business makes less profit on each item sold). • Reputational costs may include a damaged brand, loss of credibility or reduced customer loyalty.

➜

Figure 8.10.3 Benefits and costs of business promotion

Judging overall effectiveness

➜

Figure 8.10.4 There are a number of things to consider when judging the overall effectiveness of a promotional campaign.

The third step is to make an overall judgement about the effectiveness of the promotion. This means assessing the degree to which the promotion achieved its goals. It also involves considering whether the benefits were worth the costs to the business. For example, a promotion might be judged to have been significantly effective at creating awareness but to have had limited effectiveness at increasing sales. By making an on-balance judgement, businesses can better understand the strengths and weaknesses of a promotion and apply these insights when planning future promotional campaigns.

8.10 Skills focus: how to evaluate the effectiveness of promotional techniques

Review 8.10 Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

453

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2.

3. 4.

SA PA M P G L ES E

Identify the stages of the marketing funnel. Identify one performance indicator that could be used to assess whether a promotional goal is achieved at each stage of the marketing funnel. Outline one financial benefit and one reputational benefit of promotion. Outline one financial cost and one reputational cost of promotion. Explain why a promotion can achieve its promotional goals but still be considered ineffective.

Thinking, researching and communicating

A national coffee chain runs a one-month digital promotion that offers reward points to customers who purchase via the app. The promotion cost $1.2 million to develop and advertise. During the promotion:

• sign-ups to the app increased by 25%, reaching 500,000 new users • sales increased by 20%, and repeat purchases increased by 2% • criticism from a small number of customers about data privacy concerns is widely shared on social media and reported by national news outlets.

2. 3.

Identify the most likely promotional goal, using the information provided, and assess whether it was achieved. Discuss the benefits and costs of the promotion. Evaluate the overall effectiveness of the promotion. Investigate one of the following promotional campaigns.

Business

Promotional campaign

Metro Trains Melbourne

Dumb Ways to Die

Coca-Cola

Share a Coke

McDonald’s

McDonald’s Monopoly

Spotify

Spotify Wrapped

Evaluate the effectiveness of the promotional campaign. In your answer, assess whether the promotional goal was achieved, and discuss costs and benefits of the promotion. You are the senior vice-president of marketing at one business mentioned in this chapter (e.g. Nike, Netflix or McDonald’s). You have been asked to judge the effectiveness of one promotional campaign. Create a promotion effectiveness scorecard (e.g. using Excel). Your scorecard should:

• identify the promotional campaign and the main promotional goal • rate the financial and reputational benefits and costs of the campaign (e.g. low, medium or high) and briefly justify each rating • evaluate the promotion’s overall effectiveness and briefly justify your judgement based on information in the scorecard.

454

Chapter 8 Promoting and selling

8.11

What legal and ethical issues may arise when promoting goods and services? Success criteria

In this lesson, you will learn about legal and ethical issues that may arise when promoting goods and services.

❏ I can identify legal and ethical issues that may arise when promoting goods and services. ❏ I can explain the consequences of using illegal or unethical promotional practices.

SA PA M P G L ES E

Learning intention

Starter activity

A ticketing site advertises tickets to your favourite musician at a low price. You go to the site, choose your seats, and you’re about to pay. At the final payment stage, a compulsory booking fee appears. 1.

Think about what just happened. a. Does this seem fair? b. Do you think it is legal? c. Would you still click “pay”?

2. 3.

Be prepared to explain your answers. Discuss your ideas with a partner, and then with the class.

Writing focus 8.11 Developing sentences

Promotion is used not only to inform consumers but also to influence purchase decisions. To maximise sales, businesses may influence consumers in ways that raise legal and ethical issues. Understanding the issues that may arise can help consumers identify problems and help businesses to promote products in a socially responsible way. In this lesson, you will learn about specific legal and ethical issues that may arise from different promotional techniques.

Legal versus ethical issues

Legal issues arise when promotions break the law, leading courts to impose penalties such as requirements for businesses to pay fines. Ethical issues arise when promotions are not socially responsible and may have negative consequences for consumers or the broader community. While unethical promotions may be legal and lead to increased sales in the short term, they can also lead to public backlash, reputational damage and reduced sales over time.

Legal issues The main legal issues that may arise from promotional activity include:

• false or misleading claims • exploitation of vulnerability • interference with privacy defamation. • pages Final • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.11 What legal and ethical issues may arise when promoting goods and services?

False or misleading claims Promotional messages may be false or misleading where they are factually inaccurate, made without evidence or in a way that is likely to mislead consumers. This can limit a consumer’s ability to make voluntary and fully informed choices, leading them to buy products they don’t actually need or want. The law allows puffery, which is the use of wildly exaggerated and vague claims that no one would be likely to take seriously. For example, a cafe might claim to sell the “best coffee in the universe”.

Samsung

➜

SA PA M P G L ES E

In 2022, Samsung was fined $14 million by the Federal Court, which found that it had misled consumers about the water resistance of its mobile phones.

Figure 8.11.1 A Samsung phone

False or misleading claims appear in many forms, including those shown in Figure 8.11.2.

Bait advertising

• Advertising a very low price when the product is unavailable or only available in limited quantities. • For example, advertising a smartphone at a very low price to attract consumers, then pressuring them to buy a more expensive model.

Fake reviews

• Reviews that are created, or selectively displayed, to give a false impression of product quality. • For example, a software company creates fake customer accounts to post 5-star reviews of a new mobile game.

Fine print

• Important conditions hidden in small or unclear text that contradict the main promotional message. • For example, advertising a “free one-month trial” when the fine print explains that users are automatically charged unless they cancel early.

Fake news

• Promotions designed to look like independent media content. • For example, an ad for vitamin supplements presented as a news article.

Greenwashing

• Environmental claims that are false, misleading, vague or exaggerated. • For example, promoting clothing as “eco-friendly” because its packaging is recyclable when the clothing itself is produced using harmful chemicals.

Black cladding

• A business representing itself as Indigenous when it is not actually controlled or run by Indigenous people

➜

Figure 8.11.2 The types of misleading or falsified claims that businesses may use to promote their brands Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

455

456

Chapter 8 Promoting and selling

Activity 8.11.1 See, think, identify

Look at Figures 8.11.3 to 8.11.5.

a. Identify one example of a false claim. b. Identify one example of a misleading claim. c. Identify one example of puffery. Explain each of your choices.

SA PA M P G L ES E

Figure 8.11.4 A Facebook ad designed to look like medical advice, featuring the image of a well-known science educator ➜

➜

Figure 8.11.3 The slogan “Red Bull gives you wings” is an example of a wildly exaggerated claim.

➜

Figure 8.11.5 In-store promotional pricing signage at an Australian supermarket. The ACCC’s Supermarkets Inquiry (2024– 25) found that widespread use of promotions can make it harder for consumers to compare prices and assess value for money.

Exploitation of vulnerability Promotional activities may knowingly exploit consumers who are experiencing disadvantage. Consumers may be vulnerable where they have limited ability to understand a promotion, resist its influence or assess risks, such as due to their age, low income or limited education. For example, a car salesperson may rush elderly consumers to sign contracts they do not fully understand. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.11 What legal and ethical issues may arise when promoting goods and services?

457

Interference with privacy Promotional activities may interfere with privacy where businesses collect, use or store personal information that is not necessary for their activities or without the informed consent of consumers. This legal issue is relevant for businesses that promote online since personal information is often collected and used to deliver targeted ads. For example, a free mobile game may request access to a user’s location and then use this information to send ads from nearby stores.

Defamation

SA PA M P G L ES E

Promotional messages may be defamatory where they are untrue and damage someone’s reputation. This may occur in comparative advertising that describes a competitor or its products unfavourably. For example, a phone company may run advertisements that falsely claim a rival’s phone batteries are explosive.

Ethical issues

The main ethical issues that may arise from promotional activity include:

• manipulation of consumers • disrespect for community groups • improper use of culturally significant designs. Manipulation of consumers

There is often a fine line between ethical influence and manipulation. Promotions become manipulative where they give businesses an unfair advantage by limiting consumers’ ability to make voluntary and fully informed choices. This can occur through practices such as deception, exploitation, social pressure or emotional manipulation. Manipulation can lead to negative outcomes for consumers, such as financial loss or buyer’s remorse.

Deception

Deception occurs where a promotion intentionally hides, obscures, distorts or falsifies the facts to prevent consumers from making a fully informed choice. Examples of this are shown in Table 8.11.1. Table 8.11.1 Examples of different forms of deception Form of deception

Example

Hidden costs

A food delivery app advertises a meal price and adds additional service fees at the final stage of payment.

Undisclosed brand partnerships

A music video shows branded sneakers worn by the artist without sponsorship disclosure.

Ambiguous language Butter promoted as “light”, referring to colour not fat content. Exaggerated benefits

Cereal advertised as “healthy” as it contains added vitamins despite high sugar content.

Misleading claims

A toothpaste ad claims it is “recommended by dentists” based on a survey of three dentists.

False claims

A business continues to promote a children’s toy as “safe” after becoming aware of serious injuries.

Chapter 8 Promoting and selling

Exploitation Exploitation occurs where a promotion takes advantage of a power imbalance between the business and consumers. Examples of this are shown in Table 8.11.2. Table 8.11.2 Examples of different forms of exploitation Form of disadvantage

Example

Low income

A buy now, pay later service promoted in low socio-economic areas.

Age

Cartoon characters used to sell high-sugar snacks to children.

SA PA M P G L ES E

458

Social pressure

Social pressure occurs where a promotion preys on consumers’ desire to belong, gain social status or defer to authority. Examples of this are shown in Table 8.11.3. Table 8.11.3 Examples of different forms of social pressure Form of social pressure

Example

Appeal to authority

An actor dressed as a doctor recommends a medical treatment.

Social proof

A restaurant labels its most profitable menu item as “most popular”.

Social status

A car ad states that “only winners” drive this vehicle.

Emotional manipulation

Emotional manipulation occurs where a promotion aims to bypass the consumer’s rational thinking by inducing strong emotions, such as fear, guilt, desire, happiness or love. Examples of this are shown in Table 8.11.4. Table 8.11.4 Examples of different forms of emotional manipulation Form of emotional manipulation

Example

Artificial urgency

“Limited time only!!”

Artificial scarcity

“Only 1 room left!!”

Fear tactics

Insurance ads showing dramatic images of disaster.

Disrespect for community groups Promotional techniques may disrespect individuals or community groups when they show disregard for people’s dignity or rights. This can violate community expectations that businesses behave in a socially responsible way. Examples may include using gender stereotypes, using words or images that breach community standards or invading people’s privacy (even when permitted by law). Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

➜

SA PA M P G L ES E

8.11 What legal and ethical issues may arise when promoting goods and services?

Figure 8.11.6 A 1950s advertisement that reflects social attitudes of the time

Improper use of culturally significant designs

Businesses may improperly use culturally significant designs if they proceed without cultural sensitivity. Indigenous designs, for example, have Cultural value closely connected to particular Communities and Country. These designs are protected by Indigenous Cultural and Intellectual Property (ICIP) principles. As a result, businesses that want to use Indigenous designs in promotions or product designs should consult with the appropriate Indigenous Communities to ensure the designs are used respectfully, authentically and that those Communities share in the benefits of this commercial use.

Review 8.11 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

459

cultural sensitivity understanding and respecting the cultural meanings, values and traditions of different groups of people Country lands, waterways, seas and skyways to which Aboriginal and Torres Strait Islander Peoples are connected

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Identify two examples of legal issues and two examples of ethical issues that may arise in promotion. Distinguish between legal and ethical issues in promotion. Explain two ways promotions can be manipulative, even when they are not false or misleading. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

460

4. 5. 6.

Chapter 8 Promoting and selling

Explain how businesses use greenwashing to influence consumer behaviour. Explain why bait advertising can limit consumers’ ability to make voluntary and fully informed choices. Copy and complete the table below to classify each promotional activity as either a legal issue, ethical issue or both.

Legal

Ethical

Both

A sports drink is advertised as “proven to improve athletic performance”, but there is no evidence to support the claim.

An online store displays a pop-up stating, “Only 5 minutes left!” even though the same products remain available the next day.

Customer email addresses, collected to send purchase receipts, are used to send marketing emails without asking for permission.

A TV advertisement uses humour that relies on negative gender stereotypes to promote a household appliance.

A fast-fashion brand highlights a “recycled” label on its clothing while remaining silent about the short lifespan of its products.

SA PA M P G L ES E

Promotional activity

Thinking, researching and communicating 1. 2.

Analyse the impact of unethical promotional practices on businesses and consumers. Investigate a promotional campaign that attracted public criticism for ethical reasons. Choose one of the campaigns below, or another example approved by your teacher.

Business

Promotional campaign

Ethical issue

Protein World

Are you beach body ready? (2015)

Social pressure

Volkswagen

Clean Diesel (2015)

Deception

Pepsi

Live for Now (2017)

Disrespect

Burger King

Women belong in the kitchen (2019)

Disrespect

Gillette

The Best Men Can Be (2019)

Disrespect

a. Identify and describe the promotional campaign. b. Identify the ethical issue and explain why it caused public criticism. c. Explain how this promotion could impact the business’s reputation and long-term sales.

Create a redesigned version of one promotional campaign mentioned in the previous question. Your new promotion must be ethical and appealing to the target market. Create an annotated poster or six-frame storyboard that:

• identifies the promotional campaign and ethical issue • presents the new version of the promotion • explains how the new version both avoids the ethical issue and appeals to the target market • explains why the new version is more socially responsible.

8.12 What laws relate to promoting goods and services to children and young people?

8.12

461

What laws relate to promoting goods and services to children and young people? Success criteria

In this lesson, you will learn how laws and industry codes regulate promotions aimed at children and young people.

❏ I can identify the laws and industry codes that regulate promotion to children and young people. ❏ I can explain how these laws and codes protect children and young people from harmful promotional practices.

SA PA M P G L ES E

Learning intention

Starter activity

Look at each image shown. 1.

Is it entertainment, advertising or both?

What makes you think that? How easy is it to tell?

Discuss your ideas with a partner, and then with the class.

➜

Figure 8.12.1 Images showing different types of content aimed at children

Why are children a target for promotional messaging? Children and young people are an important audience for promotional messages. They are consumers, and they can also influence what their households buy. This influence comes from repeatedly requesting advertised products, a behaviour often referred to as pester power. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 8.12 Appositives

462

Chapter 8 Promoting and selling

How are promotions aimed at children? To appeal to children, businesses often use content marketing and sales promotion. This involves offering entertainment, such as cartoons, games or videos, with promotional messages embedded within the content. Examples of this include:

• influencer endorsements • product placements • competitions that blur the line between promotion and entertainment.

SA PA M P G L ES E

Children are often easy to influence, because they are generally less able to distinguish between promotion and entertainment, identify persuasive intent, assess risks and make decisions that are in their own long-term best interests. Since they are more vulnerable, the law provides children with special protections to help ensure that promotions are fair and transparent. In this lesson, you will learn about laws and industry codes that protect children.

Legislation

Australian Consumer Law

The most important legislation regulating promotion to children is the Australian Consumer Law (ACL), contained in the Competition and Consumer Act 2010 (Cth). The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing the ACL. The ACCC may:

• investigate repeated and ongoing consumer problems • issue public warnings • negotiate with businesses to fix the problem • ask businesses to sign a court-enforceable undertaking that they will fix the problem • take legal action in the Federal Court. Misleading or deceptive conduct

Under section 18 of the ACL, promotions must not mislead or deceive, or be likely to mislead or deceive. The legal test for what counts as “misleading or deceptive” is based on the likely effect of a promotional message on ordinary members of the target audience. Since children are more likely to be misled, advertising aimed at children is more likely to breach this law. For example, a social media influencer might mislead children by recommending a product during a livestream without disclosing it as advertising, even though adults would not have been misled.

Unconscionable conduct unconscionable acting in a way that is unfair or exploits another party

Under section 21 of the ACL, promotions must not involve unconscionable conduct, which involves knowingly exploiting vulnerable consumers, such as taking unfair advantage of a child’s lack of experience. For example, a mobile game might engage in unconscionable conduct where it uses repeated pop-up messages to pressure children into making purchases. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

8.12 What laws relate to promoting goods and services to children and young people?

463

“Dark patterns” are user interface design elements (such as buttons, layouts or colours) used by games, websites or apps to pressure consumers into making choices they probably would not have made otherwise, such as buying a product or downloading software. These tactics may breach the law, especially when aimed at children. Follow this link to watch a TEDx talk explaining how dark patterns are used by digital platforms to manipulate consumer choices: https://cambridge.edu.au/redirect/11746.

Privacy law

SA PA M P G L ES E

Privacy law, contained in the Privacy Act 1988 (Cth), regulates how businesses collect, use and store personal information. When promoting to children, privacy law limits the collection of personal information to data that is necessary for the business’s activities.

Industry self-regulation

Figure 8.12.2 Some mobile games may take advantage of young people to trick or pressure them into making in-game purchases. ➜

Advertising that targets children is regulated primarily by the Children’s Advertising Code (Children’s Code) and the Food and Beverages Advertising Code.

Children’s Advertising Code

The Children’s Code sets standards for advertising to children. It requires that advertising using popular personalities or celebrities must be clearly distinguishable from regular entertainment content. According to the Children’s Code, advertising aimed at children must not:

• violate prevailing community standards • mislead or deceive children • include sexual images • include frightening or distressing images or events • undermine the authority of parents or carers • encourage children to pester their parents to buy advertised products • imply that a product makes children who own it superior to their peers. Food and Beverages Advertising Code

The Food and Beverages Advertising Code places additional restrictions on advertising food and beverages to children. It requires advertising of foods and beverages that are high in salt, fat and/or sugar must not have children as the primary target audience. This means the advertising for them must be displayed at a time and place that primarily targets adults. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

464

Chapter 8 Promoting and selling

Review 8.12 Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3. 4.

Identify two reasons why children and young people are considered vulnerable consumers. Outline one law or advertising industry code that applies to advertising aimed at children. Outline one way that digital media has increased children’s exposure to promotion. Explain how the law and advertising industry codes protect children and young people.

SA PA M P G L ES E

Thinking, researching and communicating 1.

Discuss the advantages and disadvantages for consumers and businesses of laws that protect children and young people. Investigate a real-world example of advertising aimed at children. Choose one of the examples below, or another example approved by your teacher.

Business

Promotional campaign

Kellogg’s

Coco’s Beats (2014)

Coca-Cola

Fanta “Tastes Like” (2015)

McDonald’s

“Denise” Happy Meal Ad (2020)

KFC

The “Buckethead” Campaign (2022)

a. Identify which law or industry code protecting children and young people is most relevant to the advertisement and briefly explain why. b. Explain why specific features of the advertisement (for example, visuals, audio, time and place it was broadcast) attracted complaints and may have breached the law or industry codes.

You are the general counsel (most senior legal adviser) of a confectionery business. Write a short advisory note (100 to 150 words) to the senior vice-president of marketing explaining how the business can promote a new chocolate bar while complying with the law and industry codes. Use the structure below to form your response.

INTERNAL MEMORANDUM

TO: Senior VP of Marketing FROM: General Counsel SUBJECT: Legal Compliance for Launch of the Choczilla Chocolate Bar

Make sure that you:

• identify the purpose of your advice • outline two relevant laws or industry codes that apply • recommend how the marketing team can reduce legal risks, referring to both the content of the advertising and where and when it is displayed.

8.13 What role do advertising codes and standards play in regulating advertising?

8.13

465

What role do advertising codes and standards play in regulating advertising? Success criteria

In this lesson, you will learn how advertising codes and standards are used to regulate advertising in Australia.

❏ I can describe the role of advertising codes and standards. ❏ I can explain how advertising codes and standards help protect consumers.

SA PA M P G L ES E

Learning intention

Starter activity

The following advertisements appeared online recently. Neither of them breaks the law. Ad 1: The incredible energy drink

A fast-paced YouTube ad shows a teenager drinking an energy drink before an exam. The screen flashes with dramatic effects. The narrator says, “One can and your brain goes into overdrive!”. The student is shown finishing the exam confidently while upbeat music plays. Ad 2: Act now!

A colourful ad appears within a free mobile game designed for younger players. It uses cartoon characters, countdown timers and phrases like “Don’t miss out!” and “Act now!” to promote in-game purchases. No false claims are made, and prices are shown in small text. Think about each example and then write down your response to the following questions. 1.

Assess whether each ad is acceptable or unacceptable.

Briefly justify your decision.

The advertising industry is dynamic. Every day, community standards evolve and fresh new advertisements are released. New ads may violate community expectations and lead to complaints from members of the public. Since advertising complaints are made regularly, and often don’t raise any legal issues, the courts are not an appropriate place to deal with these issues. Instead, the advertising industry deals with complaints under a self-regulatory system. This allows complaints to be assessed quickly and rules to be updated when needed. Businesses also tend to comply with the rules voluntarily in order to avoid bad publicity.

Writing focus 8.13 Creating topic sentences

Chapter 8 Promoting and selling

In this lesson, you will learn about the advertising industry’s self‑regulatory system. This includes the complaints process, the key institutions involved, and the advertising codes that guide the industry.

Self-regulatory system Advertising codes and standards are enforced through a public complaints system. Advertising standards reflect the community’s expectations and are used to interpret the rules set out in the advertising codes.

Complaints process A complaint is a concern raised by a member of the public about an advertisement that they believe may breach these codes.

SA PA M P G L ES E

466

Members of the public who believe that advertising breaches the advertising codes and standards can submit a complaint.

Ad Standards receives the complaint and administers the process.

The Community Panel assesses each relevant complaint and decides whether the advertisement has breached the advertising codes.

If a breach is found, the advertiser may be asked to modify or remove the advertisement.

➜

Figure 8.13.1 The process of lodging and resolving a complaint

Institutions

Several key institutions play a role in Australia’s system of advertising self-regulation, as shown in Figure 8.13.2. Australian Association of National Advertisers (AANA)

The AANA is a leading advertising industry body that develops, reviews and updates the advertising codes. Ad Standards

Ad Standards is an independent body that administers the complaints process. It decides whether complaints are covered by the adverting codes, passes relevant complaints to the Community Panel, and notifies advertisers and complainants of the outcome of the process. Community Panel

The Community Panel is a group of everyday Australians that assesses complaints and decides whether advertisements have breached the advertising codes. Businesses (advertisers) Businesses create advertisements and are responsible for voluntarily complying with the advertising codes.

➜

Figure 8.13.2 The institutions involved in the advertising self-regulatory system

8.13 What role do advertising codes and standards play in regulating advertising?

467

Advertising codes A number of advertising codes operate in Australia, shown in Figure 8.13.3. Each code focuses on a different area of advertising and sets rules that explain what advertisers can and cannot do when promoting goods and services. These rules help protect consumers. • Sets out general rules for all advertising. • Aims to ensure that advertising is legal, honest and truthful.

Children’s Advertising Code

• Sets out protections for vulnerable young audiences. • Restricts advertising that may mislead, pressure, or expose children under 15 years of age to inappropriate content.

SA PA M P G L ES E

Code of Ethics

Food and Beverages Advertising Code

• Sets out rules for how food and beverage products can be advertised. • Prohibits advertising that promotes "occasional food or beverages" (products that do no meet the Food Standards Australia Nutrient Profile Scoring Criterion) from targeting children.

Environmental Claims Code

• Sets out rules to prevent greenwashing by restricting false, misleading, vague, exaggerated or unverifiable environmental claims.

➜

Figure 8.13.3 The advertising codes Australian businesses must follow

Review 8.13

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

2. 3.

Identify two advertising codes that regulate advertising in Australia. Outline the role of Ad Standards in Australia. Outline the main steps in the advertising complaints process. Explain how the advertising codes help to protect consumers.

Thinking, researching and communicating 1.

Discuss the advantages and disadvantages of advertising industry self-regulation. Investigate a real-world advertising complaint by visiting the Ad Standards website and navigating to the Community Panel decisions. Choose one of the following categories: clothing, education, entertainment, food/beverages, toys and games. a. Identify the advertising codes involved. b. Outline the complaint, and the outcome of the Community Panel’s decision. c. Explain what this example shows about the strengths or limitations of advertising self-regulation.

Create a poster or infographic that explains to a non-expert audience how advertising industry self-regulation works in Australia. You should include:

• institutions involved in developing the rules, administering the system and determining complaints • how the complaints process functions • at least two advertising codes • at least one strength and one limitation of self-regulation. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 8 Promoting and selling

8.14

Investigation: current issues in promoting and selling

Learning intention

Success criteria

In this lesson, you will learn about a current issue related to the promotion and selling of goods and services and communicate your findings using relevant commerce terminology.

❏ I can analyse a current issue related to promoting and selling. ❏ I can discuss my findings using relevant commerce terminology.

SA PA M P G L ES E

468

Scenario: You are an ACCC investigator!

You are working as a junior investigator at the Australian Competition and Consumer Commission (ACCC), an independent Commonwealth authority that aims to protect consumers. The ACCC has asked you to investigate a current issue in relation to the promotion and selling of goods and services. Your report will be used to inform the public and guide future regulatory decisions.

➜

Figure 8.14.1 The ACCC investigates promotional practices that may mislead or unfairly influence consumers.

8.14 Investigation: current issues in promoting and selling

Your task: investigating a current issue You may choose one of the following issues, or another issue approved by your teacher:

• greenwashing • influencer marketing • dark patterns (manipulative design in online promotions) • buy now, pay later (as a form of sales promotion) • promoting to children.

SA PA M P G L ES E

To complete this task, you must investigate one specific real-world example that illustrates the broader issue (such as an advertisement, social media post, influencer endorsement, or sales promotion). Your investigation should address the following. 1. Outline the good or service being promoted. 2. Outline the target market for the promotion. Refer to relevant demographic, psychographic, geographic or behavioural characteristics. 3. Describe the specific promotion. Refer to promotional goals, promotional techniques and promotional message. 4. Explain how the specific promotion illustrates a current issue in relation to the promotion and selling of goods or services. 5. Analyse the current issue in relation to the promotion and selling of goods or services. Refer to legal and ethical issues, and consequences for consumers, businesses and the broader community. 6. Based on your analysis, evaluate whether this promotional practice is acceptable from a consumer protection perspective.

Guidelines for preparing your report

• Use reliable sources, such as news articles, company websites, the ACCC website • • •

and the Ad Standards website. All sources should be acknowledged. You are encouraged to include images, tables or graphs. Suggested word count is 600 to 800 words (excluding headings, subheadings and references).

Communicating your findings

Your teacher will tell you how to present your findings. This might be in the form of a written report, infographic, slide presentation (with speaker notes) or podcast.

469

470

Chapter 8 Promoting and selling

8.15

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about promoting and selling? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

The purposes of promotion Consumer journey stages

Differentiating goods and services Identifying the target market Promotional techniques

Factors influencing promotional choices Advantages and disadvantages of promotional techniques

Evaluating promotional effectiveness

Legal and ethical issues in promotion

Advertising to children and young people Advertising codes and standards

Visible thinking routine Connect, extend, challenge

This exercise in visible thinking asks you to think about how the concepts in this chapter have expanded your understanding of how promoting and selling works. Using the question prompts, write a paragraph explaining what you previously knew about the topic and connecting what you now understand about the topic to your own experiences. 1.

Connect: how does what you learned in this chapter connect to what you already knew about promoting and selling goods and services?

Extend: what new ideas have extended or deepened your thinking?

Challenge: what is still challenging or confusing? What questions do you now have?

8.15 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Define promotion.

Define advertising.

List the five stages of the AIDAR model.

Identify two ways businesses can differentiate their goods or services.

Outline the four categories used to segment a market.

Identify two promotional techniques other than advertising.

List two internal and two external factors that influence promotional choices.

Define credibility, in the context of promotion.

Outline one key performance indicator for retention and summarise why it is difficult to attribute business outcomes to a specific promotion.

10.

Identify two types of misleading claims that may appear in promotional material.

11.

Describe what exploitation of vulnerability means and recall one reason children are considered vulnerable consumers.

12.

Identify two advertising codes that regulate advertising in Australia.

SA PA M P G L ES E

➜ Figure 8.15.1 Ethical

issues can arise around promotions and methods of advertising. In October 2018, a crowd gathered to protest NSW Premier Gladys Berejiklian allowing Racing NSW to promote the Everest Cup on the Sydney Opera House sails.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

471

472

Chapter 8 Promoting and selling

DOC

Download single paragraph model

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: A local nursery sells exotic plants to experienced gardeners. It has a small marketing budget. Select one promotional technique that would be likely to influence the target market and explain your choice.

SA PA M P G L ES E

Model answer: Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas Linking sentence: reconnects to the topic sentence using the language of the question

A promotional technique that would influence experienced gardeners shopping at a small nursery is targeted social media marketing, because it reaches a niche audience at a low cost. It uses platforms such as Instagram and Facebook to promote products directly to people already interested in gardening and exotic plants, allowing a small business to reach a relevant audience affordably. Because these platforms use algorithms to match users with specific content, the nursery can direct posts to gardeners most likely to value exotic plants, building brand recognition and displaying stock without expensive advertising. This is evident in the success of small retailers who use short videos, plantcare tips and strong visuals to build trust and encourage ongoing engagement. For example, the nursery could post a weekly ‘Exotic Plant Spotlight’ with care tips or behind-the-scenes footage to appeal to knowledgeable gardeners. In this way, targeted social media marketing offers a cost-effective method for influencing experienced gardeners interested in exotic plants.

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments

Examples: provide credibility and illustrate the argument

Structured-response question 1.

Create a timeline showing the main stages in the consumer journey. For each stage, identify one promotional technique that is well aligned with the promotional goal.

A car salesperson knows a competitor sells a similar model for 10% less. They tell customers, “The cheaper cars are outdated models, ours offer the best value for money.” Identify whether this is a legal or ethical issue and justify your choice.

Using the AIDAR model, write a press release of 150 to 250 words for a tech news site to announce that Tesla is about to release a major update to its Full Self-Driving software. Start by capturing attention, explain how it solves a problem, describe the key benefits for drivers and conclude with a call to action for readers to learn more. Include a quote from a Tesla spokesperson to add credibility.

8.15 Chapter review

Select an advertisement from the last 12 months (print or digital). With reference to features of the advertisement: a. Identify the main promotional goal using the AIDAR model. b. Describe the target market. c. Explain whether the advertisement has high credibility and alignment.

Extended-response question 1.

Find a real-world example of hunger marketing, viral marketing or guerilla marketing. a. Outline the marketing strategy and promotional techniques employed. b. Describe the intended target market, referring to at least two relevant market segment characteristics.

➜

SA PA M P G L ES E

c. Evaluate the effectiveness of the promotion. In your answer, assess whether the promotional goal was achieved, and discuss costs and benefits of the promotion.

Figure 8.15.2 The exotic plants of a specialist nursery can be promoted on platforms such as Instagram and Facebook.

473

Chapter

Investing

Lessons Setting the scene: the floating of Guzman y Gomez

9.2

What are the ways to finance my investments?

9.3

What are the ways I can invest?

9.4

What is ethical investment?

9.5

How can I manage risk and return in my investments?

9.6

How do I reduce my risk as an investor?

9.7

How do financial roles, responsibilities and government agencies protect investors?

9.8

Case study: what company is best to invest in?

9.9

Skills focus: can I become a share market detective to figure out how a company is performing?

SA PA M P G L ES E

9.1

9.10 Investigation: can you beat the market in the ASX Schools Sharemarket Game? 9.11

Chapter review

This digital chapter can be accessed via Cambridge GO

Chapter

Law in action

Lessons Setting the scene: what is law in action and why does it concern you?

10.2

What are human rights and how does Australia uphold them?

10.3

What are your legal rights and responsibilities as a young person?

10.4

What are the roles of law enforcement agencies in Australia and the rights of young people when interacting with them?

10.5

What is jury duty and what role does it serve in a courtroom?

10.6

In what ways do the courts interact with Aboriginal and Torres Strait Islander Peoples, including Culturally responsive approaches?

10.7

What is alternative dispute resolution and how do Aboriginal and Torres Strait Islander Communities resolve disputes?

10.8

How are crimes and punishments classified, and what are the consequences of a criminal record?

10.9

What is civil law and how do we encounter it in our daily lives?

SA PA M P G L ES E

10.1

10.10 Case study: why is shoplifting a big issue in New South Wales? 10.11

Skills focus: what does data reveal about youth crime in New South Wales?

10.12 Investigation: how can I explore the law in action? 10.13 Chapter review

Warning: Aboriginal and Torres Strait Islander people should be aware that this chapter discusses Culturally sensitive matters. Educators should take care to create a Culturally safe environment for students of Aboriginal and/or Torres Strait Islander backgrounds. Aboriginal and Torres Strait Islander people should be aware that this chapter contains the image and name of an Elder who has passed away.

476

Chapter 10 Law in action

10.1

Setting the scene: what is law in action and why does it concern you?

Learning intention

Success criteria

In this lesson, you will start to learn about how the law is applied to your everyday life.

❏ I can outline why everyone needs to have some understanding of the law.

SA PA M P G L ES E

Starter activity

Lindsay is running late for class and decides to cross the busy street in the middle of the block instead of at the pedestrian crossing. A nearby police officer sees her jaywalking and stops her. Do you know the answers to these questions? 1.

What law did Lindsay break by crossing the street this way?

Why do you think laws about crossing streets at pedestrian crossings exist?

What potential dangers could happen if people jaywalk?

How is the police officer demonstrating “law in action” by stopping Lindsay?

What could be some consequences for jaywalking in this situation?

In this topic you will start to build an understanding of how the law affects you and the wider community. This will enable you to provide educated answers to the questions in the Starter activity.

➜

Video 10.1.1 Setting the scene: law in action

jaywalking walking across a street at a place where it is not allowed or without taking care to avoid the traffic

undermine to gradually weaken something and make it less powerful or less likely to succeed

Is ignorance a defence when it comes to the law?

No. If a person breaks the law, claiming they did not know the law existed is generally not an acceptable defence in court. The rationale behind this rule is that if people could avoid responsibility simply by saying “I didn’t know it was illegal”, it would be very difficult for governments and courts to enforce laws. This principle is an important part of the legal system as it promotes responsibility by encouraging everyone to learn about and follow the law. It supports law enforcement as laws need to be applied fairly and uniformly, which would be undermined if ignorance was accepted as an excuse. This principle also maintains order as society relies on individuals complying with laws to create order and safety. In very limited and rare cases, ignorance may be considered if a person truly could not have known about the law – for example, when a law is newly introduced or very complex.

10.1 Setting the scene: what is law in action and why does it concern you?

477

➜

SA PA M P G L ES E

Writing focus 10.1 Question words

Figure 10.1.1 The law affects everyone in the community, including you.

However, these exceptions are difficult to prove and do not apply to most cases. For example, in the case of a traffic violation, if someone drives over the speed limit but claims they didn't know the new speed limit sign was posted, this defence usually won’t work. Drivers are expected to know and obey traffic laws.

Human rights and the law in action

In this topic, you will first learn about human rights and then look more closely at the Australian legal system. You might ask, how are they connected? The legal system helps protect your basic human rights through laws, parts of the Constitution, and rules such as anti-discrimination laws. Courts make sure these laws are followed and check government actions to protect your rights. Australia also agrees to international human rights rules, which affect its laws. Plus, common law helps protect rights, too. All of these work together to make sure your freedoms are respected by the law.

Activity 10.1.1 Pair up with another student and discuss your responses to the following questions. 1.

Do you think it is fair to punish someone who genuinely does not know the law?

How can people learn about laws?

How does the principle of “ignorance of the law is no excuse” help keep society functioning smoothly?

Share your responses with the class. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Constitution the written set of political principles that guides the rights of people in a country antidiscrimination against unfair treatment of people because of factors such as their race, gender or sexuality common law a system of laws based on customs and court decisions rather than on written laws made by a parliament

478

Chapter 10 Law in action

10.2

What are human rights and how does Australia uphold them? Success criteria

In this lesson, you will learn about fundamental human rights, children’s human rights, and the steps Australia takes to uphold them.

❏ I can outline the importance of human rights and identify the categories of human rights. ❏ I can describe the ways that human rights are protected in Australia. ❏ I can outline the different ways that children’s rights are protected in Australia.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Think about one human right you believe everyone should have.

Write down why it is important to you and how it impacts people’s lives.

What are human rights?

inherent existing as a natural or basic part of something inalienable unable to be removed or taken away

indivisible cannot be separated into different parts interdependent depending on each other

accountability a situation in which someone is responsible for things that happen and can give a satisfactory reason for them

Human rights are universal, belonging to every person Figure 10.2.1 Eleanor Roosevelt holds up a copy of the Universal simply because they are Declaration of Human Rights, 1949. human, regardless of identity or background. They are inalienable, meaning they cannot be taken away, though some rights may be lawfully limited in specific cases. All rights are indivisible and interdependent, as each right is equally important and connected to others. Human rights uphold equality and nondiscrimination, ensuring everyone has the same dignity and protection. They promote participation and inclusion, allowing people to be involved in decisions affecting their lives. Lastly, accountability and the rule of law require governments and authorities to respect rights and be responsible for any violations. ➜

Writing focus 10.2 Transitional phrases

Human rights are the fundamental (or necessary) rights and freedoms that belong to every person in the world, from birth until death. They apply regardless of where someone is from, what they believe, or how they choose to live their life. These rights are inherent to all human beings and are meant to ensure dignity, freedom, equality and justice for everyone.

10.2 What are human rights and how does Australia uphold them?

Right to life and liberty

479

• Everyone has the right to live and to be free from arbitrary detention or harm.

Freedom from torture and • Protection against cruel, inhuman or degrading treatment or punishment. inhumane treatment Freedom of thought, conscience and religion

• The right to hold beliefs and practise religion freely.

Freedom of speech and expression

• The right to express opinions and information without censorship or restraint.

Right to equality and non-discrimination

• Equal protection under the law without discrimination based on race, gender or other status. • Protection against arbitrary interference with one's privacy, family or correspondence.

SA PA M P G L ES E

Right to privacy Right to a fair trial

• The right to be heard fairly by an impartial tribunal.

Right to education

• Access to basic education.

Right to work and fair employment conditions Right to participate in government

• The opportunity to earn a living under just and favourable conditions. • The right to vote and take part in public affairs.

➜

Figure 10.2.2 The fundamental human rights

Why are human rights important?

Human rights are essential for creating a world where all people can have a safe, free and dignified life. Human rights do this in the following ways.

Protecting individual freedom and dignity

Human rights mean that everyone is valuable and should be treated with respect. They protect our freedom to make choices and live freely without being controlled or scared. These rights support who we are, what we believe, and our ability to be ourselves. This includes the key areas of freedom of speech where a person should be able to openly express opinions and ideas; the freedom of religion with the right to practise any religion or none at all; and the right to privacy, with protection against unlawful intrusion into personal life.

Ensuring equality and preventing discrimination

Human rights mean that everyone is equal and should be treated fairly by the law and in society. They protect people from unfair treatment because of things like race, gender, age, disability, background or who they love. This helps create a fair and caring community. This is important as discrimination can lead to social exclusion, poverty, violence and loss of opportunity. Human rights actively work to prevent these harms by safeguarding everyone’s equal status.

Promoting safety and security Human rights protect people from violence, abuse, torture and cruel treatment. They guarantee legal protections, fair trials and safeguards against random arrest or detention. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

unlawful intrusion the act of illegally becoming involved in a situation where you are not wanted or don’t belong poverty the condition of being extremely poor detention (immigration) when people who have entered a country without the necessary legal documentation are held in custody

480

Chapter 10 Law in action

Security helps create a safe environment where people can live without fear. When people feel safe and protected, they can focus on development, education and contributing positively to society.

Supporting access to basic needs and services Human rights recognise that to live a full life, people need secure access to vital resources such as food, shelter, healthcare and education. These rights help reduce poverty, improve health outcomes and open opportunities, especially for people in vulnerable situations.

Connecting to development

SA PA M P G L ES E

Human rights recognise that having access to education and healthcare is very important for people and communities to grow. Education helps people learn skills to get better jobs, make good choices and help their communities. Healthcare keeps people healthy and living longer, so they can join in daily life and work. With these basic services, people can improve their lives, escape poverty and take part fully and fairly in society. This builds stronger, kinder communities and helps the whole society grow.

Enabling participation in society and government

Human rights guarantee that all people can be involved in public life, including having a say in governance and policies affecting them. This includes voting rights, freedom of assembly and the right to form associations or join political parties. This is important because active citizen participation strengthens democracy, accountability and justice. It ensures that government decisions reflect the will and needs of the people.

How are human rights protected across the world?

• International agreements like the Universal Declaration of Human Rights, which countries sign to promise they will respect basic rights, protect human rights worldwide.

• International bodies like the United Nations monitor how countries follow promises,with groups like the Human Rights Council investigating problems. • Courts and commissions, such as the European Court of Human Rights and the Inter-American Human Rights Commission, help people whose rights are violated get justice. • A country’s constitution and laws, with courts upholding these rules, protect human rights domestically. Many countries have independent offices, called human rights institutions, that investigate abuses and teach people about their rights. • Non-governmental organisations (NGOs) such as Amnesty International work to identify violations, support victims and push for better protections.

• Education helps people understand their rights and how to defend them. ➜

10.2 What are human rights and how does Australia uphold them?

481

International agreements, global and regional groups, national laws, independent offices, NGOs and education all work together to protect human rights, although success depends on governments’ commitment and resources. The United Nations (UN) is an international organisation that works to keep peace, protect human rights and help countries work together to solve global problems. The Human Rights Council (HRC) is a group within the UN that works to promote and protect human rights around the world. Watch the following video to find out more about the HRC: https://cambridge.edu.au/redirect/12166.

Activity 10.2.1 See, think, wonder

SA PA M P G L ES E

Freedom of opinion and expression

The right to vote

The right to education

See: look at the images above. They each represent human rights in Australia.

Think: do you think these rights are accessible to everyone?

Wonder: why or why not? Write down your reasons.

How are human rights protected in Australia?

Human rights in Australia are incorporated into law through a combination of international treaties, federal and state legislation, and common law principles.

International

Australia is a party to many international human rights treaties, such as the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR). While these treaties influence Australian law and policy, they do not automatically become law unless incorporated through legislation.

Federal At the federal level, several key laws protect human rights. The Australian Human Rights Commission Act 1986 establishes the Australian Human Rights Commission, which investigates discrimination and human rights complaints. The Racial Discrimination Act 1975 makes racial discrimination unlawful. The Sex Discrimination Act 1984 prohibits discrimination based on sex, marital status or pregnancy. The Disability Discrimination Act 1992 protects people with disabilities against discrimination, and the Age Discrimination Act 2004 prohibits age-based discrimination. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

federal related to the central government of a country, as opposed to the government of a specific state or region

482

Chapter 10 Law in action

States and territories In addition to federal laws, some states and territories have enacted their own human rights or anti-discrimination legislation. For example, the Human Rights Act 2004 in the Australian Capital Territory and the Charter of Human Rights and Responsibilities Act 2006 in Victoria provide frameworks for protecting rights at the state level. Common law also plays a role, as courts have developed principles supporting certain rights, such as the right to a fair trial and freedom of speech. However, these rights are not absolute and are not always explicitly protected.

SA PA M P G L ES E

The Australian Constitution does not include a comprehensive bill of rights; instead, it contains some implied and express rights, such as the implied freedom of political communication and protection against discrimination based on state residence.

➜

In New South Wales, human rights are protected through state anti-discrimination laws and the NSW Anti-Discrimination Board, which handles complaints.

Builds empathy and respect – understanding human rights encourages compassion for others, promoting peaceful and respectful communities

➜

Video 10.2.1 This video was made by the Department of Foreign Affairs and Trade when Australia took a seat on the Human Rights Council. After watching the video, write down some notes about what you have learned about human rights and what they depend upon.

Empowers individuals – knowledge of rights enables people to stand up against injustice and advocate for themselves and others

Promotes justice and equality – teaching human rights fosters awareness of fairness and the importance of protecting these rights for all

Figure 10.2.4 Knowing your human rights can help foster better communities.

The United Nations Convention on the Rights of the Child and children’s rights in Australia The United Nations Convention on the Rights of the Child (UNCRC) is a global agreement that outlines the basic rights all children should have. Australia ratified the UNCRC in 1990, signalling a strong commitment to uphold the rights of children outlined in the Convention.

➜

Figure 10.2.5 The United Nations takes the rights of children very seriously and has set these out in a convention.

While the UNCRC is an international treaty and does not automatically become domestic law, its principles influence the development and reform of Australian federal, state and territory laws and policies affecting children. Governments incorporate UNCRC standards into child protection legislation, education policies, health services and family law.

10.2 What are human rights and how does Australia uphold them?

Protection from harm One important part of the UNCRC is keeping children safe from abuse, neglect and violence. In Australia, there are laws and systems to identify and respond to child abuse. People such as teachers and doctors have to report if they think a child is being hurt. Special agencies then investigate these reports and help children and families with support and care when needed. There are national plans to prevent harm and make sure children are looked after.

Right to education

SA PA M P G L ES E

The UNCRC also says every child has the right to go to school and get a good education for free. In Australia, children of school age have access to fee-free public education. Education systems aim to include all children, including those from different cultures, children with disabilities and Indigenous children. Some families choose private schooling, but free public education is available to all. Additional support, such as tutoring and scholarships is also available to help children who require it.

Participation rights

Children have the right to say what they think and have adults listen to them. Australia supports this by encouraging children to speak up in school councils and meetings. In family court cases, children’s views are accounted for depending on their age. Child welfare services also ask children in care about their feelings and wishes. Many programs make sure children can share their views safely and be heard respectfully.

➜

Figure 10.2.6 Everyone is entitled to the same basic human rights.

483

484

Chapter 10 Law in action

Health and wellbeing The UNCRC states that every child has the right to good health and medical care. Australia offers free or low-cost healthcare through Medicare. There are national programs to vaccinate children, and services to support mothers and babies. Mental health programs help children with their emotions and wellbeing. Extra help is given to Indigenous children and children living in remote areas to make sure they get the care they need.

Non-discrimination and equality

SA PA M P G L ES E

Video 10.2.2 Watch this video from the Office of the United Nations High Commissioner for Human Rights to learn about why it is important to stand up for human rights. ➜

No child should be treated unfairly because of things like their race, gender, disability or background. Australia has laws that protect children against discrimination. Schools and services are designed to be welcoming and fair to all children, including those from different cultures or languages. Special programs support children who face more challenges, to make sure everyone has equal opportunities.

Monitoring and reporting

Under the UNCRC, Australia is required to submit periodic reports to the UN Committee on the Rights of the Child detailing how it is implementing the Convention. This process includes input from government agencies, non-governmental organisations, Indigenous representatives and children themselves. The Committee reviews these reports and provides recommendations for improvements. This ongoing monitoring encourages transparency and continuous progress towards better protection and promotion of children’s rights.

Review 10.2 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Provide a definition for human rights based on what you learned in this lesson.

Identify three types of organisations or mechanisms involved in protecting human rights. Outline how Australian states and territories protect human rights. Provide an example.

Thinking, researching and communicating 1.

Pair up with another student and write a three- to five-minute speech about how Australia could improve the participation of all children in decisions that affect their lives, to better uphold their rights under the UNCRC. Prepare to present your speech as if you were speaking at parliament. Practise your delivery with your partner, focusing on clear communication and persuasive language. Consider the following areas in your speech:

• current participation opportunities – strengths and limitations • barriers to participation • possible improvements • legal and policy enhancements • benefits of improved participation. Remember to include an introduction, at least three main points and a conclusion to your speech. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

10.3 What are your legal rights and responsibilities as a young person?

10.3

485

What are your legal rights and responsibilities as a young person? Success criteria

In this lesson, you will learn about the concept of legal capacity and when minors are granted different legal rights and responsibilities.

❏ I can define legal capacity and outline how it affects young people. ❏ I can identify the age that different rights and responsibilities are granted and outline some of the arguments around the age of criminal responsibility.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Look at Figure 10.3.1 and write down what you think the image highlights about the rights and legal obligations of young people.

Think about how the context impacts a young person’s legal capacity. Why do you think it’s important for a young person’s rights and obligations to increase gradually towards adulthood?

➜

Figure 10.3.1 Young people have different legal capacities to adults.

legal capacity a person’s legal ability to understand and make binding decisions or enter into enforceable agreements, such as contracts, and to be held responsible for those decisions under the law

486

Chapter 10 Law in action

What is meant by legal capacity? Writing focus 10.3 Transitional phrases

Universal but variable

• This means that all persons have some degree of legal capacity, but the extent varies depending on factors like age, mental capacity and legal status.

Acquired at birth

• While legal capacity generally begins at birth, it is very limited. Full capacity is attained later.

Capacity to have rights and duties

• Everyone has the capacity to hold rights and duties, such as property ownership and legal protections. • Along with rights, individuals assume obligations such as paying debts, fulfilling contracts or complying with laws.

Capacity to exercise rights

• Legal capacity includes the ability to perform acts that create or affect legal relations, such as signing contracts.

Limited by law

• Legal capacity can be limited or suspended in certain cases – such as with minors, people with mental incapacities or under certain legal restrictions.

SA PA M P G L ES E

binding agreement something that cannot be legally avoided or stopped

Legal capacity is the ability of a person or entity (such as a business) to have rights and obligations under the law and to perform legal actions. It is essential because it defines who can enter into legally binding agreements and how they can participate in legal processes. Without legal capacity, an individual or entity cannot fully engage with the legal system. The main features of legal capacity are shown in Figure 10.3.2.

• Some disabilities or limitations to legal capacity can be temporary or permanent. • For example, adults can lose legal capacity temporarily or permanently due to Can be regained or lost mental health issues, intoxication or legal judgments (e.g. bankruptcy restricts capacity in certain cases). • However, legal capacity can sometimes be restored through guardianship orders or other legal processes.

➜

Figure 10.3.2 The main features of legal capacity

The legal capacity of children as minors

In most places, including New South Wales, a person is considered a child or young person until they are 18 years old. Before they turn 18, they are called minors and have limited legal capacity because they are still developing physically, mentally and emotionally, and generally do not have the full understanding or experience to make important legal decisions. Because the law recognises that children may not fully grasp the consequences of their actions or agreements, it limits their ability to enter into certain legal contracts or take on significant responsibilities. This protection helps prevent them from being taken advantage of or making decisions that could harm their future. Children can make simple, everyday transactions, like buying small items, but they can’t enter complex or binding agreements without restrictions. For most major legal actions, they need a parent or guardian’s consent.

10.3 What are your legal rights and responsibilities as a young person?

487

In some cases, like medical decisions, the law considers a child’s maturity before allowing them to act independently. By limiting their legal capacity, the law ensures that children have guidance and support, usually from parents, guardians or the courts, when making important decisions. As they grow older and mature, they gradually gain more rights and responsibilities.

The capacity of a young person to enter into contracts

SA PA M P G L ES E

Usually, when a young person signs a contract, the contract is voidable. This means the young person can cancel the contract before they turn 18 or soon after. But if they decide to keep the contract after becoming an adult, then the contract becomes valid and they have to follow it. This protects young people from being forced to keep contracts that they didn’t fully agree to. If a minor cancels a contract, they should return what they received to keep things fair. For example, if they bought something but then cancel the agreement, they should give the item back.

voidable if something is voidable, it becomes possible to remove its legal force

There are some important exceptions where the contract is binding on a minor. One common exception is contracts for “necessaries”, which are things a young person really needs to live properly, like food, clothes, housing or medical care. If a young person buys or agrees to pay for those things, they usually have to pay a fair price for them.

Figure 10.3.3 Always be cautious when signing contracts, and have a trusted adult review anything before you commit. The law protects young people in some ways, but it’s better to be safe than sorry. ➜

Another exception is contracts for things that help the young person, such as jobs, training or education. If a young person signs a contract to work or to learn a trade through an apprenticeship, and the conditions are fair, then this contract usually must be followed. The law sees these contracts as helpful for the young person’s future.

However, contracts for things like buying expensive luxury items or gambling (betting) usually do not bind young people. The law does not want young people to get stuck with unfair contracts for things they don’t really need or understand.

Age-based legal rights and responsibilities in Australia

In Australia, people gain certain rights and responsibilities at different ages. For example, children under the age of 10 cannot be held responsible for breaking the law, and in some states and territories this minimum age is higher. At 14, they can start working in some jobs. At 16, they can get a learner driver’s licence. When they turn 18, they become adults who can vote, get married and make legal agreements on their own. These rules help protect young people while letting them do more as they grow up. Although most of these laws are similar across Australia, some details can be different depending on the state or territory. Figure 10.3.4 outlines some of the key agebased legal rights and responsibilities in Australia. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

488

Chapter 10 Law in action

From birth

From the moment a child is born, they are recognised as a legal person with basic rights and protections. Although newborns cannot exercise legal capacity independently, the law affords them safeguards regarding welfare, inheritance rights and protection against neglect or abuse. Parents or guardians act on their behalf, managing decisions in the child's best interests until they reach age-defined thresholds. Across Australia, people gain additional rights and responsibilities at different ages, although these can vary between states and territories. Age of criminal responsibility In Australia, children aged 10 and above can be held criminally responsible for their actions. In some states and territories, this minimum age is higher. However, children between 10 and their state’s upper threshold are protected by the doli incapax presumption, which assumes they are incapable of criminal intent unless it can be proven that the child knew their conduct was wrong. This balances accountability with developmental understanding and supports rehabilitative approaches within the youth justice system. Employment rights and restrictions

SA PA M P G L ES E

At age 10

Legal personhood

At age 14

At age 16

At age 17

At age 18

Young people may engage in paid work during their teenage years under strict conditions designed to protect their health, safety and welfare, but the rules about minimum working age and conditions vary. Employment laws regulate working hours, types of permissible work and environments to prevent exploitation or harm. These restrictions recognise the need for education and development while allowing young people to gain experience and financial autonomy. Learner driver’s permit and medical consent

Sixteen-year-olds can apply for learner driver’s licences, permitting supervised driving. This step promotes gradually gaining driving skills, adhering to road safety standards. Additionally, under the principle of “Gillick competence", minors may consent to or refuse medical treatment independently if deemed mature enough to understand the implications, ensuring respect for growing autonomy in health decisions. Increased independence

In their later teenage years, young people can take on more legal independence. They become eligible to apply for a provisional driver’s licence, allowing limited unsupervised driving while continuing to develop skills. Compulsory education typically ends, enabling them to leave school and pursue work, vocational training or further education. The age that young people gain these rights Full legal capacity and adult rights

Reaching 18 signifies attaining full adult legal capacity, with complete rights and responsibilities under Australian law. Individuals can vote, enter contracts, marry without parental permission and be tried fully as adults under the criminal justice system. This age threshold marks the transition from childhood legal protections to adult accountability and autonomy.

➜

Figure 10.3.4 Age-based legal rights and responsibilities in New South Wales

Activity 10.3.1 Think, pair, share

Pair up with another student and discuss your responses to the following questions based on the headline in Figure 10.3.5.

What do you think this headline means?

How does it relate to this part of the topic?

How does it relate to the protection of children’s rights?

Figure 10.3.5 A headline from the ABC about the age of criminal responsibility ➜

10.3 What are your legal rights and responsibilities as a young person?

Review 10.3 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

489

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Recall why young people are given different legal standings from adults.

Match the sentence starters to the sentence finishers. Write the correct sentences in your workbook.

Sentence finishers a. perform acts like signing contracts that affect legal relations. b. protect them from exploitation and harmful decisions. c. guardianship orders or other legal processes.

SA PA M P G L ES E

Sentence starters i. Legal capacity is universal but variable, meaning that … ii. Legal capacity is acquired at birth, but … iii. Everyone has the capacity to hold rights and duties such as … iv. The capacity to exercise rights means an individual can … v. Legal capacity can be limited by law in situations involving … vi. Legal capacity can be lost or regained – for example, through … vii. Children, or minors, have limited legal capacity because … viii. The law limits children’s ability to enter into legal contracts to … ix. Minors usually require parental consent for … x. Contracts made by minors can often be cancelled to … xi. Exceptions to cancellable contracts for minors include those involving … xii. If a child cancels a contract, they should …

d. the extent varies based on age, mental capacity or legal status. e. protect minors from being forced into agreements they don’t understand. f. try to return whatever they received to maintain fairness. g. it is very limited at first and full capacity is attained later. h. essentials like food, clothing, education or work-related items. i. minors, people with mental incapacities, or legal restrictions. j. they are still developing mentally, physically and emotionally. k. property ownership, paying debts and complying with laws. l. important legal acts that could bind them to significant obligations.

Thinking, researching and communicating 1.

Construct a timeline of the legal rights and responsibilities of minors.

Construct a short paragraph on why it's important to know your legal capacity and when to seek legal advice and guidance.

Visit the Legal Aid NSW website https://cambridge.edu.au/redirect/11741 and access the information about your rights at different ages. Find the correct information to suit the following scenarios. • Scenario 1: Tom is 16 and wants to get a part-time job. What legal steps should Tom be aware of before starting work? • Scenario 2: Karina is 17 and is thinking about getting a learner driver’s licence. When is she legally allowed to start the learner’s process? • Scenario 3: Selim is 15 and his friends are planning to have a party with alcohol. What legal issues does Selim need to consider? • Scenario 4: Samantha is 14 and wants to open a bank account in her name. What are her rights regarding financial decisions? • Scenario 5: Pavel is 18 and thinking about renting a flat. What legal responsibilities does he have now that he is an adult? Share your answers with another student and discuss any new information you have learned. Highlight any common misunderstandings about legal rights and ages.

490

Chapter 10 Law in action

10.4

What are the roles of law enforcement agencies in Australia and the rights of young people when interacting with them? Success criteria

In this lesson, you will learn about the roles of the different law enforcement agencies in Australia and your rights and responsibilities, as a young person, when interacting with the police.

❏ I can outline the role of the law enforcement agencies in Australia. ❏ I understand my rights and responsibilities when interacting with the police.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Can you name the different law enforcement agencies in Australia and what each one does?

Why do we need different ones?

➜

Figure 10.4.1 Law enforcement in Australia holds a vital role in public safety.

The role of law enforcement agencies

Writing focus 10.4 Developing sentences

In Australia, and across the states and territories, law enforcement agencies play a crucial role in maintaining public safety, enforcing laws and upholding justice. Their responsibilities broadly include the following.

Maintaining public order and safety Law enforcement agencies work to create safe and peaceful communities. They do this by patrolling neighbourhoods, watching for suspicious behaviour, and preventing crimes from happening. They also manage public events such as festivals, sports games and protests to ensure that these gatherings go smoothly and safely. When emergencies occur, such as traffic accidents, natural disasters or violent incidents, officers respond quickly to provide help, protect people and restore order. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

10.4 The roles of law enforcement agencies in Australia and the rights of young people

491

Preventing and investigating crimes When a crime happens, police investigate carefully to understand what occurred. This includes collecting evidence such as photos, fingerprints and witness accounts. They interview people involved and search for suspects. After gathering sufficient evidence, they arrest those they believe were responsible. Police then work with prosecutors to help bring them to trial. Thorough investigations help solve crimes and reduce the chance of repeat offences, keeping communities safer.

Enforcing laws

SA PA M P G L ES E

Police enforce various laws made by federal, state and local governments. This includes enforcing traffic rules like speed limits and drink-driving laws to reduce accidents. They also apply drug laws by stopping illegal drug use and trafficking. Beyond that, police enforce criminal laws covering theft, assault, fraud and more. By making sure people follow laws, they protect everyone's rights and keep society orderly.

Engaging communities

Building positive relationships with the community is key to effective policing. Officers engage with schools, community groups and residents to provide information about safety and crime prevention. For example, they may teach children how to stay safe online or give advice on home security. When police and communities work together, it creates trust, making it easier to prevent crime, solve cases and improve neighbourhood wellbeing.

prosecutors legal officials who accuse someone of committing a crime, especially in a courtroom fraud the crime of obtaining money or other objects of value by deceiving people counterterrorism action taken to prevent violence for political purposes hacking getting into someone else’s computer system without permission in order to find information or do something illegal trafficking the act of buying and selling goods illegally

Carrying out specialised operations

Some police units focus on complex and serious crimes requiring special skills. For example, counterterrorism units protect against threats to national security. Cybercrime teams deal with online offences like hacking and identity theft. There are also units targeting organised crime such as gangs involved in drug trafficking and violence. Domestic violence teams support victims and work to stop abuse in homes. These specialised teams use advanced training and technology to tackle difficult challenges.

Law enforcement agencies in Australia and New South Wales Australian Federal Police (AFP)

• This is the federal agency responsible for enforcing laws related to national security, organised crime, drug trafficking, cybercrime and protecting federal government interests across Australia.

NSW Police Force

• This is the primary law enforcement agency in New South Wales. It handles general policing duties, including crime prevention, investigation, traffic enforcement, emergency response and public order within the state.

Other agencies

• Various other agencies have law enforcement roles, such as the Australian Border Force (customs and immigration enforcement), local council enforcement officers and specialised units within these bodies.

➜

Figure 10.4.2 These agencies work collaboratively to uphold the rule of law and ensure the safety and security of individuals and communities in New South Wales and across Australia. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

492

Chapter 10 Law in action

Young people and interactions with the police

SA PA M P G L ES E

➜

Young people interact with police in various contexts, from community engagement to law enforcement actions. These interactions can cause anxiety, especially if young people face discrimination or misunderstand their rights. Positive encounters build trust, while negative ones may lead to fear and mistrust.

Figure 10.4.3 Everyone has rights and responsibilities when dealing with the police.

What happens if young people are arrested? Rights

Where possible, police try to find other ways besides arresting the young person, especially if the problem is small. An example would be giving a warning. This helps keep young people out of trouble and supports them to get help instead of receive punishment. However, sometimes police will arrest a minor. When this occurs, there are things that must be done to protect the young person.

A young person's rights when they're arrested

• The police must tell the young person clearly why they are being arrested and explain their rights in a way that is easy to understand. • The young person should know that they don’t have to answer questions if they don’t want to, and they can have a parent, guardian or trusted adult with them when the police talk to them. • The young person should be kept somewhere safe and separate from adults in jail. • Police must tell the young person’s parent or guardian as soon as they can about the arrest and where the young person is. • The young person should also be able to talk to a lawyer who can help them understand what is happening. • Police must be respectful and careful with young people and not use too much force. • There are rules about how long police can keep a young person without charging them, and these rules must be followed. • Police also need to write down everything about the arrest to keep a record.

➜

Figure 10.4.4 It’s important to understand your rights as a young person, so that you know how to conduct yourself in a potentially stressful situation.

10.4 The roles of law enforcement agencies in Australia and the rights of young people

493

Responsibilities When you encounter the police as a young person, it’s important to approach the situation with respect and calmness. Being polite and cooperative can help make the interaction go smoothly and safely.

➜

SA PA M P G L ES E

A young person's responsibilities when interacting with law enforcement

• You should listen carefully to what police officers say, follow any lawful instructions, and avoid arguing or resisting, as this can escalate the situation and lead to more serious consequences. • You have a responsibility to understand what is happening during the interaction. If you don’t understand something the police say or ask, you should ask questions or say that you don’t understand. • When answering questions, it’s crucial for you to be honest. Providing false information or lying can complicate the situation and lead to further legal trouble. • You also have the right to remain silent – that is, you do not have to answer questions if you don’t want to. If you choose to remain silent, it is best to do so respectfully and clearly, such as by stating you want to speak to a parent, guardian or a lawyer before answering any questions.

Figure 10.4.5 Knowing your responsibilities when dealing with law enforcement will help you know what is expected of you.

Review 10.4

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Read the scenario about Jake and complete the questions.

Jake is a 17-year-old high school student who lives in a suburban neighbourhood. One afternoon, while walking home from a friend’s house, he passes by a local convenience store. At this time, the store owner reports a theft, describing a young person seen acting suspiciously nearby. Police officers arrive, identify Jake as a possible suspect and ask him some questions. Jake feels nervous and fidgets during the questioning. The officers confirm his identity, inform him that he is a suspect, and explain his rights, including the right to remain silent and speak with a lawyer. Jake is then placed under arrest and taken to the police station, where he is allowed to contact his parents and a lawyer. a. Outline how Jake’s feelings of stress and anxiety might affect his interaction with the police during questioning. b. Explain why it is important for the police to clearly inform Jake of his legal rights. c. Outline the key rights a teenager like Jake has when being questioned or arrested by the police. d. Explain how police can ensure that a young person is treated fairly and with respect during an arrest. e. Why is it important for Jake to have access to a lawyer and to contact his parents? f. Identify the steps Jake could take if he feels that his rights are not being respected.

Thinking, researching and communicating 1.

Go to the Australian Federal Police website and read about their latest investigations. Pick two investigations from the last year and answer the questions below. a. Identify what the investigation was about (e.g. drugs, online crime, terrorism) and describe what happened during the investigation (e.g. arrests, charges, results). b. Explain how this investigation helped keep people safe. c. Did other police or agencies help with the investigation? If so, in what way? d. Summarise any problems or difficulties that occurred during the investigation.

Construct a short report (500 to 700 words) about why the AFP’s investigations are important for Australia. Refer to your findings from question 1 in the response. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

494

Chapter 10 Law in action

10.5

What is jury duty and what role does it serve in a courtroom? Success criteria

In this lesson, you will learn about the different personnel that you will find in a courtroom when a criminal case is being heard and how juries are selected.

❏ I can identify the different people in a courtroom and their role. ❏ I can outline the role of juries and the selection process.

SA PA M P G L ES E

Learning intention

Starter activity

When you watch legal shows on television, there are often a lot of people in the courtroom. Australian courts also have many different people in them, but usually not as much drama as a television show. 1.

How many personnel can you name?

Write down what you know about their roles.

Who is who in the courtroom?

Writing focus 10.5 Developing sentences

jury a group of people chosen to listen to all the facts in a court of law and decide if a person is guilty or innocent or if a claim has been proved

trial the hearing of statements and showing of evidence in a law court to decide a case or a legal matter

District and supreme courts hear more serious criminal Figure 10.5.1 You could ask the adults in your life if they have ever cases and so there will participated in jury duty, and what that experience was like. be more people involved, although not always a jury if the defendant has elected to have a judge-only trial. Many of these concepts are covered in Chapter 4. ➜

defendant a person in a law case who is accused of having done something illegal

The number of people in a courtroom and their roles will differ depending on the level of the court and the case being heard. For example, lower-level crimes are usually heard in a local court, where there will be a judge but no jury. Civil cases also have differences that will be explored in Lesson 10.9.

Key personnel When you look at Figure 10.5.2, you will see where everyone sits in a criminal courtroom depending on their role. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Figure 10.5.2 Each person in a courtroom has a distinct role. Do you know what each role entails?

SA PA M P G L ES E

10.5 What is jury duty and what role does it serve in a courtroom?

495

496

Chapter 10 Law in action

Judge’s associate

• This person sits close to the judge and helps them with paperwork and other tasks. • They work in the bigger courts, like the Supreme and County Courts.

Tipstaff / bench clerk

• A tipstaff or bench clerk helps the judge by announcing when a case is starting and swearing in witnesses (asking them to promise to tell the truth). • The tipstaff works in the Supreme and District Courts, and the bench clerk works in Children’s and Magistrates’ /Local Courts. • When you are asked to promise to tell the truth in court, this is the person who speaks to you.

SA PA M P G L ES E

Judge or Magistrate

• This is the person in charge of the court. They sit at the front, facing everyone. • Like a principal at a school, they make sure the court follows the rules. They listen to the stories and evidence from both sides and decide what is fair. • Sometimes, they decide if someone is guilty and what should happen next.

Lawyers

• There are two types of lawyers in court: - The prosecution lawyers say that someone broke the law. - The defence lawyers help the person who is accused of breaking the law. • Lawyers ask questions of witnesses to help the judge or magistrate and jury understand what happened. • Lawyers who speak in court are sometimes called barristers or counsel.

Witness box

• This is the special seat where adults sit when they answer questions (this is called giving evidence). It's usually near the judge. • Children and young people usually give their answers somewhere else because it can be stressful to sit in the witness box.

Defendant

• This is the person who the police say has broken a law. They are also called the accused. • Usually, the defendant sits in a secure area called the dock at the back of the courtroom, or sometimes with their lawyers.

Security guard • This person stands near the defendant to keep everyone safe during the court

Public gallery

• This is where people from the public can watch the court case. • When children or young people give evidence, usually only important people who need to be there are allowed inside.

Police informant

• This is the police officer who charged the defendant with the crime. • They often sit behind the prosecution lawyers in the public gallery during the trial.

Jury

• This is a group of 12 people from the community. They listen to the evidence and decide if the defendant broke the law or not. • If they say the person is guilty, then the judge decides the punishment. • Not all courts use juries, and often the jury is not there when children or young people give evidence.

➜

Figure 10.5.3 Key personnel in a courtroom

➜

Figure 10.5.4 The jury is a group of 12 people selected from the community Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

10.5 What is jury duty and what role does it serve in a courtroom?

497

What is a jury and how are jurors selected? The jury system involves community members in both criminal and some civil cases and is designed to ensure fair trials by protecting the integrity of the judicial process. The role of juries and their selection is similar across Australia; however, each state and territory may have small differences. This lesson will look at the selection of juries in New South Wales.

Juries in New South Wales

SA PA M P G L ES E

In New South Wales, the role and selection of juries are governed by legislation such as the Jury Act 1977 (NSW) and related court rules.

Role of juries in New South Wales

• Juries primarily serve in criminal •

➜

trials in the District Court and Supreme Court. Their role is to listen to the evidence presented in court, assess the facts and apply the law as directed by Figure 10.5.5 Jury duty is an important part of the legal system. the judge. They must decide the facts impartially and deliver a verdict, which in criminal cases will be guilty or not guilty. In criminal trials, a unanimous verdict is generally required, though majority verdicts may be accepted in some circumstances after deliberation.

• •

Jury selection in New South Wales

• Potential jurors are randomly selected from the electoral roll, ensuring they • • • • • •

represent a cross-section of the community. Eligible jurors must be Australian citizens aged 18 or over who live in New South Wales and are enrolled to vote. Certain people are disqualified or exempt from jury service, such as those serving certain government roles, legal professionals or people with certain criminal convictions. People summoned for jury duty must attend court on the specified date. During jury empanelment, prospective jurors may be subject to voir dire, which is questioning by lawyers to assess their suitability. This might involve questioning about potential biases or conflicts of interest. A lawyer can challenge a prospective juror for cause (if they have a valid reason for wanting the prospective juror disqualified) or through peremptory challenge (where they do not need to give a reason - but they can only make a limited number of peremptory challenges). Once the required number of jurors is selected (usually 12 for criminal trials), they are sworn in to hear the case.

verdict an opinion or a decision made at the end of a trial after judging the facts presented electoral roll an official list of people who are allowed to vote jury empanelment the process of selecting jurors to form a panel peremptory expecting to be obeyed without any delays or questions

498

Chapter 10 Law in action

Review 10.5 Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding

Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. The judge or magistrate sits at the back of the courtroom.

SA PA M P G L ES E

b. The judge is like the principal of a school because they are in charge. c. The judge’s associate helps the judge during the trial.

d. The tipstaff or bench clerk asks witnesses to promise to tell the truth. e. Lawyers only help the person accused of breaking the law.

f. There are two main types of lawyers in a criminal case: prosecution and defence. g. Witnesses always sit in the witness box, no matter their age.

h. The defendant is the person who is accused of breaking the law.

i. Security guards are in the courtroom to help keep everyone safe.

j. A jury is a group of 12 people who decide if the defendant broke the law. k. All courts have a jury present during every trial.

l. The public gallery is where people from the public can sit to watch the court case. m. The police informant sits with the defence lawyers.

5. 6.

Discuss the primary role of a jury in a trial and the types of cases in which juries most commonly serve in New South Wales. Outline why it is important to have ordinary citizens serving as jurors in the legal system. Explain what jurors must do when deciding on a verdict in a criminal trial and what is usually required for a verdict to be accepted. Summarise the eligibility requirements needed to be selected for jury service in New South Wales. Outline voir dire and why it is used during the jury selection process.

Thinking, researching and communicating 1.

Based on what you have learned about criminal courtrooms, evaluate the different measures in place to protect children in a courtroom. Why are these measures important and how do they help?

10.6 In what ways do the courts interact with Aboriginal and Torres Strait Islander Peoples

10.6

499

In what ways do the courts interact with Aboriginal and Torres Strait Islander Peoples, including Culturally responsive approaches? Success criteria

In this lesson, you will learn about the different ways that the courts interact with Aboriginal and Torres Strait Islander Peoples, including Culturally responsive approaches they adopt.

❏ I can describe different ways that the courts interact with Aboriginal and Torres Strait Islander Peoples, including Culturally responsive approaches. ❏ I can outline criticisms of these interactions.

SA PA M P G L ES E

Learning intention

Starter activity

Look at Figure 10.6.1 showing the smoking ceremony at the opening of the Youth Koori Court. 1.

What does this image suggest about how courts interact with First Nations Communities?

How might Practices like this support justice outcomes and help courts better respond to young people and their Communities?

➜

Figure 10.6.1 Elder Uncle Wes Marne (centre) carries out the smoking ceremony at the entrance to Children’s Court, before the opening of the Youth Koori Court in Surry Hills, Sydney in 2019. Photo: Kate Geraghty

smoking ceremony a traditional First Nations Cultural Practice in which smoke from burning native plants is used by Elders to cleanse a place, welcome people and mark significant events

500

Chapter 10 Law in action

Why must the courts adopt Culturally responsive approaches with Aboriginal and Torres Strait Islander Peoples? As the Australian legal system is culturally European, courts need Culturally responsive ways to work with Aboriginal and Torres Strait Islander Peoples, whose cultures and experiences are diverse. Culturally responsive approaches build trust, involve Elders and Communities, and help courts understand people’s backgrounds. This leads to fairer decisions that support healing and avoid unnecessary punishment. It also helps reduce the high number of First Nations people in jail and respects their rights and culture. A combination of approaches can support a fairer and more effective justice process for First Nations Peoples within Australia’s contemporary legal system, which operates alongside, and has historically displaced, Aboriginal and Torres Strait Islander systems of law and justice that have existed for tens of thousands of years.

SA PA M P G L ES E

Writing focus 10.6 Appositives

Different approaches

Special courts for Aboriginal and Torres Strait Islander Peoples

➜

Figure 10.6.2 Community representatives and court officials seated together during the opening of the Youth Koori Court in Surry Hills on 6 February 2019. The Koori Court model uses Culturally-safe approaches to resolving legal matters impacting First Nations young people by focusing on respect, dialogue and Culturally responsive justice. offender a person who is guilty of committing a crime

One Culturally responsive approach that has been developed is setting up special courts such as Koori Courts (in New South Wales) and similar courts in other states. In these courts, Elders or respected Community members join the judge or magistrate during sentencing. Their job is to help explain the person’s culture and life so the court understands better. This helps to give more suitable punishments that support the person’s healing and prevent them from committing crimes again. These courts usually deal with less serious offences, and the Indigenous person must agree to take part. The process is less formal and feels more supportive than a regular court.

Circle sentencing is another special method used in some areas. It involves sitting in a circle with the offender, victims, Elders and Community members. Everyone talks openly about what happened and agrees on how the offender can make amends. This method is about fixing harm and bringing communities together, rather than just punishing.

Involving Elders and Community members

Elders and respected First Nations Community members play a key role by supporting defendants during court processes. They explain what’s happening in ways that are easier to understand and provide emotional and cultural support. These Elders also help the court understand the reasons behind someone’s actions, like family problems, Cultural responsibilities or past trauma. These approaches have developed as courts have recognised that the Australian legal system, introduced by colonisation, has contributed to disadvantage and trauma for First Nations people.

10.6 In what ways do the courts interact with Aboriginal and Torres Strait Islander Peoples

501

In response, courts are seeking to make processes more inclusive and Culturally responsive. The presence of Elders and Community members can make the court process less confusing and scary, helping First Nations people feel more supported in the courtroom.

Culturally friendly court spaces

SA PA M P G L ES E

Courts sometimes provide spaces where Indigenous defendants and their families can wait comfortably, away from the busy, formal court waiting rooms. Some courts have special days set aside just for Indigenous cases. This allows court staff to prepare, making sure the process is Culturally safe. Courts might also include First Nations artwork or have ceremonies like Welcome to Country to show respect for local Indigenous culture. These actions can help Indigenous people feel welcomed and respected.

Indigenous support workers

Indigenous Liaison Officers (ILOs) or Aboriginal Justice Officers help Indigenous people before, during and after court. They provide advice, explain processes and connect people with other help (like counselling or housing support). ILOs can help arrange interpreters if the person speaks an Indigenous language or has difficulty understanding English. These workers help ensure that First Nations people are treated fairly and do not get lost in the complex court system.

Training for judges and court staff

Judges and court staff get special training about Aboriginal and Torres Strait Islander Peoples. They learn about culture, the history of First Nations Peoples in Australia, and issues like trauma and disadvantage. This training helps them understand why someone might have been offended and how to treat everyone respectfully and fairly. It also helps reduce any unconscious biases, so decisions are more just.

Thinking about culture when deciding punishment

When sentencing a First Nations offender, courts are asked by law to consider their cultural background and life circumstances. This includes thinking about the effects of colonisation, loss of family, poverty and the impact of past policies that hurt First Nations people. Courts try to avoid sending First Nations people to jail if possible, instead using alternatives like community orders, rehabilitation programs or Cultural activities that help offenders fix their problems and stay connected to their Culture and Community.

Restorative justice and community programs Restorative justice means focusing on healing the harm done by the crime rather than only punishing the offender. Programs offer First Nations offenders chances to take part in activities like community service, talking sessions with victims, or Cultural healing circles. This helps repair relationships, rebuild trust and make communities stronger. Referral to these programs is sometimes done by the court or police and can stop the case from going through more formal court processes.

unconscious biases unknowingly allowing personal opinions to influence judgement, resulting in the unfair treatment of some people rehabilitation the process of helping someone return to a healthy or good way of life restorative the act of returning something or someone to its earlier good condition or position

502

Chapter 10 Law in action

Laws and rules supporting these Practices

overrepresentation when a particular group makes up a larger proportion of a system or outcome than it does in the general population

Problems with the approaches

SA PA M P G L ES E

recidivism percentage of former prisoners who are rearrested for a similar offence

Laws such as the Crimes (Sentencing Procedure) Act 1999 in New South Wales require courts to consider Aboriginality – that is, the fact that a person is First Nations – when sentencing. Governments have policies that encourage courts to use Elders, provide support workers, run special courts and give cultural training to staff. These measures respond in part to the over-representation of Aboriginal and Torres Strait Islander Peoples in the justice system, who make up a small proportion of Australia’s population but a much larger proportion of the prison population, caused by a range of historical and social factors. Together, these laws and policies aim to support a more equitable and Culturally responsive justice system for First Nations Peoples.

Although these approaches are important because they seek to respect Indigenous cultures and promote fairer outcomes, many issues remain unresolved. These include limited coverage, inadequate funding, the need to increase Community involvement, insufficient training and the need for broader reforms to address systemic racism and poverty. Criticisms of the approaches centre around the areas shown in Figure 10.6.3.

Accessibility and efficacy

• Koori Courts aren’t widely accessible yet, which means many First Nations people in rural or remote areas miss out on the benefits because they don’t have these courts nearby. • There also isn’t enough strong evidence to show that these courts always help reduce the number of Indigenous people going to jail or reduce recidivism rates. Research shows mixed results so far.

Funding

• These courts often don’t get enough funding or staff to run well. Without resources, they can’t always provide good support and services to help people in court.

Meaningful involvement

• Elders and Community members are involved to share Cultural Knowledge, but sometimes their role feels like just a formality. • Their advice might not always change what happens in court, which makes their involvement less meaningful.

Larger issues

• Bigger issues like racism, poverty and extra policing in Indigenous Communities remain problems even with these special courts. These things are not solved just by having special courts.

Insufficient training

• The training given to judges and court workers to learn about First Nations culture isn’t always good or detailed enough for them to fully understand or respect cultural differences. This can cause issues.

Strict laws

• Judges can think about culture when sentencing, but there are strict laws they must follow. • This means they can’t always choose punishments that suit First Nations Cultural needs or help the Community heal.

➜

Figure 10.6.3 Addressing the issues that persist in the current system can create better outcomes for First Nations Communities.

10.6 In what ways do the courts interact with Aboriginal and Torres Strait Islander Peoples

Review 10.6 Online quiz

Knowledge and understanding

Thinking, researching and communicating

503

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1.

Copy and complete the following table in your workbook, matching each term below with its correct description.

SA PA M P G L ES E

• Koori Courts • Culturally friendly court spaces • Considering Culture in sentencing • Circle sentencing • Elders and Community people • Restorative justice and community programs • Indigenous support workers • Training for judges and court staff Description

Term

a. Special courts where Elders join judges during sentencing to help the court understand culture and life

b. A process where offender, victims, Elders and Community members sit in a circle to agree on how to make amends c. Respected First Nations people who support defendants by explaining court processes and providing Cultural advice

d. Court environments that include First Nations artwork, ceremonies and special waiting areas to make defendants feel welcome e. Staff such as Indigenous Liaison Officers who help First Nations people before, during and after court, including arranging interpreters

f. Learning provided to judges and court staff about First Nations Culture, history and trauma to reduce biases and improve fairness

g. Courts legally required to think about First Nations offenders’ background, including history, Culture and hardships, when deciding punishments h. Programs that focus on healing harm through activities like Community service and cultural healing, rather than punishment only

Thinking, researching and communicating 1.

Assess why Culturally responsive ways of courts working with Aboriginal and Torres Strait Islander Peoples are important. Your answer should be an extended response in which you provide examples (e.g. special courts, Elders’ involvement), discuss problems or limits, explain how these ways help fairness and suggest improvements.

504

Chapter 10 Law in action

10.7

What is alternative dispute resolution and how do Aboriginal and Torres Strait Islander Communities resolve disputes? Success criteria

In this lesson, you will learn about the different types of alternative dispute resolution methods and the ways that Aboriginal and Torres Strait Islander Communities resolve disputes.

❏ I can outline the different types of alternative dispute resolution methods and how they are used. I can identify the benefits of choosing these methods. ❏ I can outline the different ways that Aboriginal and Torres Strait Islander Communities resolve disputes.

SA PA M P G L ES E

Learning intention

Starter activity

Figure 10.7.1 shows a yarning circle, which is one method that can be used to resolve disputes in Aboriginal and Torres Strait Islander Communities. Consider the following questions and write down your answers. 1.

In your opinion, how effective could this method be?

Discuss what benefits it might bring.

Explain what you think is needed for this method to work well.

Introduce group

Introduce a focus question

Sit in a circle

Reflection

Share ideas and thoughts

➜

Figure 10.7.1 Yarning circles, used for generations by Aboriginal and Torres Strait Islander Peoples, reflect traditions of gathering, sharing and respectful communication. This circle in Gilgandra is located at a meeting place for the Wiradjuri, Gamilaroi (Gamilaraay) and Wailwan Peoples. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

10.7 Alternative dispute resolution and dispute resolution in Aboriginal and Torres Strait Islander Communities

505

Types and benefits of alternative dispute resolution methods Alternative dispute resolution (ADR) refers to a range of processes and techniques used to resolve disputes without resorting to formal litigation or court proceedings. ADR methods are typically more informal, quicker and less costly than traditional court cases. ADR is commonly used in various contexts, including commercial disputes, workplace conflicts, family matters and community issues, often supported by government or organisational policies promoting collaborative and efficient conflict resolution.

Writing focus 10.7 Appositives

Negotiation

SA PA M P G L ES E

Negotiation is the simplest form of ADR where the parties communicate directly or through representatives to reach a mutually acceptable agreement without thirdparty involvement. It can range from informal conversations to structured bargaining sessions. In this process, the people involved talk about what they want, share their ideas and try to agree. It is used in normal business deals, job contracts and when people try to settle a problem before going to court. The good things about this are that the people have full control over the result, it doesn’t cost extra money, it can happen at a time that suits the parties involved and it stays private.

Mediation

Mediation is a voluntary, confidential process where an impartial third party, called a mediator, assists disputing parties to communicate and negotiate alternatives for resolving their disagreement. The mediator facilitates the discussion but does not have decision-making power. The process usually includes meetings where everyone talks together, as well as private talks with each person separately. This method is often used in workplace disputes, family law matters, commercial conflicts and education-related disagreements. It helps people work together to find solutions, makes the problems clearer and helps everyone communicate better.

Conciliation

Conciliation resembles mediation but is typically more advisory. The conciliator actively suggests solutions and helps to overcome impasses in negotiation. It tends to be more directive than mediation. The conciliator meets with each party separately and together, looking for possible agreements and giving recommendations. This process is often used by government agencies, in consumer disputes, workplace issues and regulatory matters. The advantages include helping people understand their options and the results of those options, reducing anger and making it easier to reach an agreement.

Arbitration Arbitration involves a neutral third party known as an arbitrator who listens to evidence and arguments from both sides and delivers a binding decision, known as an award. Arbitration is often more formal than mediation but less formal than court litigation. The process can be optional or required, depending on what the contract says or the law requires. The parties can agree on the rules to follow, or they can use rules set by special arbitration groups. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

litigation the process of taking a case to a court of law so that an official judgment can be made impasses situations in which progress is impossible because the parties involved cannot reach an agreement regulatory relates to checking whether an individual or business is working according to official rules or laws

506

Chapter 10 Law in action

This way of solving problems is often used for business deals, construction problems, work issues and international business arguments. It is faster than going to court and lets people choose experts to decide. The decisions are usually final and can be enforced by courts in many countries.

Early neutral evaluation

SA PA M P G L ES E

In early neutral evaluation (ENE), an experienced neutral evaluator (often a retired judge or legal expert) reviews the facts, legal issues and evidence early in the dispute. This evaluation provides parties with a realistic assessment of their chances in litigation or arbitration. The process can include written submissions and a meeting where the situation is evaluated. It is used for complex disputes when parties want to get an informed opinion early before spending a lot of money on formal proceedings. The advantages are that it helps set realistic expectations, encourages early settlement and can reduce the number of issues to be resolved.

Mini-trial

abbreviated shorter than usual or expected compliance the act of obeying a law or rule

Mini-trials are structured but informal processes where parties present abbreviated versions of their case to senior executives, a neutral adviser or a panel, who then assists the parties in negotiating a settlement. The parties prepare short presentations and then take part in discussions led by a neutral third party. This process is used in large business disputes where the parties want to avoid going through full court cases or arbitration. The advantages include saving money, encouraging direct talks between the people in charge and helping find creative solutions.

Cost

• It usually costs less than going to court. Court cases have many fees like filing charges, paying lawyers for a long time and other expenses. ADR is faster and less complicated, so it helps save money.

Speed

• It has the advantage of speed. Court cases can take a very long time – sometimes months or years – because courts are busy and the process is slow. ADR can be arranged quickly and often finishes in just a few days or weeks. This helps people solve problems faster and reduces stress.

Confidentiality

• The process is more confidential than going to court. Court cases are usually open to the public, so what happens there becomes public knowledge. ADR sessions are private, so the details stay secret. This is important for protecting people’s privacy and keeping sensitive business or family matters private.

Flexibility

• The flexibility of ADR allows the people involved to decide how things will work. They can choose when and where to meet, what language to use and who will help them solve the problem. This makes things less formal and easier for everyone involved.

Working together

• It encourages people to talk and work together instead of fighting. This helps preserve relationships between business partners, co-workers, family members or friends after the disagreement is solved.

Satisfaction

• ADR has the benefit of giving greater satisfaction and compliance because everyone helps create the solution, and so they usually feel happier with the result. When people agree on a solution themselves, they are more likely to follow it, unlike court orders that one side may dislike or try to challenge.

➜

Figure 10.7.2 The benefits of alternative dispute resolution (ADR) Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

10.7 Alternative dispute resolution and dispute resolution in Aboriginal and Torres Strait Islander Communities

507

Case study 10.7.1: scenario – mediation instead of a trial in a neighbourhood dispute Background

Two neighbours, Mr Chan and Mrs Johnson, had a disagreement over a fence that separated their properties. Mr Chan wanted to build a taller fence for privacy, but Mrs Johnson believed the fence would block her garden’s sunlight and reduce her property’s value. The disagreement escalated, and both parties were ready to take the matter to court. Choosing mediation

Before going to trial, a mediator was suggested to help find a solution outside the court system. Both Mr Chan and Mrs Johnson agreed to try mediation because they wanted to avoid the high costs and long wait times associated with a trial.

SA PA M P G L ES E

The mediation process

An impartial mediator met with Mr Chan and Mrs Johnson in a neutral location. During mediation:

• each neighbour explained their concerns and needs • the mediator ensured that each person listened respectfully • the mediator helped identify common ground, such as both wanting to maintain good

neighbourly relations • different options were discussed, including building a fence that allowed some sunlight through or planting shrubs to create privacy • with the mediator’s guidance, Mr Chan and Mrs Johnson agreed on a compromise: a semi-transparent fence with strategically placed plants to protect privacy and let sunlight through. Outcome

Mr Chan and Mrs Johnson signed a written agreement outlining the fence’s specifications and maintenance responsibilities. The mediation avoided the need for a trial, saving time, money and emotional stress. Both neighbours were happier with the outcome and were able to continue living peacefully next to each other.

The ways that Aboriginal and Torres Strait Islander Communities resolve disputes

Aboriginal and Torres Strait Islander Communities frequently address disputes internally to preserve Cultural integrity, reinforce social bonds and uphold traditional laws and customs. This method encourages healing, honours the Community's values and relationships, and guarantees Culturally appropriate outcomes. Resolving disputes within the Community helps maintain harmony and emphasises restorative justice over punitive actions, promoting the wellbeing of both individuals and the Community as a whole.

Dispute resolution methods Aboriginal and Torres Strait Islander Communities have diverse and distinct Cultures, and their Practices for resolving disputes vary across different groups. However, there are some common approaches that many Communities use, often grounded in Customary Lore and customs, emphasising restoration, Community involvement and reconciliation. Figure 10.7.3 highlights some key Practices that these Communities may use to resolve disputes.

punitive actions actions intended as a punishment reconciliation the process of making two opposing parties or ideas agree

508

Chapter 10 Law in action

Restorative justice Practices

Elders and Community leaders’ role

• Elders and respected Community leaders play a central role in: - facilitating discussions - providing wisdom and guidance based on Cultural Knowledge and Customary Lore - ensuring that resolutions are Culturally appropriate and accepted. • Some disputes may be resolved through Cultural ceremonies or rituals that symbolically or practically address the conflict and promote healing.

SA PA M P G L ES E

Ceremonial and Cultural processes

• Traditional dispute resolution often focuses on restoring relationships rather than punishment. This can involve: - face-to-face meetings between those involved - acknowledging harm and its impact on relationships - working collaboratively to find a mutually acceptable solution - emphasis on healing for individuals and the Community.

Community meetings (yarning circles or talking circles)

• These structured gatherings provide space for open dialogue, allowing everyone involved to tell their story and be heard in a respectful environment.

Mediation and negotiation

• Within the Community, informal mediation led by Elders or designated mediators helps resolve disagreements before issues escalate.

Customary Lore

• Many Communities follow their own Customary Lore that governs behaviour and dispute resolution according to longstanding traditions.

➜

Figure 10.7.3 Common approaches used by Aboriginal and Torres Strait Islander Communities to resolve disputes, focusing on restoration, Community involvement and reconciliation

Review 10.7

Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Copy and complete the table in your workbook, matching the type of ADR below with its correct description.

• Mediation • Arbitration

• Negotiation • Conciliation

• Early neutral evaluation • Mini-trial

Description

Type of ADR

a. The parties talk directly to each other to try to find a solution without outside help. b. A neutral person helps the parties communicate and find a mutually acceptable solution.

c. The parties talk to a neutral person who may suggest possible solutions or give advice. d. A neutral arbitrator listens to both sides and makes a decision that is usually binding. e. A neutral expert assesses the strengths and weaknesses of the case early on to help parties settle. f. Both sides present a short case summary to a neutral adviser or panel who gives a non-binding opinion. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

10.7 Alternative dispute resolution and dispute resolution in Aboriginal and Torres Strait Islander Communities

509

Read Case study 10.7.1: scenario – mediation instead of a trial in a neighbourhood dispute. Based on this case study, answer the following questions.

SA PA M P G L ES E

a. Outline why you think Mr Chan and Mrs Johnson chose mediation instead of going to court. b. Discuss the role of the mediator in helping the two neighbours reach an agreement. c. Outline what might have happened if they had gone to trial instead. How could that affect both neighbours? d. Provide examples of other conflicts where mediation might be a better choice than a trial and explain why. e. Analyse some advantages of the solution they agreed on compared with a court decision. f. If you were the mediator, what questions would you ask to help Mr Chan and Mrs Johnson find a solution? g. What challenges might arise during mediation, and how can they be overcome? Thinking, researching and communicating

The Australian Institute of Aboriginal and Torres Strait Islander Studies (AIATSIS) is a government body focused on preserving, promoting and sharing the cultures, histories and languages of Aboriginal and Torres Strait Islander Peoples through research, collections and educational resources. 1.

Visit the AIATSIS website https://cambridge.edu.au/redirect/11742 to answer the following questions about Customary Lore and dispute resolution among Aboriginal and Torres Strait Islander Peoples. Prepare to discuss your answers and insights with the class.

➜

a. What key terms or concepts related to dispute resolution can you find? b. How do Aboriginal and Torres Strait Islander Communities traditionally resolve disputes? Write your answer in a paragraph. c. What roles do Elders or Community leaders play in this process? d. What is restorative justice, and how is it different from Western Figure 10.7.4 Circles such as this one may be used in First Nations restorative justice legal approaches? processes, where disputes can be resolved within the Community through discussion, mediation e. How does restorative and Customary Lore Practices. justice benefit the Community and individuals involved? f. What Cultural Practices or ceremonies are sometimes used during dispute resolution? g. How do Aboriginal and Torres Strait Islander Communities work with courts or government systems to ensure Culturally responsive justice?

Write a paragraph about what challenges might arise, and how they are addressed according to the materials on the AIATSIS website.

510

Chapter 10 Law in action

10.8

How are crimes and punishments classiﬁed, and what are the consequences of a criminal record? Success criteria

In this lesson, you will learn about the ways that crimes are classified and the elements that must be proven for someone to be convicted. You will also learn about the types of punishments that are used in response and how getting a criminal record can impact your life.

❏ I can classify different crimes and outline what must be proved in order for someone to be convicted of a crime. ❏ I can state the purpose of punishment and outline the different types of punishments. ❏ I can describe the different consequences of having a criminal record.

SA PA M P G L ES E

Learning intention

convicted being officially found guilty of a crime in a court of law

Starter activity

The term mens rea, which means “guilty mind” in Latin, comes from English common law. It is based on the idea expressed in the phrase actus non facit reum nisi mens sit rea, meaning “an act does not make a person guilty unless the mind is also guilty”. 1.

List as many crimes as you can think of where someone might commit an offence without fully thinking about it.

➜

Figure 10.8.1 A car going through a red light is classified as a summary offence in New South Wales.

10.8 How are crimes and punishments classified, and what are the consequences of a criminal record?

511

The classifications of crimes The classification of crimes groups offences by seriousness, such as indictable offences or summary offences. Figure 10.8.2 is an overview of how crimes are classified.

Minor crimes like traffic violations and petty theft, dealt with quickly in lower courts without a jury, and usually result in fines or short jail time.

Indictable offences

Serious crimes such as robbery or murder, tried in higher courts with a jury, and carry severe penalties like long prison sentences.

SA PA M P G L ES E

Summary offences

Either-way offences

Strict liability offences

Can be tried as either minor or serious crime, depending on the case.

Don’t require proof of intent – only that the act happened – and often involve regulatory issues like food safety or traffic laws, making prosecution easier but limiting defences.

➜

Figure 10.8.2 Crimes are classified based on their seriousness and how they are handled in court.

The elements of crime that must be proven: mens rea and actus reus Elements of a crime are the parts the prosecution must prove – mainly the guilty act (actus reus) and the guilty mind (mens rea). Actus reus is the physical action, like stealing or hurting someone, and it must be something done on purpose, not by accident. Mens rea is the mindset – whether the person meant to do it, knew about the risk, was reckless or was careless. For some crimes, the law must also show that the act caused a specific result (causation), such as injury or death. Both the guilty act and guilty mind must happen at the same time for a person to be found guilty. Figure 10.8.3 is a summary of the elements that must be proven for a conviction. The classification and elements are related, as the classification affects which elements must be proven and how strictly. Serious crimes usually need proof of both actus reus and mens rea, while some minor or strict liability offences may require only the guilty act. Together, classification and elements determine how crimes are charged and proven.

Writing focus 10.8 Creating topic sentences indictable offence an offence that someone can be accused of in a court of law summary offence an offence that is a less serious criminal violation prosecution the lawyers in a trial who try to prove that a person accused of committing a crime is guilty of that crime reckless doing something dangerous and not worrying about the risks and the possible results strict liability offences these offences don’t require proving intent or knowledge of the act. The act occurring is sufficient

512

Chapter 10 Law in action

Actus reus (the guilty act) This is about what a person does or doesn’t do against the law. It could be: • Doing something harmful, like hitting someone, stealing or breaking something. • Sometimes, not doing something when they are supposed to, like a parent not feeding their child. • The act must be voluntary – meaning the person chose to do it, not by accident or while they were unconscious. Mens rea (the guilty mind) This is about what the person was thinking or feeling when they did the act. The law looks at different mental states:

SA PA M P G L ES E

• Intention: the person meant to do the act. • Knowledge: the person knew what they were doing was wrong or likely to cause harm. • Recklessness: they didn’t care about the risk and went ahead anyway. • Negligence: they should have known better but didn’t take enough care. • Some crimes need a higher level of mens rea (like intention), others only require carelessness. Causation (cause and effect) This means the person’s act must have directly caused the bad result. For example:

• If someone pushed another person and they fell, breaking their leg, the push caused the injury. • If the injury happened for some unrelated reason after the push, it might not count. • The connection between act and result must be strong enough for the act to be considered a crime. Connection in time (coincidence of act and mind) The person must have had the guilty mind at the same time as doing the guilty act. For example:

• If a person accidentally hurts someone but was not intending or thinking badly at that moment, it’s different from if they meant to cause harm. • Sometimes the law looks carefully to see if the mental state and act happened together, which is needed to prove guilt. ➜

Figure 10.8.3 These elements must often be proven before someone can be convicted of a crime.

Exceptions and special rules

• Strict liability crimes: some offences don’t require proving the wrong mind, only

•

duress threats used to force a person to do something

that the person did the act. For example, traffic offences like speeding don’t need proof of intention. Defences: a person can avoid conviction by showing they had a good reason or a mental problem. For example:

• • •

Insanity: if they didn’t understand what they were doing. Self-defence: if they protected themselves from harm. Duress: if they were forced to do it by threats.

These defences mean the person is not legally responsible, even if the act happened.

Activity 10.8.1 Does the punishment fit the crime?

Imagine that you read about a teenager who was caught stealing a small amount of money from a store and was sentenced to three years in prison. 1.

Discuss with another student whether you think this punishment fits the crime. Why or why not?

What alternative punishments might be more appropriate in your opinion?

10.8 How are crimes and punishments classified, and what are the consequences of a criminal record?

513

What is the purpose of punishment? Punishment exists to help maintain order and ensure that people follow the rules of society. Without punishment, people might ignore these rules and do things that harm others or create problems.

SA PA M P G L ES E

Punishment helps make things fair through retribution – when someone breaks a rule, they face consequences that fit their actions, which helps others feel safe and treated fairly. It also serves as a deterrent, which means stopping people from doing wrong again by showing that bad actions lead to consequences. Another purpose is rehabilitation, where punishment helps a person understand why their behaviour was wrong and encourages them to act better in the future. Punishment can also protect communities by keeping people who might harm others away or under control. Finally, punishment can help with restoration, which means fixing the problems caused by bad behaviour and encouraging people to take responsibility and make things right.

Types of punishment

Different types of punishment exist, each designed to serve a specific purpose and fit different offences. Each type has its advantages and disadvantages. See Figure 10.8.5 on the following page.

How a criminal record affects life

➜

A criminal record is an official list of a person's past crimes, kept by police and government. It shows what crimes they were accused of, the court’s decisions and any punishments. This record is important because employers and government agencies may check it to decide if someone is suitable for certain jobs or activities. Usually, only authorised people can see it and old offences can be removed from the record if the person has behaved well or was found not guilty.

Figure 10.8.4 A jail sentence is one of the more serious punishments.

Having a criminal record can affect many parts of a person’s life. The problems it causes depend on what the crime was, where the person lives and their situation. However, people with a criminal record often have trouble securing employment, education and housing, and they may face challenges with getting a passport and travelling abroad. They may lose their professional licences as well as certain legal rights like voting or serving on a jury. Insurance may become too expensive or inaccessible to them and rebuilding their life may become harder due to judgement and poor treatment from their communities. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

retribution a punishment that is deserved

514

Chapter 10 Law in action

Community service

• This requires offenders to perform unpaid work that benefits society, such as cleaning public areas, helping charities or planting trees. It is often used for minor crimes or as an alternative to jail. • This punishment holds offenders accountable while helping repair the harm they caused. It also gives them a chance to reflect on their actions while contributing positively to the community. It does, however, need supervision and may be seen as too lenient for serious crimes.

SA PA M P G L ES E

Fines

• This is a monetary penalty where the offender must pay the government or court as punishment for breaking a law. Fines discourage unlawful behaviour by imposing a financial cost and are usually given for minor offences like speeding, parking violations or petty theft. • The amount can vary based on the offence and sometimes on the offender’s ability to pay to ensure fairness. • If the fine isn't paid, additional consequences may follow, such as extra fines, loss of driving privileges or even jail time. They are cost-effective to enforce and can be adjusted for fairness, but may unfairly impact low-income offenders. Fines don’t help with rehabilitation and are less effective for serious crimes.

Restorative justice

• This is a process where offenders, victims and sometimes community members meet to discuss the harm caused by the crime. Offenders hear about the impact of their actions, take responsibility, apologise and agree on ways to make amends, such as repairing damage or doing community work. • This approach helps victims feel heard, reduces anger, and can encourage offenders to change. It is often used with young or minor offenders but isn’t suitable for all cases, especially serious crimes. Restorative justice supports healing and reduces reoffending, but requires willing participants and is not suitable for all crimes.

Probation

• Probation allows offenders to remain in the community instead of serving jail time, but under strict supervision and rules set by the court. These may include regular meetings with a probation officer, maintaining employment, attending counselling or treatment programs and avoiding certain people or places. • Probation is commonly given to first-time or less serious offenders, or after serving part of a sentence. Breaking probation conditions can result in imprisonment. • This approach reduces costs and supports rehabilitation while protecting the community, but it requires careful monitoring and can be viewed as too soft.

Suspended sentences

• This means the court gives a jail term but delays having the offender serve it immediately. The offender stays free if they follow certain conditions like good behaviour, attending rehabilitation or completing community service. • If conditions are met during the set period, the jail time is not served. If conditions are broken, the sentence is activated, and the offender goes to prison. This helps encourage reform while reducing prison populations, but suspended sentences need effective supervision and may seem lenient.

Imprisonment

• This involves placing an offender in jail or prison for a fixed period, usually for serious crimes such as violent acts, theft or repeated offences. • Prisons range from minimum to maximum security based on the offender’s risk level. • Imprisonment serves several purposes: it protects society by removing offenders, deters crime through clear consequences and provides retribution. However, it’s expensive and raises issues like overcrowding, and requires effective rehabilitation programs to reduce recidivism.

• This is the legal process of sentencing someone to death for very serious crimes like murder or treason. It is the most severe punishment available. Capital • Most countries, including Australia, have abolished the death penalty due to ethical concerns, the risk of punishment (death penalty) wrongful executions and doubts about its effectiveness in preventing crime. • Where it is still used, it serves as the ultimate form of retribution and deterrence, sending a strong message that such crimes will not be tolerated. ➜

Figure 10.8.5 Each punishment serves a different purpose.

10.8 How are crimes and punishments classified, and what are the consequences of a criminal record?

Review 10.8 Online quiz

Knowledge and understanding

Thinking, researching and communicating

515

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1.

Outline the areas of life that can be affected by having a criminal record.

Read each scenario and match it to the correct classification from the list below:

• summary offence • indictable offence

• strict-liability offence • either-way offence.

Classification

SA PA M P G L ES E

Scenario a. A person is caught drinking alcohol in a public park and is fined.

b. Someone is accused of breaking into a house and stealing valuables. c. A driver is caught speeding on the highway and is issued a ticket.

d. An individual punches another person during an argument, causing injury. e. A person is charged with drug trafficking after being caught selling illegal drugs. f. A person is caught driving without a valid licence and must go to court. g. Someone steals a mobile phone worth $500 from a store.

h. A factory fails to meet safety regulations on food processing and is fined accordingly.

Thinking, researching and communicating 1.

Should rehabilitation or retribution be the most important purpose of punishment? Think about how each purpose affects offenders, victims and society. a. Recall one argument in favour of rehabilitation as the most important purpose of punishment. b. Recall one argument in favour of retribution as the most important purpose of punishment. c. Finally, construct a short paragraph explaining which purpose you think is most important and why. Use the arguments you wrote to support your opinion.

Explain the differences between summary offences and indictable offences and why they are treated differently.

Assess how the classification of a crime affects what the prosecution must prove.

Compare strict liability offences and indictable offences regarding the need to prove guilty intent.

Explain how NSW laws like the Crimes Act 1900 support crime classification.

Explain why actus reus and mens rea occur together in most crimes. How does this affect prosecutions?

Discuss how defences like insanity or self-defence impact crime classification and trial results.

516

Chapter 10 Law in action

10.9

What is civil law and how do we encounter it in our daily lives? Success criteria

In this lesson, you will discover how you might interact with civil law and the different types of civil law remedies used to resolve disputes.

❏ I can recognise and outline the different ways individuals come into contact with civil law. ❏ I can describe a young person's ability to enter into various types of contracts. ❏ I can identify how different remedies may be applied in civil law disputes and why.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Did you know that when you buy something you are entering into a contract? This is an area of civil law.

Do you think you have received a civil law remedy or seen someone close to you receive one?

The ways that individuals come into contact with civil law

Writing focus 10.9 Creating topic sentences

Civil law is the set of rules that helps solve problems between people or organisations. It is different from criminal law, which deals with crimes and punishments like jail. Civil law is about fixing problems when someone feels hurt or treated unfairly by another person or group. Usually, the person who feels wronged asks a court to help fix the problem.

civil law governs disputes between individuals and groups (such as commercial and government organisations), focusing on private rights and responsibilities

➜

Figure 10.9.1 Not all contracts need to be written ones.

10.9 What is civil law and how do we encounter it in our daily lives?

517

Property

• Property is another area of civil law. This involves things people own, like houses, land or belongings. Sometimes neighbours argue over where one property ends and another begins. Landlords and tenants may also disagree over rent or living conditions. • Courts help decide who owns what or fix problems between the people involved.

Family law

• Family law deals with family matters, such as divorce, child custody and money, when couples separate. When parents cannot agree on who should care for their children or how to share their belongings, the court steps in to help. • Family law also covers adoption and protecting people from violence at home.

Tort law

• Tort law is about harm or injury caused by someone’s carelessness or wrongdoing. For example, if a person is hurt in a car accident because another driver was careless, they can ask for compensation to cover their pain and costs. • This also includes situations like when someone says untrue bad things about you or damages your property. The court can require the person who caused harm to pay for it.

Consumer rights

• Consumer rights protect people when they buy goods or services. For instance, when you buy a phone or get a haircut, you expect good quality. If the product is faulty or the service isn’t good, you can ask for a refund, repair or replacement. • If a business behaves unfairly or dishonestly, you might take legal action.

More civil laws

• Other parts of civil law include work law, which sets rules about jobs, pay and fair treatment at work. • Wills and inheritance laws decide how a person’s property is shared after they die. • Trust laws deal with managing money or property for someone else.

Solving problems

• To solve civil law problems, people usually go to court, where a judge listens and makes decisions based on fairness. • Sometimes disputes are settled outside court through mediation, where a neutral person helps both sides agree. Many people hire lawyers, who understand the law and give advice to make the process easier.

➜

SA PA M P G L ES E

Contracts

• A common way people come across civil law is through contracts. A contract is a promise made between people or businesses, like agreeing to buy something or rent a house. It does not always have to be in writing, but the conditions must be fair to all parties involved. • If one side does not keep their promise, such as not paying rent or not delivering what was agreed, problems can happen. The person who feels treated unfairly can ask a court to solve the issue or make the other person keep their promise.

Figure 10.9.2 Common ways in which people may interact with civil law

What civil law remedies are used to resolve disputes?

The purpose of civil law remedies is to provide relief to the injured party through various means. Primarily, they aim to offer compensation, either monetary or nonmonetary, for losses or injuries suffered. Additionally, these remedies seek to restore the plaintiff to their original position, known as the status quo ante, as far as possible. They also serve to enforce legal or contractual obligations by compelling a party to fulfil their duties. Lastly, civil remedies work to prevent a party from continuing or repeating wrongful behaviour, thereby protecting the rights and interests of those affected. Disputes can be resolved without court through alternative dispute resolution methods like negotiation, mediation, conciliation and arbitration. These methods offer flexible, private and quicker ways to settle disputes. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

remedies the actions or solutions a court provides to fix a harm or enforce a right monetary relating to money or in the form of money plaintiff someone who makes a legal complaint against someone else in court

518

Chapter 10 Law in action

Types of civil remedies equitable based on fairness, where the court considers the specific circumstances of a case rather than applying strict legal rules

Table 10.9.1 Types of civil remedies Remedies

Outcomes

Common law remedies (damages): Damages are monetary payments meant to compensate for harm or loss. Damages can be grouped in several ways, with the main ones shown here.

i. Compensatory damages: these cover real financial losses like medical bills and lost wages, as well as non-financial harm such as pain and suffering. ii. Nominal damages: small amounts awarded when a legal right has been broken, but no actual loss has happened. iii. Exemplary (punitive) damages: rarely given; to punish a defendant for especially careless or wrongful behaviour. iv. Aggravated damages: extra money awarded when the defendant’s actions have caused additional distress or harm.

Equitable remedies

i. Injunctions: court orders that direct a person to do something or stop doing something. ii. Specific performance: orders that require someone to carry out exactly what they promised in a contract, commonly used in property deals. iii. Account of profits: requires a wrongdoer to give up any profits made from their wrongful actions, like breaking a duty of trust. iv. Rescission: cancelling a contract and returning everyone involved to the position they were in before the contract. v. Declaratory relief: a court statement that clarifies the legal rights of the parties without giving any money as compensation.

Statutory remedies: These remedies are set out in specific laws, such as the Civil Liability Act 2002 (NSW) or the Australian Consumer Law.

i. Corrective orders: require a person or company to issue an apology or make a public correction, often used in cases like defamation or consumer protection. ii. Consumer remedies: include options like refunds, repairs or replacements for faulty products. iii. Statutory penalties: fines or other civil penalties given for breaking laws, such as those under the Corporations Act 2001 (Cth).

SA PA M P G L ES E

statutory remedies or solutions created by laws to solve disputes

Civil remedies are typically divided into common law, equitable and statutory categories. Common law remedies are money paid by the court to make up for a loss, based on past court decisions. Equitable remedies are special court orders, like telling someone to stop doing something or to do what they promised, used when money isn’t enough to fix the problem. Statutory remedies are solutions created by laws, such as fines or rules to protect people, that give extra ways to solve disputes. Types of civil remedies are shown in Table 10.9.1.

10.9 What is civil law and how do we encounter it in our daily lives?

Review 10.9 Online quiz

Thinking, researching and communicating

Knowledge and understanding

Students can access sample responses and results online

519

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Read the following scenario and complete the questions. Paloma bought a car that soon broke down repeatedly. She lost time and money because of repairs. Paloma sues the car dealer for selling a faulty car.

SA PA M P G L ES E

a. Outline what Paloma might want from going to court (e.g. compensation, fixing the problem or stopping the dealer from selling faulty cars). b. Identify which purpose of civil remedies this situation shows. c. Outline how the court could help Paloma.

Read the following scenarios and complete the questions.

Rashid signed a contract to buy a rare painting from Sarah, but Sarah refused to give it to him after Rashid paid. In another case, Lucy’s neighbour builds a fence on her land without permission. a. Identify which remedies might apply in each case (e.g. damages, specific performance, injunction). b. Categorise these remedies as common law, equitable or statutory. c. Explain why certain remedies are more suitable than others in each situation.

Read the following scenario and complete the questions.

Misaki bought a laptop that stopped working after one week. The store refuses to refund or repair it. Misaki is considering her options. a. Identify the statutory remedies Misaki might use under the Australian Consumer Law. b. Outline whether she could seek common law remedies like damages. Why or why not? c. If Misaki wants to avoid court, what ADR options does she have? d. Outline how going to court could help Misaki restore her rights.

Thinking, researching and communicating

A 17-year-old friend is considering signing a contract to start an apprenticeship, which requires them to move out and rent a studio apartment. They are seeking your advice about the legal aspects of these contracts because they know you study commerce. 1.

Draft an email to your friend offering guidance and information about the legality of entering into such agreements.

Assess how statutory remedies add extra protection for consumers and others. ➜

Figure 10.9.3 Is this contract legal?

Chapter 10 Law in action

10.10

Case study: why is shoplifting a big issue in New South Wales?

Learning intention

Success criteria

In this lesson, you will learn about the problem of shoplifting in New South Wales.

❏ I can describe the problem of shoplifting as a crime in New South Wales.

Starter activity

SA PA M P G L ES E

520

Do you know what shoplifting is?

Do you think it is a serious crime?

Why or why not?

What is shoplifting?

➜

Shoplifting means taking things from a store without paying. It is a big problem in New South Wales because stores lose a lot of money – hundreds of millions of dollars every year. Shoplifting also makes workers worried and can make customers feel unsafe or uncomfortable. Both big and small stores have this problem. Big stores often Figure 10.10.1 Shoplifting is a crime that costs retailers millions of dollars have groups stealing things in lost revenue and security costs. on purpose, while small stores usually have people stealing once in a while. The NSW Police and Australian Retailers Association work together to stop shoplifting. Store owners must follow the law when they catch someone stealing. Some people think shoplifting doesn’t hurt anyone because they believe small thefts don’t cause much damage or big stores can pay for the loss. They might think it’s a small problem and not serious. But shoplifting causes stores to lose money, which can make prices go up for everyone. It also makes workers stressed and can make shopping feel unsafe for customers. So, shoplifting does hurt people in many ways, even if it doesn’t seem obvious.

10.10 Case study: why is shoplifting a big issue in New South Wales?

Shoplifting statistics in New South Wales Shoplifting accounts for 30% to 40% of retail theft in New South Wales, contributing substantially to over $1 billion in annual retail losses nationwide. Recent years show a 10% to 15% increase in incidents, especially in metropolitan Sydney, partly driven by economic hardship. Offenders include first-time young offenders, repeat individuals and organised groups, with varying motivations from personal use to resale. Loss prevention methods like CCTV and electronic tagging have demonstrated potential loss reductions of 20% to 50%.

➜

SA PA M P G L ES E

Law enforcement often opts for community-based penalties for minor offences, reserving custodial sentences for organised or repeat offenders.

Figure 10.10.2 Statistics on shoplifting in New South Wales

A retail store takes action

In 2023, a large retail chain with many stores in Sydney saw shoplifting rise by 25% over six months. The stolen items were often mid-priced electronics, brand-name clothes and everyday groceries. This increase caused the store to lose more products, which hurt its profits. Additionally, staff felt worried and unsure about how to handle shoplifters, and customers complained about longer wait times and feeling uncomfortable because of extra security measures. The store realised its usual methods weren’t enough and decided to try a stronger plan.

Improving security

The retailer improved its security in several ways. First, it installed better CCTV cameras that covered hidden areas and store entrances and exits. It also set up a special room where staff could watch the cameras live and used software that alerted them to suspicious behaviour, so workers didn’t have to watch everything all the time.

Staff training

Second, staff received training to spot signs of shoplifting, like nervous or avoidant behaviour. They were taught how to safely and legally handle suspected thieves and how to calm tense situations. Regular refresher courses helped keep staff confident and ready. Third, the store worked closely with the local police by sharing information about thefts and losses, asking for extra patrols during busy times, holding community talks about shoplifting consequences and making reporting faster to help catch thieves.

Technology Lastly, the store used technology such as electronic tags on expensive items that triggered alarms if someone tried to leave without paying. It also used computer programs to analyse sales and stock data to spot possible theft or fraud.

521

522

Chapter 10 Law in action

Results employee turnover the rate at which employees leave a company and are replaced by new employees

Ongoing challenges There are still challenges to address. Stores must balance keeping customers safe with making sure they don’t feel uncomfortable or overly watched. Staff need to treat suspected shoplifters professionally and politely. Many people who shoplift do so because of poverty, addiction or mental health problems, so shoplifting is also a social issue, not just a crime problem. Thieves keep finding new ways to avoid cameras and alarms, so stores must keep improving their tools and training. Finally, staff must always follow the law carefully to avoid lawsuits or bad public attention.

SA PA M P G L ES E

addiction an inability to stop doing or using something, especially something harmful

After one year of using this plan, the retailer saw shoplifting drop by about 40%. Staff felt safer and less stressed, which helped reduce employee turnover. Customers felt more comfortable shopping even with the extra security measures in place. The police helped catch and charge more repeat shoplifters. The money saved by reducing theft and running the stores better was much more than the cost of installing new cameras and training staff.

In conclusion

Overall, shoplifting is a tough problem for NSW stores, but combining better technology, staff training, police cooperation and community education helps reduce theft, making stores safer and more profitable. Shops, police and support services need to keep working together and adapt as thieves change their tactics to keep shoplifting under control.

Case study activity 10.10.1 1.

Define shoplifting and identify which types of stores are commonly affected by shoplifting.

Outline the impact of shoplifting on the store owner, store staff and customers.

Outline the reason why shop owners need to act legally when handling suspected shoplifters.

Identify what percentage of retail theft in New South Wales is attributed to shoplifting.

Outline how shoplifting incidents changed in recent years, especially in metropolitan Sydney.

Describe the typical offenders involved in shoplifting, and their motivations.

Evaluate common loss prevention measures and their effectiveness in reducing theft.

Explain why cooperation among retailers, police and community support services is essential in reducing shoplifting.

Discuss the challenges that you believe remain for retailers in balancing security and customer comfort.

10.

Explain why stores must continually upgrade their security measures and staff training.

10.11 Skills focus: what does data reveal about youth crime in New South Wales?

10.11

523

Skills focus: what does data reveal about youth crime in New South Wales? Success criteria

In this lesson, you will learn how to research data and find information about youth crime in New South Wales.

❏ I can locate and interpret authoritative data on youth crime. ❏ I can analyse trends and patterns in youth crime statistics. ❏ I can write a report that uses data to support findings.

SA PA M P G L ES E

Learning intention

Why is this skill important?

Businesses, governments and communities rely on accurate data to make decisions. In Commerce, understanding how to research and interpret data helps you evaluate issues and propose solutions. In this lesson, you will apply these skills to investigate youth crime in New South Wales.

Your task

The objective of this task is to research youth crime trends in New South Wales using authoritative data sources and to produce a comprehensive report. This will involve data gathering, analysis, interpretation and clear presentation of findings. Go to the Interactive Textbook to download a scaffolded report template to help you structure your work.

➜

Figure 10.11.1 Theft from cars might be one crime you notice in your research. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

DOC

Download report template

Chapter 10 Law in action

Step 1: research and data collection

• Go to the Bureau of Crime Statistics and Research (BOCSAR) website. • Navigate to youth crime information. • Collect data on the following.

• • • • •

Youth offender statistics: collect data on the total number of offenders within the youth age group. Types of offences: identify the most common offences committed by youth (e.g. theft, assault). Youth proceedings data: obtain information on how the cases were processed. Recidivism: look at rates of repeat offending among youth. Trends over time: examine data spanning multiple years to determine trends in youth crime.

SA PA M P G L ES E

524

Step 2: data analysis and interpretation

• Identify common crimes: determine which offences are most frequently committed •

•

by youth. Trend analysis: note any significant increases or decreases in youth crime rates over recent years. Comparison with adult crime: where possible, compare youth offending rates with those of adults to highlight differences or similarities. Demographic considerations: include analysis based on gender, geographic location or other relevant demographic factors.

➜

Figure 10.11.2 Use online tools to find the research you need.

10.11 Skills focus: what does data reveal about youth crime in New South Wales?

525

Step 3: additional research

• Conduct supplementary research using credible sources, such as government •

reports, academic publications and reputable news outlets, to broaden understanding. Keep a record of all additional sources you used, so you can acknowledge and cite them in your report.

Step 4: report writing

SA PA M P G L ES E

Prepare a structured report that includes the following. i. Introduction: Provide a brief overview of the purpose and scope of the report. ii. Data presentation: a. Incorporate clear visuals, such as charts, graphs and tables, to effectively communicate the data. b. Reference BOCSAR as the primary data source. iii. Analysis and discussion: a. Interpret the data trends and highlight key findings. b. Discuss possible social, economic or environmental factors influencing these trends. c. Include discussion of relevant government policies, programs or initiatives aimed at youth crime prevention. iv. Conclusion: Summarise the main points and suggest areas for further research or policy focus. v. References: List all sources, including BOCSAR and any other external information used.

Review 10.11

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Recall the age range for youth offenders in New South Wales.

Identify the organisation that provides official crime statistics in New South Wales.

Explain what recidivism is.

List two types of data available on the BOCSAR website about youth crime.

Thinking, researching and communicating 1.

Using BOCSAR data, identify the most common youth offence and explain why it might be prevalent.

Create a graph showing youth crime trends over the last five years. Describe what it reveals.

Compare youth crime rates with adult crime rates. What does this tell you?

Evaluate the reliability of BOCSAR as a data source. Why is it considered authoritative?

Based on your analysis, discuss the recommendations you would make to reduce youth crime. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 10 Law in action

10.12

Investigation: how can I explore the law in action?

Learning intention

Success criteria

In this lesson, you will focus on one area of the topic to choose the most relevant points to share with the local community.

❏ I can create a poster that sets out the main ideas of one area of the topic and explain it to an audience.

SA PA M P G L ES E

526

The topic: law in action

This has been a very large topic with many new concepts, which highlighted the rights of individuals and the community. It is time to start thinking about how you can share this with others.

➜

Figure 10.12.1 Exploring the law in action and presenting the key ideas in a poster

The task Create a poster of one area of the law in action topic that could be displayed on a noticeboard in a local community centre so that people understand how the law affects them. Your poster can be designed electronically or on paper. You will be required to prepare a two-minute oral explanation of your poster that could be given to the class.

10.12 Investigation: how can I explore the law in action?

Choose from one of the following topic areas (but you can also focus on a sub-topic of these):

• human rights and laws in Australia • nature of legal capacity • resolving disputes • contact with criminal law • contact with civil law. Ensure that you can highlight the key areas with relevant words and appropriate graphics.

Steps in creating your poster

SA PA M P G L ES E

Step 1: choose the topic you understand best from this chapter. Pick something you feel confident explaining to people in your community. Step 2: think about the most important ideas that your audience needs to know. Write down three to five main points in your own words. Step 3: go back through the earlier lessons to check your notes and make sure your information is accurate. Keep the language simple enough so that everyone in the community can understand it. Step 4: plan what your poster will look like. Decide on a heading, the key points you will include and the pictures or symbols that will help explain your message. Step 5: create your poster on paper or on a device. Make sure it is clear, easy to read and uses visuals that support your information. Step 6: practise explaining your poster out loud. Aim for a clear two‑minute explanation that describes your topic, your key points and why this information is useful for the community.

➜

Figure 10.12.2 Prepare to explain your poster to your class. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

527

528

Chapter 10 Law in action

10.13

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

• • •

Auto-marked questions for fast feedback and fun practice Self-assessment tools to track your progress, review answers (if enabled by the teacher), and flag questions for extra help Downloadable worksheets for class or homework revision

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about the law? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Australian law in action

Human rights and children’s rights protections

Legal rights and responsibilities of young people Law enforcement agencies Jury duty and selection

Culturally responsive court approaches to Aboriginal and Torres Strait Islander Peoples Crimes and punishments Civil law

Alternative dispute resolution

Visible thinking routine Connect, extend, challenge

This exercise in visible thinking asks you to think about how the concepts in this chapter have expanded your understanding of how the law is enacted. Using the question prompts, write a paragraph explaining what you previously knew about the topic and connecting what you now understand about the topic to your own experiences. 1.

Connect: how does what you learned in this chapter connect to what you already knew about the law in action?

Extend: what new ideas have extended or deepened your thinking?

Challenge: what is still challenging or confusing? What questions do you now have?

10.13 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Define the term legal capacity.

Define the term recidivism.

Recall at what age you can be held criminally responsible in Australia.

Identify two human rights protected in Australia.

List two children’s rights protected under the UNCRC.

Summarise how “ignorance of the law is no excuse” is applied in legal situations.

List two rights you have when being questioned or arrested by police.

Identify one benefit of Koori Courts and summarise the role Elders play in these processes.

Describe what a yarning circle is.

10.

Outline two benefits of alternative dispute resolution over going to court.

11.

Identify the difference between summary and indictable offences.

12.

Outline what is meant by tort law and give one example.

SA PA M P G L ES E

➜ Figure 10.13.1 People queue outside of Penrith Court

in April 1986 waiting for selection for the jury in the Milperra massacre trial. Serving on a jury is a legal duty of Australian citizens that has a huge impact on how justice is served.

Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

529

530

Chapter 10 Law in action

DOC

Download single paragraph model

Writing focus

The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Explain how human rights protect freedoms, dignity and equality in Australia. Model answer: Human rights protect freedoms, dignity and equality because they set minimum standards for how individuals must be treated in society. These important rights for everyone outline core protections such as freedom of expression, equality before the law and the right to safety, which allow individuals to live free from unfair treatment. These rights guide how governments and legal systems act, ensuring laws and decisions respect each person’s inherent value. They also help limit the misuse of power by setting clear expectations for how authority should be exercised. We can see this in Australia’s legal protections, including anti-discrimination laws and the incorporation of children’s rights through the UNCRC. These legal frameworks show how human rights principles are put into practice through laws and policies. For example, anti-discrimination legislation prevents unfair treatment in areas such as employment, protecting people’s dignity and opportunity. People can also exercise their human rights by participating in peaceful protests or expressing their views freely, demonstrating how freedoms such as expression and assembly operate in everyday life. In these ways, human rights safeguard freedoms, dignity and equality by guiding how individuals must be treated under the law and in everyday life.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Examples: provide credibility and illustrate the argument

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments

Linking sentence: reconnects to the topic sentence using the language of the question

10.13 Chapter review

Structured-response questions 1.

Describe how legal capacity develops and apply this concept to the rights and responsibilities of young people.

Explain how judges, lawyers and juries work together to ensure fair trials.

Discuss how Culturally responsive approaches, including the involvement of Elders, support Aboriginal and Torres Strait Islander people in the court system.

Compare alternative dispute resolution with traditional Indigenous methods of resolving conflict.

5. 1.

Explain how crimes are classified and why this distinction matters when determining consequences.

SA PA M P G L ES E

Extended-response question 1.

Discuss how the legal system tries to balance the rights of individuals with the need to look after the whole community. In your response, refer to the positives and negatives of the roles of laws, the court system and alternative dispute resolution methods. Use examples to illustrate how this balance is achieved in practice.

➜

Figure 10.13.2 People march for social justice in the city, exercising their right to freedom of expression and assembly. You may have attended a rally or demonstration yourself, using your human rights to speak up about issues that matter to you.

531

Chapter 10 Law in action

Chapter

Political and community involvement

Lessons

SA PA M P G L ES E

532

11.1

Setting the scene: being involved

11.2

What types of issues of concern affect the lives of individuals and the community?

11.3

How can individuals and groups influence political processes and decisions on issues of concern, and how effective are these methods?

11.4

The right to stand for public office: what eligibility requirements are needed to become a candidate at different levels of government?

11.5

Case study: what is a young parliamentarian?

11.6

What are the roles and responsibilities of elected representatives and what happens if they do the wrong thing?

11.7

What are the opportunities to become an active participant in the community?

11.8

Skills focus: how do I research my local council?

11.9

What are the benefits of community involvement and how can young people be more involved?

11.10 Investigation: organising a local campaign against graffiti 11.11 Chapter review

This digital chapter can be accessed via Cambridge GO

Chapter

The travel consumer

Lessons Setting the scene: why are young Australians so obsessed with travel?

12.2

What are the types of tourism available?

12.3

What types of businesses exist in the tourism industry and what is their economic contribution?

12.4

Travel destinations, planning options and different types of travel: what is best for me?

12.5

Case study: how to choose my holiday destination

12.6

What do I need to organise before I travel internationally?

12.7

Skills focus: how to get ready for my travel

12.8

What factors do I need to consider when developing an itinerary?

12.9

Why should I check travel advice and travel reviews before deciding where to go?

SA PA M P G L ES E

12.1

12.10 What financial and legal issues may I have when travelling overseas? 12.11

How can I research potential cultural differences to ensure that I am more culturally sensitive?

12.12

Where can I turn for assistance if things go wrong while overseas?

12.13

Investigation: how to develop my itinerary

12.14

Chapter review

Teachers access the Online Teaching Suite to:

• • • •

plan, sequence and assign directed tasks for students and classes using Task Manager view student activity reports provide feedback to students download a printable “Writing focus” workbook for this chapter.

534

Chapter 12 The travel consumer

12.1

Setting the scene: why are young Australians so obsessed with travel? Success criteria

In this lesson, you will learn why travel is so popular among young Australians and explore the social, cultural and personal factors that influence their enthusiasm for exploring new destinations.

❏ I can outline the reasons for young Australians to be obsessed with travel.

SA PA M P G L ES E

Learning intention

Alec has been to some interesting places, and all for different reasons and at different times. Some places he visits regularly. His first holiday was to Malaysia with his family as an 11-year-old to visit the many theme parks, where he fell in love with the people and the interesting culture. Since then, he has been back at least 10 times, usually as a stopover of a few days when travelling elsewhere.

➜

Figure 12.1.1 Alec is your typical 21-year-old. He likes watching the NRL, playing sport, fishing and hiking. Like many young Australians, he also loves to travel. In the last 10 years, he has travelled extensively, sometimes visiting the same country more than once. Some trips he has done with family, some with friends, some with groups, and others alone. When asked why he enjoys travelling so much, he says one word – “adventure”.

The travel list

So far, Alec has visited Malaysia, Singapore, Thailand, Denmark, Qatar, New Zealand, Türkiye, Lebanon, Saudi Arabia, Indonesia, Cambodia, Kyrgyzstan, Tajikistan, Uzbekistan and Oman, and he is hoping to visit many more countries. “Unfortunately, we are far away from the rest of the world, so it’s usually a long flight, and very expensive,” Alec says. He chooses to save up and not borrow money to travel, instead doing several countries in a single trip if they are close to each other, choosing budget flights and accommodation, and eating at the same places as the locals.

➜

Video 12.1.1 Setting the scene: the travel consumer

Writing focus 12.1 Question words

His favourite country so far

Kyrgyzstan was the best in his opinion, with beautiful nature, interesting culture, good food and wonderful adventures. He talks about horseriding, hiking up mountains, sitting in hot springs, taming eagles, and staying in homestays where he learned how to make traditional Kyrgyz foods. He also slept in a yurt – a traditional tent used by the nomadic people of the region.

The best adventures Some of his best adventures have happened overseas also – from bungee jumping in New Zealand, to hot air ballooning in Cappadocia in Türkiye, snorkelling in the islands of Thailand, sailing in the Mediterranean Sea off Lebanon, jetskiing in Malaysia, riding motorcycles in Cambodia, and performing in a real Soviet circus in Uzbekistan! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.1 Setting the scene: why are young Australians so obsessed with travel?

535

Influences on travel destinations

Figure 12.1.2 Visiting extended family in Lebanon

SA PA M P G L ES E

➜

Alec travels for many reasons. The second trip he ever made was as a 12-year-old to Denmark to represent Australia in a robotics competition. Another two trips were to perform religious pilgrimages to Mecca in Saudi Arabia. Another two trips were to Lebanon to visit extended family and just enjoy the lifestyle. “Lebanon was the most fun with the best food,” Alec says. Also, he has been to Cambodia for three consecutive years and plans to go many more times to do humanitarian work as part of a charity group to build houses and infrastructure. “The Cambodian people are my favourite people by far,” he says.

Travel disasters

He has, however, had some travel disasters, including a plane that had technical problems landing in Türkiye, eight days in Thailand where it rained non-stop, but the worst was almost dying in Singapore from a burst appendix as a 14-year-old! Luckily for him, the medical care he received in Singapore was exceptional, and his family had taken out travel insurance, with the $30,000 bill covered by the $80 premium paid.

What next?

Alec has also travelled much of the east coast of Australia on camping holidays over his 21 years and wants to see more of Australia. He also wants to continue travelling the world. So far, Alec has travelled to 16 countries, and he is hoping to visit all the countries of the world eventually. His next travel adventure is to South Africa and Tanzania so that he can go on a safari and see the wildlife. But first he needs to save up and do some planning!

➜

Figure 12.1.3 (From left to right) Sightseeing in Türkiye, taming eagles in Kyrgyzstan, connecting with the locals in Cambodia, and on pilgrimage to Mecca in Saudi Arabia

Activity 12.1.1 1.

List the top 10 places you would like to visit, either in Australia or overseas.

Compare your responses with your classmates. How are your responses similar? How are your responses different?

Explain three pieces of advice or lessons you can draw from Alec’s experience as a young traveller. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

536

Chapter 12 The travel consumer

12.2

What are the types of tourism available? Success criteria

In this lesson, you will learn about different types of tourism and explore the unique elements and benefits of Aboriginal and Torres Strait Islander Cultural tourism.

❏ I can explain the different forms of tourism, including the elements and benefits of Aboriginal and Torres Strait Islander Cultural tourism.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: recall your most recent travel. Write down a the reason(s) for your travel.

Pair: exchange and discuss your list with a partner. What’s different in their list?

Share: share your discussion with the class.

Writing focus 12.2 Transitional phrases

Tourism is the industry that provides services to people who are away from their homes in pursuit of leisure, adventure, education, business or events. According to the Australian Bureau of Statistics (ABS), the tourism industry in Australia generated over $81 billion in income in 2024, and it is expected to grow. The tourism industry includes many businesses that provide accommodation, transport, food, activities, insurance, and other goods and services. Tourism provides many jobs and increases the wealth of the economy as tourists spend money.

Types of tourism

domestic relating to or occurring within one’s own country or home international involving or operating between different countries

visa official permission to enter another country

When considering travel, Australians have two options: domestic and international tourism. Domestic tourism is easier to organise for a traveller and will usually cost less. It also supports the Australian economy and is better for the environment as there are less emissions created from shorter travel. However, it can be more expensive due to higher costs of accommodation, food and activities compared with other countries around the world due to our strong economy and high wage costs for tourism workers. Many Australians choose to travel domestically, especially if it is a shorter trip, such as a weekend away. International tourism involves travelling beyond the country you live in to other countries. Travelling overseas can be more complex to organise due to differences in language, culture and currency. Overseas travel may be more expensive, and it also has an environmental impact. Travellers need to organise visas and have a passport to travel. Travel is an important part of many economies and allows people from different places and cultures to connect.

12.2 What are the types of tourism available?

537

Table 12.2.1 outlines different types of tourism within domestic and international tourism. Table 12.2.1 Types of tourism Cultural tourism

This most common type of tourism involves travelling for enjoyment, relaxation, cruising and sightseeing.

This includes experiencing culture, history and traditions. This may include visiting significant historical monuments and museums. An example may be visiting Uluru in the Northern Territory.

Eco and nature tourism

Adventure tourism

This involves supporting conservation and local communities. Activities may include exploring rainforests and wildlife conservation activities.

This includes physical activity, such as hiking, camping, surfing, diving and snorkelling, skydiving or bungee jumping.

SA PA M P G L ES E

Leisure and recreation tourism

Business tourism

Event tourism

This involves people travelling for work. This may include professionals attending a conference, or backpackers in regional towns picking fruit.

This involves travelling to places for special events, such as sports, concerts and music festivals. Australian examples include the Australian Open in Melbourne (tennis), or the Bathurst 1000 in Bathurst (motorsport).

Medical and wellness tourism

Religious tourism

This involves visiting places that offer cheaper cosmetic surgeries, or it could include visiting a wellness retreat that focuses on clean eating, yoga, meditation or rehabilitation.

This involves people connecting to their faith by visiting pilgrimage sites, such as Vatican City (Catholic), Jerusalem (Christian, Muslim and Jewish), Mecca and Medina (Muslim), and Lumbini (Buddhist).

Mass tourism

Mass tourism occurs when a destination becomes so popular that tourists cause overcrowding. This leads to issues such as damage to the natural environment in places such as beaches and forests, excessive emissions from vehicles causing air and noise pollution, waste and littering, and damage to cultural artefacts and buildings. It may also lead to social problems, such as insensitive behaviour towards locals, an increase in the cost of living and accommodation for locals, and the loss of cultural heritage. Mass tourism causes an over-reliance on tourism for employment, making locals vulnerable to economic downturns or major disruptions. Tourists may become upset at long queues, or disappointed when a location has lost its character and becomes “touristy”. Some places that have been affected by mass tourism include Bali in Indonesia, Machu Picchu in Peru, Venice in Italy, and Santorini in Greece.

Aboriginal and Torres Strait Islander Cultural tourism

Aboriginal and Torres Strait Islander Cultural tourism is a rapidly growing sector of the Australian tourism industry, with around three million trips each year incorporating a First Nations activity such as Aboriginal art and craft and Cultural displays. This type of tourism involves experiences led by Aboriginal and/or Torres Strait Islander people. Some examples of Aboriginal and Torres Strait Islander Cultural tourism include visiting a First Nations site or Community, watching an Indigenous performance, going on a tour with an First Nations guide, having an Indigenous bush-tucker experience, or participating in traditional activities such as boomerang throwing. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

538

Chapter 12 The travel consumer

Of the three million trips involving Indigenous tourism activities in 2023–24, 63% were made by domestic travellers.

What is Aboriginal and Torres Strait Islander Cultural tourism and why is it important?

SA PA M P G L ES E

Figure 12.2.1 People watching a traditional Aboriginal corroboree performance at Yabun Festival, Sydney ➜

This type of tourism involves experiences that are owned, led or guided by Indigenous people. This allows for authentic experiences that are respectful of Aboriginal and Torres Strait Islander culture, history, language and Knowledge, with a strong connection to Country.

The benefits of Aboriginal and Torres Strait Islander Cultural tourism include the preservation of culture through education, leading to a challenging of stereotypes, while ensuring that Aboriginal and Torres Strait Islander Peoples maintain control over their Cultural Knowledge and how it is shared. It also allows for growth in entrepreneurship and employment opportunities, which ultimately improve communities. Aboriginal and Torres Strait Islander Cultural tourism also limits environmental impact while building pride and identity, and promoting reconciliation and mutual respect.

Country lands, waterways, seas and skyways to which Aboriginal and Torres Strait Islander Peoples are connected

Review 12.2

Knowledge and understanding

Online quiz

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Define tourism.

Outline the importance of tourism to Australia’s economy. Compare domestic and international tourism.

Thinking, researching and communicating 1. 2.

You have decided to book a holiday for yourself. Explain the type of tourism you would prefer and why. Mass tourism may have a negative impact on popular destinations. Research a destination that has been impacted by mass tourism and discuss the impacts. Research one Aboriginal and Torres Strait Islander tourism experience option. Outline the types of activities you are likely to experience. Examples of Indigenous Cultural experiences include Muru Mittigar Cultural Centre (New South Wales), Bamurru Plains (Northern Territory), Tiwi Islands Adventures (Northern Territory), Walkabout Cultural Adventures (Queensland) and Anangu Tours – Uluru-Kata Tjuta (Northern Territory).

12.3 What types of businesses exist in the tourism industry and what is their economic contribution?

12.3

539

What types of businesses exist in the tourism industry and what is their economic contribution? Success criteria

In this lesson, you will learn about the different types of businesses that operate within the tourism industry and how these businesses contribute to Australia’s economy.

❏ I can explain the different types of businesses in the tourism industry and their contribution to the economy.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: what businesses did you encounter when travelling? List them in your workbook.

Pair: exchange your list with a partner and discuss any similarities and differences.

Share: share your ideas with the class. What new types of businesses did you identify?

There are many types of businesses that exist to serve the tourism sector through the provision of accommodation, transport, activities and attractions, restaurants, retail shops catering to tourists, as well as travel agents and tour guides. Tourism in Australia is worth over $314.4 billion to the national economy, according to 2025 data from the World Travel & Tourism Council (WTTC), and employed over 696,000 Australians in 2024–25, according to Tourism Research Australia.

Types of tourism business Booking agents and guides

Travel agents and booking agents assist tourists in organising trips and activities at the destination. Many can be online, such as Booking.com, Trivago, Tripadvisor and Expedia. They provide an efficient way to make bookings for tours and may have useful information about a destination that allows for comparison of options and prices across providers. Tour operators and guides provide specialty assistance to help tourists understand or experience a destination, such as guided tours. They may be beneficial to a tourist by providing information about the area or activity, such as a museum tour, especially if they offer translation services as part of the service.

Accommodation Accommodation makes up a large portion of tourism income for Australia and there are many types. The most common include hotels, motels, resorts, caravan parks, and short-term rentals such as Airbnb and Stayz. Accommodation businesses support local economies by employing many people and can impact on how long a tourist stays. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Writing focus 12.3 Developing sentences

Chapter 12 The travel consumer

Do you know the difference between a hotel, a motel and a resort? Often these terms are used interchangeably, but they do mean different things. Hotels are generally larger and more luxurious, with a long list of amenities such as restaurants, bars, business facilities, gyms, pools and spas. They may also offer toiletries such as shampoo and toothbrushes, and room service and cable TV. They will have more people employed, such as concierges (person at the front desk to help with checking in and to give advice on local activities), porters (a person to help you with your luggage), cleaners and chefs. A motel is usually smaller and more likely to be used by domestic travellers for short stays. Motels are usually small businesses offering fewer amenities and services, making them far less expensive than hotels.

SA PA M P G L ES E

540

A resort is usually the most expensive and luxurious option and will often be located near major attractions or beaches. They tend to offer exceptional services, with some even offering meals and activities included in the price.

Transport

Transport businesses offer services that assist tourists to get to a destination or around the location. Examples include aeroplanes, cruise ships and ferries, trains, buses and cars (hire or taxis).

Activities and attractions

These businesses offer services that allow tourists to enjoy the destination, such as theme parks, museums and art galleries, zoos and aquariums, and national and state parks. They may also provide services relating to a special event, such as an expo, a music festival or a sporting event.

Food, drink and retail

Many tourists will visit an area and want to explore different food options, such as restaurants, cafes, wineries and breweries, and food trucks. Retail stores in tourist destinations and areas will often sell goods to tourists to take home as souvenirs or gifts. Examples may include gift stores attached to museums or art galleries, or even local markets selling handmade goods such as artworks or local honey.

How does tourism contribute to the economy? An economy is the system that involves the interaction between individuals, businesses and governments to produce and consume goods and services. The tourism industry is an important part of the Australian economy, providing the benefits shown in Figure 12.3.1. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.3 What types of businesses exist in the tourism industry and what is their economic contribution?

Employment Allows for the creation of more jobs due to demand for goods and services Economic growth Contributes billions of dollars to the Australian economy from overseas and domestic tourists purchasing goods and services

The economy

541

Government revenue Tourists will spend money, leading to the collection of taxes and GST by the government Regional development Money spent by tourists will lead to governments having to spend more money on infrastructure, which locals will benefit from also

Supports small local businesses Tourists will spend money, with much of this in small businesses, especially when travelling regionally

➜

SA PA M P G L ES E

Create choices for all consumers Tourists will create demand for new and innovative products, which locals will benefit from also

Figure 12.3.1 Benefits provided to the Australian economy by the tourism industry

Tourism and the multiplier effect

The multiplier effect explains how a small change in spending can lead to a larger change in total income. This is particularly relevant to the tourism industry, where an overseas tourist will spend money on goods and services, which will provide income to workers in the industry, who in turn will spend money on fulfilling their needs and wants in that community. This causes original spending to lead to more spending, several times over. This is known as the multiplier effect and explains how spending by tourists can lead to multiple economic benefits, especially in regional areas. For example, a tourist may spend $1000 on hotel accommodation in a regional town; the hotel will pay the cleaner, who then spends some of this money on groceries in the local shops, and then those local shops pay their employees.

Review 12.3

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

multiplier effect when an initial increase in spending leads to a larger overall increase in economic activity

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify the types of businesses in the tourism industry.

Compare the services provided by hotels and motels.

Outline the role of tour operators and guides.

Thinking, researching and communicating 1.

Explain the multiplier effect, using an example from your local community.

Recommend types of businesses you could start in your local area to cater to tourism needs.

Research travel and booking agents providing services such as accommodation and activities in your area. Outline some of the services that these providers offer and the costs involved.

542

Chapter 12 The travel consumer

12.4

Travel destinations, planning options and different types of travel: what is best for me? Success criteria

In this lesson, you will learn about the key factors that influence travel destination choices, explore different planning options for organising trips, and compare the advantages and disadvantages of various modes of travel.

❏ I can explain the factors that influence where I travel, the different planning options available, and the advantages and disadvantages of different means of travel.

SA PA M P G L ES E

Learning intention

Starter activity

Look at Figure 12.4.1. What’s the most important thing for you when trying to decide your next travel destination?

➜

Figure 12.4.1 Pointing out where to go is the first step to plan your travel.

What are the things you need to consider? Writing focus 12.4 Appositives

Young Australians love to travel, but deciding where to go, how to plan it and what mode of transport to use can be hard work. So how do we make these decisions and what do you need to consider so that you can make informed, responsible and budgetaware decisions? Knowing your options and doing a little bit of planning ahead will ensure that you have the best travel experience. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.4 Travel destinations, planning options and different types of travel: what is best for me?

543

What are the factors that influence choosing a travel destination? Choosing a travel destination can often be difficult. To make an informed decision, you should consider the factors outlined in Table 12.4.1. Table 12.4.1 Factors involved in choosing a travel destination Purpose of travel

Travelling can be expensive – flights, accommodation, food, activities and spending money. Cost is one of the biggest factors to consider when deciding where to travel, as it is important to know how much you can afford while staying within your budget.

What is the purpose of travel – is it to have a cultural experience, for leisure and enjoyment, for adventure, for education, for special events, or for volunteering or work?

Safety concerns

Accessibility and transport options

SA PA M P G L ES E

Cost

Some places may seem exciting to visit and explore, but You may select a destination because it is easier present dangers due to crime, environmental disasters or to get to, or easy to get around once you are political concerns. Often people will select a destination there because of its transportation system. because they feel it is safer.

Climate

Values and ethical considerations

Often people will select a location because of the climate. Some people will travel at certain times of the year and to some places to avoid the weather where they live, or to experience warmer or colder weather elsewhere.

People will avoid a location or visit it because it aligns with their values or because they consider it ethical. An example of this is Indigenous tourism or ecotourism, which people can take part in without compromising their values.

544

Chapter 12 The travel consumer

What are the different planning options for organising your travel? There are several options to choose from when organising travel.

Planning travel using your own research With internet research and AI, it is easier than ever to plan and book travel online. Organising a trip this way allows you to be flexible with your choices, and to choose exactly what you want, such as dates, accommodation and experiences. It is often cheaper, as you can book directly with providers and avoid paying commissions to travel agents. However, it can be time-consuming, and may be difficult to make changes once bookings have been made.

SA PA M P G L ES E

commission income paid to an employee based on the number and amount of sales made; for example, a real estate agent being paid according to how many houses they sell

Travel agents

A travel agent is an expert at booking travel. They can organise flights, accommodation and activities, as well as give advice on the travel destination and support you if things go wrong. Using a travel agent can be more expensive because they earn a commission from travel service providers. They may also offer a limited range of options, as they often work with selected providers.

Package holidays

Package holidays are a convenient way to book a holiday as they will usually include flights, accommodation, activities and even meals. They are easy to plan and have predictable costs. They can, however, be restrictive as you cannot make changes easily to the offered package.

Group or organised tours

➜

Figure 12.4.2 A group holiday might be your ideal choice for a first holiday, to get you used to the experience before you venture out solo.

Group or organised tours offer a convenient way to book a holiday as they will usually include flights, accommodation, activities, meals and a tour guide. They are easy to plan, have predictable costs and offer a safer way to travel. Group travel is a social experience as generally you are with the same people for an extended time, and the guide will explain and organise everything you need to know while away. They can, however, be quite restrictive, with fixed timings, schedules and limited freedom to explore destinations.

What are the advantages and disadvantages of different means of travel? Once you have decided where you will travel and what planning option you will use, you will need to consider how you will get there. This will be dependent on how much money you can spend, how much time you have, and the environmental impact that youpages will •have by travelling. Final Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.4 Travel destinations, planning options and different types of travel: what is best for me?

545

Table 12.4.2 outlines the advantages and disadvantages of different means of travel. Table 12.4.2 Comparing the advantages and disadvantages of different means of travel Plane

Car

• Advantages: faster than other modes

• Advantages: more flexible than other

of travel, meaning it is suitable for long distances.

modes as you can leave and stop any time you want and go to remote areas. It can also be cheaper, especially if several people are travelling.

• Disadvantages: can be more expensive than other modes of travel and it is common to experience delays. The environmental impacts are high due to aircraft emissions causing pollution.

• Disadvantages: may cause wear and tear

SA PA M P G L ES E

on the car, it is slower, and the driver may become tired from driving long distances and periods of time.

Train

Bus

• Advantages: a comfortable, scenic and

• Advantages: an affordable and common

environmentally friendly way to travel within a country.

way to travel from city to city.

• Disadvantages: slower than other forms

• Disadvantages: slower than plane travel and have less flexibility with limited destinations.

of travel and can be uncomfortable for longer trips.

Ship

Walking or cycling

• Advantages: a comfortable and scenic way • Advantages: a very low cost form of travel, to travel. Can offer additional features, such as entertainment, activities and many food options while travelling.

that is flexible, is environmentally friendly and has health benefits.

• Disadvantages: you can only travel limited

• Disadvantages: can be slower, more

distances, and you are exposed to the elements of the weather, such as heat, cold and rain.

expensive, and have less flexibility with limited destinations.

Review 12.4

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline why cost is a determining factor when deciding on a destination.

Outline examples of a safety concern a traveller may have when travelling overseas.

Compare travel packages and group or organised tours.

Thinking, researching and communicating 1.

You are travelling overseas to Europe. Recommend one type of transport method you will use to get there and one type of transport to travel within Europe.

You are travelling to another state in Australia to visit relatives. Recommend two types of travel that you may use to get there and for travelling while there.

Research ecotourism or Indigenous experience options available in Australia. Explain the features of this option and justify why this may be a good option for travellers who are conscious of Indigenous or environmental values. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 12 The travel consumer

12.5

Case study: how to choose my holiday destination

Learning intention

Success criteria

In this lesson, you will apply your knowledge of travel planning to design a realistic holiday itinerary. You will learn how to evaluate destinations based on practical and personal factors, make informed choices about transport and accommodation, and create a plan that balances cost, convenience and experience.

❏ I can explain the factors that impact on my choice of travel destination. ❏ I can compare different planning options when organising travel. ❏ I can discuss the advantages and disadvantages of different means of trip.

SA PA M P G L ES E

546

Starter activity

Recall what you’ve learned in previous lessons and write down your strategy of choosing a perfect destination for your next trip.

What is a case study?

A case study investigates a real destination to understand it better. It supports informed decisions by exploring factors that influence destination choice, different planning options and their features, and the advantages and disadvantages of each. Case studies take learning beyond the pages here and helps you understand what to expect when you eventually plan your own travel.

Planning travel starts with knowing what you want!

Where have you always dreamed of going? Do you dream of watching a Manchester United game or a Wimbledon tennis match in the United Kingdom? Visiting faraway places rich in history and culture, such as Egypt? Seeing Uluru beyond the pages of a book? Or eating real sushi in Japan and watching sumo wrestling? Perhaps something adventurous like whitewater rafting in Cairns or snorkelling on the Great Barrier Reef. Maybe a surfing holiday in Bali after finishing school. Or something relaxing like sitting by a beach on a tropical island sipping mocktails in the sun, perhaps in Fiji. No matter what your dream holiday is, now is the time to turn that dream into a reality by planning it out so you can be ready to just go! Planning a holiday can be exciting – the anticipation, the countdown, the daydreaming leading up to the exciting day when you finally go! All holidays start with a budget.

12.5 Case study: how to choose my holiday destination

Your teacher will provide you with a realistic budget to get started, but beyond this you will do the following:

Figure 12.5.1 Get ready to travel to your dream destination!

SA PA M P G L ES E

➜

1. Decide where you will go. 2. Make informed decisions about the factors affecting your choice, such as cost, purpose of travel, safety concerns, accessibility and transport options, climate, and values and ethical concerns. 3. Decide how you will get there – plane, car, bus, ship or ferries, train, walking or cycling. 4. Then, plan your holiday using your own research.

While planning your dream holiday, you will organise your ideas in the following activity, so that it almost becomes a reality.

Case study activity 12.5.1 Plan your own dream holiday!

Step 1: decide where you will go

Decide on a destination, domestic or overseas, sun or snow, relaxing or adventurous – the decision is yours! Step 2: reflect on why you want to go there

What made you choose this destination? 1.

Justify your choice in relation to factors such as cost, purpose of travel, safety concerns, accessibility and transport options, climate, and values and ethical concerns.

Step 3: decide how you will get there

Domestic or international travel, the choice is yours. 1.

Domestic: investigate and then outline how you will get there with two types of transportation options, choosing from plane, car, train, bus, ship or ferry, walking or cycling. International: investigate two different flight options on two different airlines and compare them so that you can select the better option.

Step 4: plan your trip

Time to dream about your accommodation, food, activities and places to visit! You will need to show your research by providing the following information. 1.

Where will you stay? Provide one accommodation option that suits your needs over a five-day trip. Consider its safety, comfort, location, climate, values and ethical concerns, and cost and justify why it is perfect for you. Where will you eat? Outline at least five different food options in terms of restaurants and cafes you would like to try. What activities will you do? Detail five different activities that you will do at the destination. The choice is yours! What monuments or places of interest will you visit? These could include museums, natural wonders, art galleries or famous beaches. List at least three.

You are now ready to see the world! Bon voyage! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

547

548

Chapter 12 The travel consumer

12.6

What do I need to organise before I travel internationally? Success criteria

In this lesson, you will learn why essential travel documents and protections must be organised before departure when travelling internationally, and how these preparations help ensure a safe, stress-free, and financially secure trip.

❏ I can explain how to organise a passport, visas and travel insurance before I travel internationally.

SA PA M P G L ES E

Learning intention

Starter activity

See, think, wonder 1.

See: look at Figure 12.6.1.

Think: what elements are included in a passport?

Wonder: why do you think these elements are necessary to include in a passport?

➜

Figure 12.6.1 A passport includes important information, such as your name, your date of birth, where you were born and your passport number.

Writing focus 12.6 Transitional phrases

So, you have decided where to go, how you are going to get there, and what you’re going to do while overseas. But have you organised the important stuff? Do you have a valid passport? Do you have a visa for where you are going? Have you organised your travel insurance? It is essential that you have organised your passports, visas and travel insurance well in advance before you go, as not having these may delay your travel, cause you stress or cost you thousands of dollars.

The importance of organising a passport Once you have decided to travel internationally, it is essential that you apply for a passport immediately as the application can take up to six weeks to process. A passport is an official government document that is recognised by other countries while travelling and is used to prove who you are. It includes important information, such as your name, your date of birth, where you were born and your passport number. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.6 What do I need to organise before I travel internationally?

549

Your passport indicates your nationality to the country where you are travelling. It is also where other countries may put visas as evidence that you are allowed to enter their country. Without a passport you cannot travel overseas, even if you have paid and organised everything else needed for your travels. In addition to having a passport, it is essential to check that it is not expired, and that it will be valid for at least six months beyond your return date from the trip as many countries will not allow you to enter otherwise.

SA PA M P G L ES E

To apply for an Australian passport, navigate to the Department of Foreign Affairs and Trade (DFAT) passport website: https://cambridge.edu.au/redirect/11733. This website will give you the information you need to get started. If you are under 18 years, you can get a child passport, which is less expensive (but lasts only five years if you are aged below 16 years). If you are not a citizen of Australia, you will need to apply through your country of citizenship and follow their process.

Steps to getting a passport

1. Organise passport photos and gather your documents. Passport photos are small photographs of your face that have strict guidelines and are usually taken in a post office or newsagent prior to lodging your passport application. You will also need identification documents, such as a birth certificate, to prove your citizenship and identity. 2. Ask someone to act as your referee or guarantor. You must have someone you have known for at least two years, who is not related to you and is a citizen to confirm your identity. In some cases, a guarantor may be needed to sign your application and photos. 3. Complete the application form. This can be done online and then printed, or completed in a paper form. 4. Lodge the application and pay the fee. You will need to do this at a post office that accepts passport applications. Staff will check your documents, accept your fee payment and lodge your application. 5. Wait for the passport to arrive. Passports are usually posted to your address within several weeks. Urgent processing is available for an additional fee. There is also an option to replace a passport while overseas if you lose it or stay longer than you intended, which can be costly and stressful. Refer to the DFAT website for further information.

The importance of organising visas

Before you travel, it is important to check visa requirements for the countries you are intending to visit. A visa is the official permission you need to be allowed to enter another country. Every country has different rules and requirements. Visas stipulate the rules for entering, staying, working or studying in another country as well as how long you are allowed to stay. Usually, a visa is a stamp or sticker placed into your passport. For most Australians, getting a visa is simple and can be done when you arrive for most popular destinations by applying and paying a small fee online. It is essential to check and organise if a visa is needed before you book your trip and arrive at the airport, as not having a visa can result in deportation (being sent back). Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

referee (passport) in this context, a person who confirms your identity when you apply for a passport guarantor (passport) in this context, a person who confirms your identity and photo in a passport application

550

Chapter 12 The travel consumer

The importance of organising travel insurance Travel insurance, although not compulsory, is an important part of overseas travel as it helps protect a traveller from the costs of unexpected events, such as lost or stolen luggage, flight cancellations or delays, and medical emergencies and hospital stays.

SA PA M P G L ES E

Organising travel insurance is easy to do online and can save you thousands of dollars. A comparison website like https://cambridge.edu.au/redirect/11734 will allow you to easily compare features and prices across a wide number of insurance providers. They will ask you questions such as your name, age, where you are travelling, how long for, what activities you may be participating in (especially if they are considered more dangerous), and if you have pre-existing conditions. Insurance for travelling to some destinations will be more expensive than others because they may be assessed as riskier or have higher medical treatment costs.

premium the amount of money paid for an insurance policy

When you have selected the travel insurance that meets your requirements, you need to pay the premium. It is recommended that a traveller carry one copy of travel insurance documents and send another copy to someone else, such as a parent, in case a claim needs to be made.

Case study 12.6.1: travel insurance

If you can’t afford travel insurance, you can’t afford to travel!

Alec was 14 years old when he travelled with his family overseas to explore theme parks in Malaysia and Singapore. A few days into the trip, Alec started experiencing stomach pains. His mother took him to a doctor, who thought it was just his poor diet while away on holidays but gave him instructions to go to the hospital if the pain got worse. Overnight, Alec was unable to sleep and had to be taken to hospital, where he was diagnosed with appendicitis. He ended up needing an operation and spent eight days in hospital recovering. Alec’s family had taken out travel insurance before leaving Australia, at a cost of $80. Their flights had to be rescheduled until many days later, new accommodation near the hospital needed to be booked and extended. Altogether, Alec’s appendicitis cost over $30,000 in changes to the itinerary and medical fees. Organising travel insurance prior to the trip saved his family from additional stress and worry, and the costs associated with Alec’s medical incident.

Review 12.6 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify when you need to organise a passport, visa and travel insurance.

Outline the requirements of getting a passport.

Outline the process of getting a visa.

Define a premium.

Thinking, researching and communicating 1.

Outline the things that travel insurance may include as part of its cover.

Explain why travel insurance may be more expensive for some countries. Research and identify countries that higher premiums an example. Final may pageshave • Cambridge University Pressas & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.7 Skills focus: how to get ready for my travel

12.7

551

Skills focus: how to get ready for my travel Success criteria

In this lesson, you will develop practical skills for preparing to travel, including comparing travel insurance options, understanding visa requirements and completing the steps to apply for a passport.

❏ I can explain the process of deciding on a travel insurance option, getting a visa and applying for a passport.

SA PA M P G L ES E

Learning intention

Starter activity

Travel planning risk assessment

When planning a trip, travellers need to think about possible risks and how to manage them. 1.

Think: Choose one travel situation below and list two problems that could occur:

• going overseas • a beach holiday • an adventure activity (e.g. snorkelling, rafting)

Pair: Compare your ideas with a partner. For each problem, suggest one way to reduce the risk (e.g. insurance, planning ahead).

Share: In pairs, choose one example and discuss it with the class. In what ways could you reduce that risk?

Travel insurance saves the day

If you can’t afford travel insurance, you cannot afford to travel. Things can and do go wrong when travelling, so it is important to have travel insurance. From cancelled flights to lost baggage, illness and accidents, travel insurance can make sure you are protected from paying the costs. So, do you know how to pick the best policy?

➜

Passports and visas

Figure 12.7.1 Travel insurance is essential for a relaxing holiday.

Before you can even book your flights, you need to have a passport and organise visas. Do you know how to do this? This skill-based lesson is about helping you learn how to organise the essentials so that you’re ready to travel. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

552

Chapter 12 The travel consumer

Review 12.7 Thinking, researching and communicating

Knowledge and understanding

Online quiz

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding Use your travel planning skills to find the best policy for your family’s needs

You have been given the task of organising travel insurance for your next family holiday. Your job is to use a travel comparison website to compare different policies and decide on the best one for your family. 1.

Select a country your family would like to travel to overseas and compare travel insurance for this country based on coverage for two weeks. You can use comparison websites such as:

SA PA M P G L ES E

• https://cambridge.edu.au/redirect/11736 • https://cambridge.edu.au/redirect/11737 • https://cambridge.edu.au/redirect/11734.

You will compare three differently-priced policies by examining the features of each, with Policy 1 being inexpensive with minimal features and coverage, Policy 2 being average in features and costs, and Policy 3 being a premium policy with many features. a. Copy and complete the following table in your workbook.

Feature

Policy 1 (inexpensive)

Policy 2 (average)

Policy 3 (premium)

Cost

Medical cover

Luggage cover Excess

Exclusions

b. Identify which policy would suit the needs of your family and justify your choice.

Thinking, researching and communicating

Apply your travel skills: organising a passport 1.

Go to https://cambridge.edu.au/redirect/11733 and then respond to the following questions. a. Identify the cost of a passport for a 16-year-old. b. Compare how long children’s and adults’ passports are valid for. Propose reasons why this may differ. c. Outline reasons why someone may apply for faster processing of their passport. d. Outline who can be a guarantor or referee.

Apply your travel skills: organising a visa 2.

For the country you have selected, research the visa requirements of that country for an Australian passport holder. a. Outline the entry requirements. b. Outline the length of time you would be allowed to stay. c. Identify the costs.

12.8 What factors do I need to consider when developing an itinerary?

12.8

553

What factors do I need to consider when developing an itinerary? Success criteria

In this lesson, you will learn how to create a practical travel itinerary by considering key factors to ensure a smooth and enjoyable trip.

❏ I can explain the factors to consider when developing an itinerary.

SA PA M P G L ES E

Learning intention

Starter activity

Your family is planning to travel overseas for the next holiday, and you are in charge of planning everything. 1.

Write down the steps you would take to make sure you have the ideal holiday experience.

Before you travel, it is essential that you do some planning to ensure that you enjoy your trip. This is why it is important to create an itinerary. An itinerary is a detailed travel plan that summarises where a traveller is going, how long they will stay, how they will get there, what activities they will do, and their travel insurance details. A good itinerary will help a traveller stay organised by helping them manage their time and money while away so that they are less stressed and can quickly make an informed decision if anything unexpected happens.

➜

Figure 12.8.1 Making a good travel itinerary means taking everything into consideration.

Writing focus 12.8 Developing sentences itinerary a planned schedule of travel activities and destinations

554

Chapter 12 The travel consumer

There are benefits to having an itinerary, such as allowing a traveller to stick to their budget and book accommodation and transport efficiently. This allows a traveller to enjoy their time away.

Factors to consider when developing an itinerary Time

SA PA M P G L ES E

Before making bookings, a person will need to decide how much time they will have available to travel. This may mean having to organise time away from work or study, and other commitments. The amount of time available will often be determined by these commitments as well as budget. This will affect how many destinations are visited, the pace at which the travel happens, and the length of stay overall. It is also important to factor in the time needed to travel, as some destinations may take over 24 hours of travel. Travelling for long periods or too quickly between locations can lead to fatigue and stress, so it is important to plan time to rest while travelling.

Budget

budget a plan that outlines how much money will be earned and spent over a certain period

Most people will have a budget in mind for their trip but may not know what expenses are involved until they begin researching and putting together their itinerary. Travellers need to consider transport costs, accommodation costs, food costs, activities costs, as well as costs for items such as gifts or emergencies. Having a limited budget may result in a shorter trip, or adjustments in the type of accommodation booked, or fewer activities.

Accommodation

➜

Figure 12.8.2 There are many factors to consider before planning your itinerary.

A traveller will need to consider the types of accommodation they will choose. This is often determined by what is available at the destination at that time and the traveller’s budget. Accommodation can be one of the biggest expenses while travelling, so it is important to compare features and prices of different options before deciding. Comfort, location and safety are all important factors to consider when choosing accommodation. Options could include hotels, motels, hostels, short-term home rentals and caravan parks.

12.8 What factors do I need to consider when developing an itinerary?

555

Activities Travellers may already have an idea of the types of activities they would like to do and attractions they would like to visit. However, it may be beneficial to research further types of activities that may be available, including opening hours and booking requirements, as sometimes these will book out ahead of time.

Other important considerations

SA PA M P G L ES E

When developing an itinerary, it may be important to consider things such as time of year. Travelling at the end of the year or during certain peak times may add extra cost to your trip due to increased demand. There may also be more people visiting at certain times of the year, causing crowding and leading to increased waiting times at events. It may also be useful to check that there are no scheduled public holidays or major events at the destination, which may make it harder to access basic needs. Health risks may also be a concern, such as viruses that are prevalent at the destination. It may be useful to know ahead of time where to turn for medical help or for medications, just in case. Contingency plans may also need to be considered in the event of poor weather, delays in transport, or sudden illness. A well-planned itinerary should provide good flexibility and allow for changes to be made if needed, as well as time to rest.

Ethan’s itinerary for a surfing holiday to Bali

Ethan has finally finished school and is going on his dream surfing holiday to Bali with his friends to celebrate. Table 12.8.1 shows the itinerary he has planned. Table 12.8.1 Ethan’s Bali itinerary

Day 1

Flights and accommodation

Activities and food

Cost

• 8 a.m. flight from

• Dinner in hotel • Rest • Go for a walk in the area

• Flight: $789 • Meals: $40 • Taxi from airport: $18 • Accommodation for

Sydney to Denpasar Airport on Batik Air flight no. JA 432 • Ubud Hotel: Bali – 25 Jalan Street. Ph. 9959376530

Day 2

near my hotel

entire week: $380

• Breakfast buffet included in

price of accommodation • Take taxi to Uluwatu Surf Spot • Lunch and dinner in local cafes with Jeff and Kobe

• Taxi: $10 • Dinner and lunch: $25

contingency a backup plan or extra allowance for unexpected events or costs

556

Chapter 12 The travel consumer

Table 12.8.1 Continued Flights and accommodation Day 3

Activities and food

Cost

• Breakfast buffet included in

• Taxi : $14 • Dinner: $10

• Breakfast buffet included in

• Taxi: $17 • Dinner: $25

price of accommodation • Take taxi to Padang Padang Surf Spot • BBQ at the beach with Jeff, Kobe, Liz and Candice Day 4

SA PA M P G L ES E

price of accommodation • Take taxi to Canggu Surf Spot • Dinner at Seafood Hut with Jeff and Kobe

• Breakfast buffet included in

Day 5

price of accommodation

• Take taxi to Bingin Surf Spot • Dinner in hotel with

• Taxi: $115 • Dinner: $20

Jeff and Kobe

Day 6

Day 7

• 4 p.m. flight back to Sydney on AirAsia flight no. AK 473

• Breakfast buffet included in

• Tour: $38 • Dinner: $20

• Sunrise tour and ATV trails.

• Tour: $45 • Flight: $645

price of accommodation • Ubud Waterfalls, Water Temple, and Rice Terraces Tours. Ph. +9967999090. Includes lunch • Dinner local to the hotel

Ph. +99657568694 • Includes breakfast and lunch. Dinner on plane home

Review 12.8 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Define an itinerary.

Outline how time available may impact on your itinerary.

Identify three costs that can be reduced on an itinerary if a traveller is exceeding their budget.

Identify other considerations a traveller may want to consider when creating an itinerary.

Thinking, researching and communicating 1.

Explain why flexibility is important when organising an itinerary.

Review Ethan’s itinerary in Table 12.8.1. Calculate his overall costs for the trip.

Research and find different examples of itineraries. Select one that has a format that you like and then justify why it is a good example. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.9 Why should I check travel advice and travel reviews before deciding where to go?

12.9

557

Why should I check travel advice and travel reviews before deciding where to go? Success criteria

In this lesson, you will learn why checking official travel advice and reading travel reviews is essential for making informed decisions about your destination, safety and travel experience.

❏ I can explain the types of advice provided by the Department of Foreign Affairs and Trade (DFAT) and travel reviews.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: write down three or more pieces of advice you’d like to give to someone who’s planning to travel overseas.

Pair: compare your ideas with a partner. What advice do you both agree on? What is different?

Share: contribute one useful piece of advice to a class discussion and explain why it is important.

Minimising risks

Travelling should be a positive experience; however, it is not without risk. Natural disasters, health risks, war, political instability, crime and cultural misunderstandings can happen at any time. So, what do you do to minimise this risk? Where can you turn if something goes wrong while you are travelling? Millions of Australians travel overseas every year, according to the Australian Bureau of Statistics. The government provides official travel advice to Australians to help keep them safe while overseas. The Department of Foreign Affairs and Trade (DFAT) operates the Smartraveller website, which provides official travel advisories, safety information and guidance for Australians travelling or living overseas. When you are thinking of travelling overseas, you should visit this website before choosing your destination. You should also refer to it while overseas or if something happens, as it provides guidance about where to get help if something goes wrong. By researching your destination on the Smartraveller website at https://cambridge.edu.au/redirect/11738, you can receive official, up-to-date travel advice to make an informed decision about the safety, financial and legal risks you could potentially face while overseas. Travel reviews may also provide further information to a traveller about their destination on a range of different accommodation, activities and tours, and restaurant options. Together, DFAT advice and travel reviews are important in understanding what to expect when travelling.

Writing focus 12.9 Appositives

Chapter 12 The travel consumer

What is Smartraveller? DFAT is an Australian Government department responsible for international relations, trade and supporting Australians overseas. It operates the Smartraveller website, which provides important information on:

• safety – outlines risks such as terrorism, civil unrest and political tension, drink • • • •

spiking, adventure activities, climate and natural disasters, crime and piracy health – provides information on such matters as travel insurance, medication, physical and mental health, health risks and medical care local laws – outlines information on local laws, Australian laws, dual nationality and local customs travel – provides information on visas, passports, money and local travel local contacts – provides information on how to access assistance if there is an emergency or if a traveller requires consular assistance.

SA PA M P G L ES E

558

What’s a consulate?

The Australian Government has an office called a consulate in many countries around the world. These offices have a consul, whose job is to help Australians while travelling in that country. Reasons to contact a consul in another country may include losing a passport, or needing to seek legal advice because you have been arrested or have had a crime committed against you, or if you need help because of political instability or a natural disaster. You can easily find out how to contact the consul through the Smartraveller website.

DFAT travel advice levels

To get advice on a destination country, a traveller should search the country on the Smartraveller website. There they will receive specific advice on the country. They will also see that DFAT assigns four levels of travel advice:

• Level 1 – Exercise normal safety precautions • Level 2 – Exercise a high degree of caution • Level 3 – Reconsider your need to travel • Level 4 – Do not travel.

Higher advice levels indicate greater risk, which means that you may be at risk if you travel there. It may affect travel insurance premiums and conditions, meaning you may not even be able to get travel insurance coverage. It may also mean that flights and activities at the destination may be cancelled without warning. It is important that a traveller reconsider their travel if the destination has an advice level of 3 or 4.

What are travel reviews? Travel reviews are opinions shared by travellers about goods or services used while travelling. They are an important part of planning a holiday as they often provide a more accurate description about the quality of accommodation, transport, restaurants, activities and tours, and other types of services used. Reviews can be seen on hotel booking websites, tour booking websites or restaurant websites. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.9 Why should I check travel advice and travel reviews before deciding where to go?

559

They can also be part of a Google Review when you search the service provider. Social media also has many short videos by travel bloggers rating services at a destination.

➜

SA PA M P G L ES E

These reviews help travellers understand the destination better by allowing them to compare options or read comments with a traveller’s opinion about the quality of the service. For example, a person leaving a review on a website may talk about the poor variety at the buffet breakfast, or the tiny swimming pool, or how noisy or dirty the room was, or how close the Figure 12.9.1 It is important to consider the overall rating rather than just hotel was to public transport or important one review that may be negative. monuments in the area. These opinions may give a more accurate opinion of a service than a hotel’s website that may display pictures of only its best rooms and highlight its best features. It is important to keep in mind that not all reviews are reliable and some may be exaggerated or fake. In addition, travellers’ preferences may vary. Someone may find the service and quality exceptional, while another person may see it as poor. It is important to look at the overall ratings and themes in the reviews, rather than decide based on a single review.

Review 12.9

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify some of the risks you may face while travelling overseas.

Outline the purpose of the Smartraveller website.

Identify some of the services provided by a consulate.

Thinking, researching and communicating 1.

Explain some of the safety concerns you may experience in a different country that DFAT may provide information on.

You come across a very bad review on an accommodation booking website. Explain your response to the review.

Research the Smartraveller website. Pick one country destination overseas and summarise the information provided by DFAT. Explain why this country is safe or not safe to travel to.

Research an accommodation booking website (e.g. Booking.com, Trivago, Expedia, Lastminute, Tripadvisor). Pick two similar hotels at the same destination and compare their reviews. Identify which one is better and explain why.

560

Chapter 12 The travel consumer

12.10

What ﬁnancial and legal issues may I have when travelling overseas? Success criteria

In this lesson, you will learn how financial risks and legal issues can affect travellers overseas, and how to prepare to avoid these problems.

❏ I can explain the possible financial and legal issues that could impact on me as a traveller.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Think back on your travelling experiences. What’s the scariest thing that ever happened?

Note down why it happened and suggest how can you prevent it from happening again.

Writing focus 12.10 Transitional phrases

exchange rate the value of one currency compared to another, showing how much of one currency you get when you exchange it for a different one

Deciding to travel overseas can be very exciting but it can be expensive, especially if you have not factored in what can go wrong. It can also be dangerous, especially if you become the victim of crime, or get arrested. Do you know what to do to avoid these situations? If you do find yourself in these situations, do you know how to overcome them?

Financial issues when travelling

All travel includes financial risk, such as exchange rate fluctuations and unexpected phone charges. However, by understanding these risks and planning ahead, they can be minimised to ensure a positive travel experience.

Exchange rate fluctuations

An exchange rate is the value of one country’s currency compared with another. Each country has its own type of currency. In Australia, it is the dollar; in England, it is the British pound; in New Zealand, it is the New Zealand dollar; and in Indonesia, it is the rupiah. Each currency has a different value compared with the other, depending on demand for the currency and global economic conditions. This can lead to daily fluctuations causing local prices to go up or down in value, making it difficult for travellers to keep track of their spending. The Australian dollar falling in value compared with the destination currency means a traveller’s money buys less overseas, making food, transport, accommodation and activities more expensive. This impacts on travellers as they may exceed their budget, running out of money sooner than anticipated. To reduce the impact of exchange rate fluctuations, it is recommended that a traveller monitors exchange rates before travelling, have additional savings in case their budget is exceeded, and compare exchange rates between places that exchange currency.

12.10 What financial and legal issues may I have when travelling overseas?

Exchanging money at airports can be expensive because exchange rates and fees are often less competitive.

➜

SA PA M P G L ES E

Travellers should also consider contacting their financial institution and organising a travel card. Prepaid travel cards allow travellers to load money and lock in an exchange rate before travelling. This helps protect against fluctuations in currency value and avoids foreign transaction fees. Other tips to manage money include being aware of Figure 12.10.1 Be aware of exchange rate fluctuations to be better prepared for your travel. ATM charges and other fees overseas. Are there cheaper ways to access and use money? By being aware of and seeking better exchange rates, travellers can make their money go further.

Mobile phone charges overseas

Did you know you can use your existing phone in most countries as normal? This may come at a high cost, especially if you forget to take your phone off roaming. It is important to think about how you will communicate while you are away and do your research before you leave. International roaming charges, internet data usage, and receiving calls and texts can cost the traveller a lot of money. There are things you can do to reduce your phone bill while overseas.

• Turn off international roaming before leaving Australia. • Check with your existing phone network provider to purchase roaming packs that • • • • •

you can add on to your existing phone plan for an extra fee. Consider buying a SIM card or eSIM specifically for your destination country instead of using roaming. Use wi-fi wherever possible overseas. (Be aware, however, that your searches may not be secure, especially if using internet banking.) Download any big files before you leave, such as maps, ebooks, music, podcasts or videos. Track your usage while away through your phone provider. Close unnecessary apps and turn off location tracking and GPS when not in use.

By planning ahead, you can still communicate easily and inexpensively, no matter where you are as a traveller.

561

Chapter 12 The travel consumer

Legal concerns when travelling It is important for travellers to understand that local laws, rules and customs differ between countries. They should research their destination before they leave, starting with the Smartraveller website.

Being a victim of crime Being a victim of a crime can be an awful experience, and it is often made worse if it happens when the person is on holidays in a place where laws are unfamiliar and they are uncertain of what to do. Tourists are often considered easier targets for criminals as they are unfamiliar with their surroundings, may be distracted and often carry valuables such as large amounts of cash. Common crimes include pickpocketing, bag snatching, and scams. It is important to research a destination before travelling to learn about common crimes and unsafe areas. If a traveller is a victim of crime, it is important that they do the following.

SA PA M P G L ES E

562

• Seek medical assistance if they are injured. • Seek support from family and friends – being a victim of crime can be overwhelming. • Let the police or authorities in that country know. • Lodge a claim with their travel insurance provider if they suffer a financial loss. • Contact the consulate in that country if the crime is serious in nature, such as a sexual assault, serious assault or kidnapping. The consulate will be able to provide advice and support, and can be found on the Smartraveller website.

➜

Figure 12.10.2 Stay alert while enjoying yourself.

12.10 What financial and legal issues may I have when travelling overseas?

563

Getting arrested overseas

SA PA M P G L ES E

Each country has its own laws and customs. It is essential that travellers obey the local laws of the country they are visiting. This begins with researching the destination before travelling to understand the local laws to be aware of. Some countries have extremely harsh penalties for crimes such as drug trafficking, which have resulted in life sentences and the death penalty. The consulate in the destination country may be able to help you by giving advice about the legal system and help you find a lawyer if you are arrested, but cannot get you out of jail. Australian laws do not apply overseas, and the legal processes may be unfamiliar. It is important that travellers are careful not to disobey local laws and are respectful of cultural and religious customs. If a traveller is arrested, they should contact the consulate in that country for assistance and support immediately.

➜

Figure 12.10.3 Australian laws do not apply when you are overseas, so be sure to stay aware of local customs and rules.

Review 12.10

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the steps you need to take if you become a victim of crime.

Outline ways you can protect yourself from excessive mobile phone charges.

Outline the steps you need to take if you are arrested overseas.

Explain how exchange rate fluctuations may impact on a traveller.

Thinking, researching and communicating 1.

Use an online currency conversion calculator and calculate the conversion rate of A$100 to three different currencies from around the world.

Research being a victim of crime while overseas, starting with the Smartraveller website https://cambridge.edu.au/redirect/11739, and outline the ways that the Australian consulate there may assist you.

Research being arrested while overseas, starting with the Smartraveller website https://cambridge.edu.au/redirect/11740, and outline the ways that the Australian consulate there may assist you.

564

Chapter 12 The travel consumer

12.11

How can I research potential cultural differences to ensure that I am more culturally sensitive? Success criteria

In this lesson, you will learn how to research cultural differences to ensure that you travel respectfully and avoid misunderstandings or cultural offences.

❏ I can identify cultural differences and explain how they may lead to misunderstandings. ❏ I can explain ways to behave respectfully in another culture to avoid causing offence.

SA PA M P G L ES E

Learning intention

Starter activity

Write down your dream destination. Then list three things you don’t know about this place. Do you think these gaps of knowledge can hinder your chance of having a dream vacation? Why or why not?

Being culturally sensitive

Writing focus 12.11 Developing sentences

social norms the unwritten rules about how people are expected to behave in a society; they differ from country to country cultural sensitivity understanding and respecting the cultural meanings, values and traditions of different groups of people

culture shock the feeling of confusion or discomfort when experiencing a different culture

Travelling overseas can be very exciting, with different languages, sights, sounds, foods, religions and cultures. This can also be overwhelming, especially if it is your first trip. The diversity of the world means that there are different customs, traditions, beliefs and values than you may not be used to. These differences mean that people at your destination country may have different social norms and expectations, as well as laws and rules for behaviour while you are there. Things that you may consider normal here may be considered rude, offensive or illegal in another country. It is important to be culturally sensitive when travelling by understanding and respecting cultural differences and practices. Showing cultural sensitivity means actively acknowledging these differences and adapting one’s behaviour to foster respect and harmony. Culture shock may occur. This is when you may feel confused or uncomfortable, which may lead to anxiety, homesickness and frustration. It is important that you do your research before you go to ensure that you are fully able to enjoy your experience.

Language barriers When travelling, it is important to remember that not everyone speaks the same language. This can make it difficult to communicate your needs and may lead to misunderstandings, such as when asking for directions or ordering food. Language barriers can also increase risks in unfamiliar places, especially if you cannot understand safety instructions or warning signs during an emergency.

12.11 How can I research potential cultural differences to ensure that I am more culturally sensitive?

It may be useful to download a translation app before leaving, such as Google Translate, DeepL, Apple Translate or Microsoft Translator, and familiarise yourself with this before leaving. Technology is now being used more often by travellers to reduce language barriers. Travellers should also consider learning a few key phrases in the language used at the destination before leaving, such as those shown in Figure 12.11.1.

I do not speak (insert language spoken in country). I only speak English.

Hello

Where can I find the bathroom?

SA PA M P G L ES E

I do not understand

I need the hospital. Can you help me, please?

Please

Yes

Thank you

➜

Figure 12.11.1 Key phrases you may want to learn in the language of your destination

Customs and social norms

Many countries have different religions, social norms and customs that make them unique and interesting to visit. These differences can also present challenges for inexperienced travellers. Before heading overseas, consider watching some online videos, reading, or asking someone who has been to your destination about the cultural norms and expectations. This will help you to navigate expectations around behaviours, such as what to wear, how to greet people and what may be considered rude.

➜

For example, in some conservative religious Figure 12.11.2 Even simple signs such as a stop sign may be countries, you may be expected to dress modestly difficult to understand in other countries, putting you at risk. by covering your legs and arms in public. There may also be requirements such as wearing a head covering when entering religious buildings or monuments, including synagogues, churches, mosques, Buddhist monasteries or Hindu temples. Inside these places, visitors may be expected to remove their shoes, enter only at certain times or observe separate areas for men and women. It is important to follow the directions of caretakers and be respectful. Watching what the majority of people are doing can help you to ensure that your behaviour is culturally sensitive. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

565

566

Chapter 12 The travel consumer

Laws and rules Some actions that are legal in Australia may be illegal overseas – for example, buying chewing gum or not flushing a public toilet in Singapore, taking a selfie with Buddha in Sri Lanka (because your back is turned), being shirtless in Barcelona, swearing in the United Arab Emirates, or building a sandcastle in Spain.

SA PA M P G L ES E

➜

There are some laws and rules that are common across many countries, such as Figure 12.11.3 When you travel in a culturally sensitive manner, you show restrictions on photographing government respect for local customs and traditions and help keep yourself safe. buildings, military areas, courts or places of worship. Other common laws relate to public displays of affection, such as holding hands, hugging and kissing, and rules about who is allowed to share a hotel room. In some countries, only married couples may share a room. Behaviours considered normal in Australia may be deemed illegal or offensive in other countries. Travellers should research their destination, starting with the Smartraveller website, to understand what is acceptable there. It is important to always be respectful of differences and adapt your behaviour accordingly. By being culturally sensitive, travellers are more likely to have positive interactions with local people and enjoy a safer, more rewarding travel experience.

Review 12.11 Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Identify some of the risks you may face while travelling overseas. Define cultural sensitivity in your own words.

Identify some apps that may help you overcome language barriers.

Thinking, researching and communicating 1.

Explain ways you can research the cultural norms and rules and regulations of a country prior to travelling.

Analyse some of the cultural norms, rules and regulations of other countries. Explain how they may affect your own behaviour when you travel.

Research a country that you would like to travel to that has a different culture, language, customs or laws than Australia. (You may want to begin with the Smartraveller website.) a. Outline how they differ and strategies you can use to ensure that you are culturally sensitive. b. Research some common phrases used in the country (you may use the ones provided in this unit) and practise saying them.

12.12 Where can I turn for assistance if things go wrong while overseas?

12.12

567

Where can I turn for assistance if things go wrong while overseas? Success criteria

In this lesson, you will learn where to seek help if something goes wrong while travelling overseas, including the roles of consulates, embassies, high commissions and airlines, and how to access support through official channels.

❏ I can explain what to do and who to contact if something goes wrong while travelling. ❏ I can identify where to get help overseas and explain the roles of consulates, embassies, high commissions and airlines.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Imagine your phone was stolen when you were shopping near your neighbourhood. What would you do to find help?

Then imagine this happens to you while you are travelling overseas. Will you act differently, and why?

Preparing before you travel

Travelling can be fun and exciting – until things go wrong. Despite a traveller’s best efforts in preparing for a trip by researching, creating an itinerary and organising travel insurance, things do sometimes go wrong. It is important to know what to do in these situations to prevent further hardship. Before leaving, you should:

Writing focus 12.12 Creating topic sentences

• research your destination, including • •

•

social norms and customs, laws, and languages spoken have access to funds if needed for an emergency prepare a detailed itinerary and copies of your passport and important documents, and share these with others who care about you have travel insurance.

➜

Having these things organised will reduce the likelihood and impact of problems if something goes wrong.

Figure 12.12.1 Getting help can be complicated and overwhelming when travelling overseas.

Chapter 12 The travel consumer

Common travel-related problems Table 12.12.1 outlines common travel-related problems and strategies to prevent and deal with them. Table 12.12.1 Types of and solutions to travel-related problems Type of incident

Strategies to prevent

Strategies to deal with the situation if it happens to you

Lost or stolen passport

• Carry your passport securely on you or

• Contact the consulate in that

keep it in the hotel safe (do not give the code to the safe to anyone else). • Keep your passport within sight whenever you need to use it.

country to seek assistance with getting a replacement. • Notify the police or authorities in the destination country if it was stolen.

SA PA M P G L ES E

568

Theft or scams

• Carry only a limited amount of cash with • Notify the police or authorities in you and avoid bringing valuables with you overseas. If you do have valuables, store them in the hotel safe. • Hold your bag close to your body when in crowded areas. • Do not hang bags off chairs or place unsecured on the ground when at restaurants.

the destination country. • Contact your travel insurance provider and seek assistance by lodging a claim.

Transport delays and cancellations

• Regularly check any updates from your

• Remain calm and listen to

Lost luggage

• Have travel insurance. • You may purchase a tracker for your

• Notify the transport provider

travel provider about any delays or cancellations.

suitcase and place it inside prior to your travel.

directions from the transport provider. • Contact your travel insurance provider and seek assistance by lodging a claim. • Have additional emergency money just in case you need to organise alternative transport. immediately. • Contact your travel insurance provider and seek assistance by lodging a claim. • Have additional emergency money just in case you need to buy clothing.

12.12 Where can I turn for assistance if things go wrong while overseas?

Table 12.12.1 Continued Type of incident

Strategies to prevent

Strategies to deal with the situation if it happens to you

Medical emergencies

• Research where the closest hospital or

• Seek medical help. • Contact your travel insurance

• Book accommodation well in advance from reputable websites.

provider and seek assistance by lodging a claim. • Contact the consulate in that country to seek assistance and advice if very serious.

• Have additional emergency

money just in case alternative accommodation needs to be made. • The travel insurance provider may be able to assist you if it is an emergency covered under your policy.

SA PA M P G L ES E

Accommodation issues

medical centre is to your hotel as well as knowing the emergency numbers for that country. • Have travel insurance. • Know the words for hospital and how to ask for help in the local language.

Cultural misunderstanding Legal problems

• Be culturally sensitive and respectful

• Seek help from a local guide or

• Follow local laws. • Follow local laws and always remain

• Apologise to the offended party. • Contact the consulate in that

• Avoid unsafe, poorly lit areas and stay

• Refer to the Smartraveller

• Follow the advice on the Smartraveller

• Contact the consulate in the

in your interactions with locals.

calm and respectful.

Serious crimes

aware of surroundings. • Do not follow people into hidden or private areas, such as the back rooms of shops, even when encouraged. • Make sure any alcoholic drinks are made or opened in front of you to avoid drink spiking. • Don’t drink non-commercially made alcohol as it may be methanol-based. • If travelling with others, stay together.

Natural disasters and political events

website about whether it is safe to go.

hotel staff.

country to seek assistance. They will advise you of next steps relevant to the country you are in.

website to seek consular assistance. They will advise you of next steps relevant to the country you are in. • Report the crime to the police or authorities in that country. • Contact your travel insurance provider to seek advice and lodge a claim.

destination country for advice. • Contact your travel insurance provider to seek advice and lodge a claim.

569

Chapter 12 The travel consumer

The roles of embassies, high commissions and consulates in helping travellers You have probably heard of embassies, high commissions and consulates before, especially if you have used the Smartraveller website, but do you know the differences and their roles and how they may be helpful to you? All have similar roles and are part of the Department of Foreign Affairs and Trade (DFAT).

Consulate Typically located in major cities, a consulate, headed by a consul, is a smaller office that may support travellers. A consulate may assist with lost passports by helping with the reissue process, supporting Australians affected by an emergency, and providing advice and referrals to local services when needed. To contact a consulate while overseas, travellers should refer to the Smartraveller website for their destination country.

SA PA M P G L ES E

570

Embassy

An embassy is the main Australian representative office in a country and is usually in the capital city. The ambassador is the head of the embassy and represents the interests of all Australians in their country of posting, overseeing every aspect of the relationship between Australia and that nation. An embassy may assist travellers by also performing the role of a consulate.

Australian High Commission

A high commission performs the same role as an embassy in Commonwealth countries, such as the United Kingdom, New Zealand, Canada and Fiji.

➜

Figure 12.12.2 The Embassy of Australia in Hanoi, Vietnam. If you find yourself in trouble, research the closest embassy to you.

12.12 Where can I turn for assistance if things go wrong while overseas?

571

The role of airlines in assisting travellers Airlines have the role of transporting travellers to their destination. Sometimes things go wrong and they are obliged to support travellers by:

• rebooking flights after •

SA PA M P G L ES E

•

cancellations providing accommodation or meal vouchers during delays helping with lost luggage claims.

Figure 12.12.3 Airlines can offer some assistance but have limited responsibility to help you in all situations. ➜

Airlines are generally only responsible for what is covered under the conditions of the ticket purchased. Travellers should read the terms and conditions relevant to their ticket type when booking their flights, as any changes may come with additional fees and charges.

Review 12.12

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify what you should do before leaving to reduce the impact of incidents while travelling.

Compare the roles of the consulate, embassy and Australian High Commission.

Outline the role of airlines in helping travellers.

Thinking, researching and communicating 1.

Analyse all the strategies outlined in Table 12.12.1. Identify the most common strategies for dealing with incidents overseas.

Compare the strategies to prevent and strategies to deal with a situation when things go wrong while travelling overseas. Justify why it is important to have knowledge of both.

Research the Smartraveller website in relation to a destination of interest to you. Outline the advice for dealing with the common travel-related problems for that country.

Research an airline that you may use to travel to a destination overseas. Outline some of its rules and policies regarding lost luggage and flight delays.

Chapter 12 The travel consumer

12.13

Investigation: how to develop my itinerary

Learning intention

Success criteria

In this lesson, you will learn how to research travel advice and reviews to make informed decisions about your destination and accommodation, and develop a detailed itinerary that includes activities, transport and cost planning.

❏ I can research and consider information on the Smartraveller website and various travel review websites to make an informed decision about where to travel. ❏ I can construct an itinerary for one destination with costings.

SA PA M P G L ES E

572

Your challenge

Every year, more than 11 million Australians travel overseas to explore the world, with Indonesia and New Zealand being our most popular destinations. Most have no problem and return home safe and ready to plan their next trip. However, some do find themselves in stressful situations. It is important for travellers to consider the safety of a country before going, along with health concerns, and how local laws and culture may affect them. Spending time planning before booking travel can reduce the risks significantly. Your challenge is to decide the best places to travel, using the Smartraveller website and travel reviews as guides.

➜

Figure 12.13.1 What adventures will you go on?

12.13 Investigation: how to develop my itinerary

Part 1: starting your research – where to go? Select three very different countries you would like to visit one day. Then go to the Smartraveller website. Explore the travel advice for each destination on the Smartraveller website, presenting it in a poster or presentation to your class. You will need to consider the following aspects in your research and outline them:

SA PA M P G L ES E

1. What level is its advice warning, and why? 2. Safety 3. Health 4. Local laws 5. Travel 6. Local contacts.

After considering the advice provided on the Smartraveller website, you will justify your choice of the best travel option. You may want to present your poster or presentation in the format shown in Figure 12.13.2 to allow for ease of comparison. Indonesia

Thailand

New Zealand

1. What level is its advice warning, and why? 2. Safety 3. Health 4. Local laws 5. Travel 6. Local contacts

Justify: After researching the above travel options, I believe that ________ is the best option because ___________.

➜

Figure 12.13.2 Sample format for comparison of three countries based on Smartraveller research, with justification of the best travel option

➜

Figure 12.13.3 If you choose to travel to Thailand, what are the key things to remember when you’re there? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

573

Chapter 12 The travel consumer

Part 2: using reviews to make an informed decision about accommodation options Now that you understand the concerns with travelling to different countries, you need to select the best option for accommodation based on reviews. You will explore three different options at your chosen destination and outline the features of the accommodation based on the following criteria: 1. Staff and service 2. Facilities 3. Cleanliness 4. Location 5. Comfort 6. Value for money 7. Wi-fi.

SA PA M P G L ES E

574

Hotel 1

Hotel 2

Hotel 3

1. Staff and service 2. Facilities 3. Cleanliness 4. Location 5. Comfort 6. Value for money 7. Wi-fi

Justify: After researching the above accommodation options and reading the reviews, I believe that the ________ hotel is the best option because ____________.

➜

Figure 12.13.4 Sample format for comparison of three accommodation options based on reviews, with justification of the best option

➜

Figure 12.13.5 A youth hostel may be the best option for you if you have a strict budget, but make sure to read the reviews to ensure that it is safe, clean and close to the things that matter to you. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

12.13 Investigation: how to develop my itinerary

Part 3: develop your itinerary Once you have selected your destination based on the advice on the Smartraveller website, read the travel reviews and selected the best accommodation option, it is time to put together your itinerary. An itinerary is a detailed travel plan that summarises the following:

SA PA M P G L ES E

1. How long you will stay 2. How you will get there 3. What activities you will do and on what days 4. Where you will eat 5. What your costs will be.

You will now need to research your destination to complete these details, including transport, daily activities and places to eat, and calculate your total costs. A sample itinerary format is shown in Table 12.13.1, similar to the one that you looked at in Lesson 12.8. Table 12.13.1 Sample itinerary format, including costs Flights and accommodation

Activities and food

Cost

Day 1

Day 2 Day 3

Day 4 Day 5

Total costs for the trip:

➜

Figure 12.13.6 If you have a well-planned itinerary, you can make the most of your time and your money! Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

575

576

Chapter 12 The travel consumer

12.14

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

• • •

Summary

SA PA M P G L ES E

DOC

Summary notes

Download chapter summary

What have you learned about being a travel consumer? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

Types of tourism

The economic contributions of the tourism industry Travel planning

Travel documentation and protections Itinerary development Travel risks

Financial and legal issues Cultural sensitivities

Overseas assistance

Visible thinking routine Compass points

This exercise in visible thinking asks you to think deeply about the concepts you’ve learned in this chapter and evaluate what you think about tourism as a result. Write down your responses to the following prompts. 1.

What excites you about being a travel consumer?

What do you find worrisome about the tourism industry? What are the downsides?

What else do you need to know to help you understand the tourist environment?

What is your stance about tourism in Australia? Do you think changes are needed, and if so, what needs to change?

Now discuss your responses with the rest of the class. Did the discussion change what you think?

12.14 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Identify two advantages of domestic travel over international travel.

Identify two benefits of Aboriginal and Torres Strait Islander Cultural tourism.

Define what a visa is and its purpose.

List three ways the tourism industry contributes to the economy.

Outline two factors, besides cost, that influence a travel destination.

Identify three reasons why you need travel insurance.

Describe how Smartraveller can help you plan your travel.

List the four DFAT travel advisory levels.

Summarise how exchange rate fluctuations can affect a travel budget.

10.

Identify when you should contact the consulate while travelling abroad.

11.

Recall two cultural differences you should be aware of during international travel.

12.

Outline the difference between an embassy and a high commission.

SA PA M P G L ES E

➜

Figure 12.14.1 The release of the 2008 film Australia was accompanied by a global marketing campaign by Tourism Australia to encourage visitors. Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

577

578

Chapter 12 The travel consumer

DOC

Download single paragraph model

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Explain why travel insurance is an essential protection for travellers. Model answer: Travel insurance is an essential protection for travellers because it helps reduce the financial and personal impacts of unexpected problems during a trip. Travel insurance covers a range of issues, including medical emergencies, lost luggage and cancellations, which can otherwise create significant stress and expense. It ensures that travellers have support when events occur that are beyond their control. Because overseas medical care can be extremely costly and travel disruptions unpredictable, having insurance provides peace of mind and allows travellers to respond quickly to problems. It also assists travellers in managing risks that cannot always be avoided through careful planning. This is evident in policies that reimburse costs for emergency medical treatment, replace lost belongings or cover cancellation fees when a trip is disrupted by illness, natural disasters or transport issues. For example, a traveller who becomes injured overseas may rely on their insurance provider to cover hospital bills and help them return home safely, preventing significant financial hardship. In this way, travel insurance acts as a vital safeguard that protects travellers from the financial and personal consequences of unexpected events.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Linking sentence: reconnects to the topic sentence using the language of the question

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments

Examples: provide credibility and illustrate the argument

Structured-response questions 1.

Identify the risks that a traveller may face while overseas.

Outline the importance of researching a destination before travelling.

Explain what a traveller should do if they lose their passport while overseas.

Discuss the benefits of overseas travel.

Extended-response questions 1.

Justify the importance of travel insurance when travelling with reference to how it may support you in various situations. You should use real-life examples in your response.

Outline the features of the Smartraveller website and how the consulate or embassy in a destination country may assist you in various situations as a traveller.

Chapter

Towards independence

Lessons Setting the scene: why do young adults leave home?

13.2

Becoming independent: when is the right time to leave home?

13.3

Case study: if I need help living out of home, who can help me?

13.4

Managing finances: how much money do I need to move out of home?

13.5

Skills focus: what are my financial support options?

13.6

What are the types of accommodation available to me?

13.7

What are the major purchases required for independent living?

13.8

Investigation: what are the steps involved in moving out of home?

13.9

Chapter review

SA PA M P G L ES E

13.1

580

Chapter 13 Towards independence

13.1

Setting the scene: why do young adults leave home? Success criteria

In this lesson, you will learn about the practical challenges and responsibilities involved in moving out of home and explore strategies to prepare for greater independence.

❏ I can identify challenges and responsibilities involved in moving out of home. ❏ I can describe strategies that help young people prepare for independence.

SA PA M P G L ES E

Learning intention

Kobi’s story

➜

Video 13.1.1 Setting the scene: towards independence

By the end of 2024, Kobi was at the edge of everything familiar, about to risk everything. Growing up in rural Inverell, New South Wales, independence was not something that came easily, nor was it something she rushed into. It was a choice she had to make. Leaving home was not just a step forward, it was a leap into the unknown. University offered Kobi a chance to study social work and build a new future. But that chance came with a cost. Moving to Sydney meant leaving her family, her support network and the financial safety she had always relied on. For the first time, she would be completely on her own.

Writing focus 13.1 Question words

“I knew I wanted more opportunities,” Kobi says, “but I didn’t realise how much I’d be giving up to get them.”

➜

Figure 13.1.1 Kobi on the day she moved to Sydney. Moving out of home was a big step in her life.

Starting from scratch was overwhelming. She had to deal with forms, apply for ID, keep track of bills and watch her bank balance fall. Independence came quickly, with no slow or easy path. She had to learn fast or fall behind.

13.1 Setting the scene: why do young adults leave home?

“Everything felt urgent,” she remembers. “If I didn’t figure it out myself, no one else was going to. My family helped, but being far away made things difficult.” One of the first big decisions she faced was whether to rent privately or apply for a residential college. College was more expensive, but it offered something she really needed: support, structure and a place where she could belong. Living with other students helped with loneliness, reduced the pressure and made a huge city feel a little smaller. “I was scared of being alone,” Kobi says. “College felt like a place where I would not have to do everything by myself.”

SA PA M P G L ES E

Money was still her biggest challenge. Without government youth payments and support for rural students, university would not have been possible. Learning to budget, protect her credit, and avoid money problems became just as important as her classes. “I learned pretty quickly that independence is not just freedom,” she says. “It is responsibility.”

Kobi’s first year wasn’t perfect, but she kept going. She is doing well in her studies, making new friends and slowly learning how to live away from home. This story isn’t just about moving out, it’s about how independence grows through hard decisions, resilience and the support that helps young people take their next steps when staying home is no longer an option.

Level up: becoming independent

As teenagers grow older, they want more independence. They want to make their own choices about money, friends, school and daily life. Independence does not happen the same way for everyone. Some teenagers move out of home. Others stay at home but take on more responsibility. Some become independent early because of their personal situation. There are many services that can help young people during this time. Knowing where to get help can make becoming independent easier.

Activity 13.1.1 1.

What information from this lesson can you identify with?

What does this make you think about in your own life?

What else do you want to learn more about?

Discuss with the person next to you one way you can prepare for independence in the future.

Discuss everyone’s ideas as a class. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

581

582

Chapter 13 Towards independence

13.2

Becoming independent: when is the right time to leave home? Success criteria

In this lesson, you will learn about the personal, financial and cultural factors that influence the decision to leave home or stay, and explore the responsibilities and preparations needed for independent living.

❏ I can identify reasons people leave home. ❏ I can outline advantages of living at home.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Brainstorm what you know about the topic, “Towards independence”.

What questions do you have about the topic? Write these down.

As a class, discuss what you know and what you would like to know.

Reasons why a young adult may leave home and live independently

As young people grow older, they may choose or need to leave home for a variety of reasons. Leaving home is an important step towards independence, but the experience can be different for everyone. One common reason young people leave home is to access education or employment opportunities. This may include moving to attend university, TAFE, an apprenticeship or starting a job in another location. Some young people leave home because they want greater independence. Living away from home allows them to make their own decisions, manage their finances and develop important life skills.

Writing focus 13.2 Transitional phrases

Education

Financial reasons

Personal reasons

Work

Reasons for leaving home

Cultural reasons

Family conflict

Safety concerns

In some situations, family conflict can lead a young person to leave home. Ongoing disagreements or difficult relationships may make it challenging to stay at home. Young people may also leave home due to safety concerns, such as experiencing violence, abuse or neglect. In these cases, leaving home may be necessary to protect their wellbeing. Other reasons include cultural, personal or family circumstances, such as differing values, family breakdown or financial hardship. For some young people, becoming independent may happen earlier than expected.

Seeking independence ➜

Figure 13.2.1 Reasons for leaving home

13.2 Becoming independent: when is the right time to leave home?

583

Reasons why a young adult may continue to live at home As young people transition into adulthood, many choose to remain living at home instead of moving out immediately. This decision is often shaped by financial, educational, cultural and personal circumstances. One of the main reasons young adults stay at home is to save money. Living with family usually means they do not have to pay rent or contribute heavily to household bills. This allows them to save for important future goals, such as buying a car, travelling or eventually purchasing a home. For example, a young person who has just completed Year 12 may work part-time while living at home to build savings.

SA PA M P G L ES E

Education and training are also significant factors. Many young adults remain at home while studying at university or TAFE, or completing an apprenticeship. Staying with family reduces financial stress and allows them to focus on their studies. A full-time university student, for instance, may choose to live at home to avoid the high cost of rent. The rising cost of living is another major reason. Young adults working casual or part-time jobs may not earn enough to support themselves independently, making home the most affordable and practical option.

rent the money a tenant pays regularly, usually each week or month, to a landlord in exchange for living in or using a property, as agreed in a rental or tenancy agreement

Family responsibilities and cultural expectations can also influence this choice. Some young adults help care for siblings or support relatives, while in certain cultures it is common to live at home until marriage or financial independence. Overall, living at home can provide stability, emotional support and a strong foundation for future independence.

Activity 13.2.1

Staying or leaving home

Read the two lists that describe why young people might stay or leave home. Answer the questions to compare these reasons and think about the similarities and differences.

Reasons young people leave home

Reasons young people stay at home

Education purposes

Save money

Work purposes

Complete education or training

Family issues (e.g. family breakdown or conflict)

High cost of living

Safety reasons

Familial responsibilities

Cultural reasons

Cultural expectations

Personal reasons

Emotional support (e.g. build confidence and adjust to work)

1. 2. 3.

4. 5.

Compare the financial reasons for leaving home versus staying at home. How do they differ? Which reasons are on both lists? How are they connected? What types of personal or family issues might cause a young person to leave home compared with those who have been encouraged to stay at home? How do independence and support play different roles in leaving or staying? Are cultural reasons for leaving home similar to or different from cultural reasons for staying at home? Explain your answer. Based on both lists, why is it important to remember that “the experience can be different for everyone”? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 13 Towards independence

How to apply for legal and medical identification When you turn 18, you become an adult in Australia. This means you can make your own decisions, get a job, and even move out of home. But to do all of this safely and legally, you need to have the right identification and medical documents with you.

Legal identification Legal identification is any official document that proves who you are.

Driver’s licence You can usually obtain a learner driver’s licence at 16. This shows your name, address, date of birth and photo. You apply through the relevant transport service with the relevant state or territory government. It usually involves passing a theory test and providing information that you are actually the correct age to drive. When you drive, you legally must have your driver’s licence on you and produce it when requested.

SA PA M P G L ES E

584

Driver Licence

New South Wales, Australia

Card Number

Luke SMITH

1 234 567 891

CENTENNIAL PLAZA 260 ELIZABETH ST SURRY HILLS NSW 2010

Licence No

0123456789

Licence Class

Conditions

Luke Smith

Luke SMITH

Date of Birth

01 Jan 2000

Expiry Date

01 Jan 2030

➜

Figure 13.2.2 A NSW driver’s licence

Photo card

Photo Card

If you don’t drive, you will need a photo card, also known as a proof of age card. This again shows your name, address, date of birth and photo. You apply through the relevant state or territory government transport service.

New South Wales, Australia

Natalie SMITH

10 CARRINGTON STREET SYDNEY NSW 2000

Card Number

1 234 567 891

PC Number

12345678

Date of Birth

28 AUG 2003

Expiry Date

01 JAN 2030

➜

Figure 13.2.3 A NSW photo card

13.2 Becoming independent: when is the right time to leave home?

Birth certificate A birth certificate is a document showing when and where a person was born. A birth certificate isn’t required every day; however, it is one of the easiest forms of identification you can use to gain a driver’s licence, proof of age card, passport or tax file number. You apply for this through the state or territory Registry of Births, Deaths and Marriages.

NEW SOUTH WALES

BIRTHS DEATHS AND MARRIAGES REGISTRATION ACT 1995

BIRTH CERTIFICATE

SA PA M P G L ES E

CHILD Surname Given Name(s) Sex Date of Birth Place of Birth

MOTHER Name Maiden Surname Date of Birth Place of Birth Occupation Usual Residence

Smith Georgia Female 20 July 2005 Royal Prince Alfred Hospital, NSW Laura SMITH SAWYER 3 December 1975 Darwin, Northern Territory Book Editor 10 Carrington Street Sydney NSW 2000

FATHER Name Date of Birth Place of Birth Occupation

Steve SMITH 1 May 1976 Darwin, Northern Territory Illustrator

MARRIAGE OF PARENTS Date of Marriage

8 February 1995

PREVIOUS CHILDREN

Luke SMITH, 5 Years Natalie SMITH, 2 Years

WITNESSES

Medical Staff Dr Lee Dr Jones

Other Witnesses

L. SMITH Mother

S. SMITH Father

INFORMANTS Name Relationship to Child REGISTRATION Registration Number Registering Officer Date and Place

12345678 Michelle Nguyen, Deputy Registrar of Births, Deaths and Marriages 20 July 2005, Sydney NSW

➜

Figure 13.2.4 A NSW birth certificate Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

585

586

Chapter 13 Towards independence

Tax file number A tax file number (TFN) is a unique number issued by the Australian Taxation Office that is required when starting a job. It is a personal reference number that is used for tax and superannuation when you are working. As an Australian resident for tax purposes, you are entitled to the first $18,200 of your income per year without having to pay tax. Tax is paid on income above this threshold.

SA PA M P G L ES E

If you do not provide a TFN to your employer, the employer is legally required to withhold tax at the highest marginal rate (currently 47%) from your entire pay, not just the amount over the tax-free threshold. You also need a TFN to access government services such as JobSeeker or apply for a student loan or apply for an Australian business number (ABN).

Medical identification Medicare card

➜

Figure 13.2.5 A Medicare card

Medicare is a service that gives Australian residents access to healthcare. It is the main medical ID in Australia and should be carried everywhere. It allows access to treatment at no cost or provides a rebate of the expense. It also means Australian residents can have free medical treatment at any public hospital. If you are 15 years or older and an Australian resident, you can apply for your own Medicare card through the myGov or Medicare website or by downloading a form. Once you have applied, you will receive a digital card immediately and a physical card within four weeks.

Ambulance cover

insurance a service that helps protect you from financial loss by providing money if something bad happens, like an accident, illness, or damage to property budget a plan that outlines how much money will be earned and spent over a certain period

Medicare does not include the cost of ambulance cover in Australia, and this cost varies in each state. For example, in New South Wales, the Australian Capital Territory, South Australia and the Northern Territory you will pay a callout fee and a fee per kilometre. This cost adds up if you do not have private health insurance or a concession card. Most ambulance cover is through private health insurance.

Private health insurance card (optional) Private health insurance helps cover the healthcare costs that Medicare doesn’t. This includes dental, optical, physiotherapy and ambulance. Private health insurance offers faster treatment as a private patient in public or private hospitals, letting you choose your doctor and avoid waiting lists. There are different types of health insurance offered, and what you choose will depend on your needs, such as private hospital cover, extras cover and ambulance cover, or a combination of these, depending on your budget. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

13.2 Becoming independent: when is the right time to leave home?

587

Activity 13.2.2 Legal and medical identification 1.

Copy the following table into your workbook and complete it by matching each key term with the correct definition.

• driver’s licence • proof of age card • birth certificate

• tax file number (TFN) • Medicare card.

Definition

Key term

A document needed to start a job and access government services A card that allows access to Australia’s public healthcare system

SA PA M P G L ES E

A photo ID used for a person who does not drive

A document showing when and where a person was born

A licence you must carry when you legally drive a motor vehicle

Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. A birth certificate must be carried every day.

b. Medicare covers the cost of all ambulance services in Australia.

c. You can apply for your own Medicare card once you are 15 years old.

d. If you do not give your employer your TFN, tax will be taken at a very high rate. e. A proof of age card is issued by state or territory governments.

For each scenario below, complete the sentence in your workbook by explaining which identification document(s) the person should use.

a. Emma is 18 and is going to buy some alcohol. She should use … b. Naima drives to work every day. She must carry … c. Arjuna is visiting a doctor for a check–up. He will need …

Review 13.2

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1. 2. 3.

Identify three reasons why a person may leave home. Define legal identification in the context of leaving home. Explain the importance of carrying legal identification for individuals who do not drive, especially in situations involving age-restricted activities. Discuss some reasons why a person might choose to stay at home.

Thinking, researching and communicating 1.

Discuss some important personal, financial and emotional factors a young person should consider when deciding whether to leave home. How might these impact their wellbeing and future? Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

Chapter 13 Towards independence

13.3

Case study: if I need help living out of home, who can help me?

Learning intention

Success criteria

In this lesson, you will learn about the different types of support available to young people living out of home and how these services can assist with housing, finances, health and wellbeing.

❏ I can identify support organisations and explain how they can assist me in living out of home.

SA PA M P G L ES E

588

Starter activity 1.

Imagine you had to leave home. What would be the reasons you would leave? Think of all reasons, big and small.

In your workbook, brainstorm reasons why a person may leave home. They can be personal, general or what you have learned or seen (e.g. moving for school, job, family, safety, travel, adventure).

Next to or under each reason, write one sentence explaining why a person might leave home.

Discuss as a class.

In Australia, young people who are not living at home can receive support from a range of organisations. These organisations help with housing, money, health, education and emotional wellbeing. There are three classifications of support: government, community and religious organisations. • A government support organisation is a public sector agency operated by state or federal government that provides assistance and services to individuals and families who require Government organisations support. These organisations help people access financial aid, healthcare, housing, education and other essential services. • Organisations include Department of Social Services and Centrelink. • Community organisations are usually funded through a combination of government funding, private sponsorship and public donations. They provide support and services to individuals Community and families who may be experiencing hardship, including assistance with housing, food, organisations health and wellbeing. • Organisations include Headspace, community health centres, Lifeline, drop-in centres, Kids Helpline and ReachOut. Religious organisations

• Religious groups have created organisations to provide support for people. They may provide counselling, rehabilitation, health workers and recreation centres. • Examples include St Vincent de Paul Society, Anglicare and the Salvation Army.

➜

Figure 13.3.1 Three classifications of support organisations available to young people

13.3 Case study: if I need help living out of home, who can help me?

When Sam moved out Sam is a 16-year-old living in Australia. Due to ongoing family conflict, he decides it is no longer safe to stay, so he leaves home. Sam is currently in Year 11 with a casual job on weekends but does not earn enough money to live independently. Sam faces a number of challenges when he leaves home, including no stable place to stay, limited income with little savings, uncertainty about accessing healthcare, emotional stress and anxiety, and he doesn’t know which support services to use.

How does Sam find the support he needs?

SA PA M P G L ES E

Sam goes to a local youth centre and speaks with a youth support worker. The youth support worker helps Sam with the following.

• Youth support services: short-term emergency accommodation and a case worker • • •

to help Sam with the next steps. Government support: assistance with applying for a Medicare card and Youth Allowance. Community support: help to provide him with food vouchers and basic living supplies. Welfare support: counselling through Headspace.

As a result, Sam was able to stay safe with accommodation, continue attending school and his casual job, develop a plan for long-term housing and education and also access appropriate healthcare and counselling.

Community • Youth refuge • Community housing • Headspace

Religious • St Vincent de Paul • Salvation Army • Anglicare

Government • Department of Social Services • Department of Communities and Justice • Centrelink

➜

Figure 13.3.2 Support systems available to Sam

589

Chapter 13 Towards independence

Activity 13.3.1 Researching organisations that provide support to young people in Australia 1.

Choose one of the following reasons for leaving home and write down the reason in your workbook:

• education • work • family conflict • safety concerns • seeking independence • cultural reasons • personal reasons • financial reasons.

SA PA M P G L ES E

590

Research three different organisations that support young people not living at home. Choose one from each of the following categories.

• health or wellbeing service • government or community service • youth or homeless support service.

Answer the following questions in an infographic. You could use a platform like Canva to help you make the infographic. a. What is the name of the organisation? b. Is it a government organisation, charity or community service? c. Who is the target group (provide an age range)? d. What services or support does the organisation provide? e. How do young people access this support?

Take it further: explain why it is important for young people to know about support services before they need them.

Case study activity 13.3.1 1.

Identify the main challenges faced by a young person who leaves home at 16.

Identify two types of organisations that can provide support to young people who are not living at home.

Discuss the role of community organisations in supporting young people who are experiencing homelessness or family conflict.

Explain why it is important for young people to seek support from government and community organisations when leaving home.

In your own words, communicate why community organisations are important for young people who are not living at home.

13.4 Managing finances: how much money do I need to move out of home?

13.4

591

Managing ﬁnances: how much money do I need to move out of home? Success criteria

In this section, you will learn how to plan for independent living by calculating the costs of moving out, creating a realistic budget, and understanding financial tools such as insurance and credit scores.

❏ I can identify the major expenses I will have when moving out of home. ❏ I can discuss the benefits of different types of insurance for moving out of home. ❏ I can define a healthy credit score.

SA PA M P G L ES E

Learning intention

Starter activity 1.

Look at Figure 13.4.1 and answer the following questions in your workbook. a. Describe the picture in detail. b. What is the picture telling you? c. What items does the person need when moving away?

➜

Discuss this with the class. Look at different viewpoints and why this could be the case.

Figure 13.4.1 Moving out of home

Major costs involved in independent living, including establishment costs and ongoing costs

Moving out of home is an important step towards independence. Before moving out, it is essential to understand both the establishment costs and ongoing costs involved and to save money to cover these expenses. Expenses reduce the amount of money available, so managing them carefully is important. Careful planning can help reduce financial stress and support a smooth transition to independent living. Creating a budget can help you maintain control over your finances. You will know in advance if you can afford it, as living away from home involves a range of expenses, not just rent. A budget will help you understand your weekly expenses and the expenses you need to save for prior to moving out.

Writing focus 13.4 Developing sentences establishment costs expenses involved in setting something up ongoing costs expenses that continue to happen regularly over time while you own or use something expenses the costs or money spent to run a business, organisation or personal life, such as things like rent, bills, salaries, supplies and other necessary items or services

Chapter 13 Towards independence

Types of expenses Housing expenses Bond

Figure 13.4.2 There are a lot of costs associated with independent living. ➜

This is a security payment before moving into a place. It is usually four weeks’ rent. The money is usually held by the rental bond board and is returned to you when you leave the property, if the property is in good condition.

SA PA M P G L ES E

592

Rent

Prior to moving into a rental property you usually must pay two weeks’ rent in advance and then regular rental payments when you live in the property. Regular rental payments need to be included in the budget; however, the bond and two weeks’ rent in advance need to be saved prior to moving in.

Contents insurance

This insurance protects your personal belongings such as furniture, clothes and electronics if they are stolen, damaged or destroyed. It helps reduce financial loss by covering the cost of repairing or replacing these items. Prior to agreeing to insurance, you need to read all the terms and conditions.

Utilities and communication

These costs include electricity and gas, internet and mobile phone bills. It’s important to account for these costs in your budget because they are ongoing.

➜

Figure 13.4.3 Household bills

Food and groceries Food, groceries, cleaning products and household items are regular weekly expenses that need to be included in the budget. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

13.4 Managing finances: how much money do I need to move out of home?

Furniture and household items When moving out for the first time, many items need to be purchased. These could include a bed, mattress, bedding, towels, kitchen items such as plates, cutlery and cooking equipment, a sofa, a table, chairs, and electrical appliances like a television, fridge and microwave. These costs will need to be saved for prior to moving out.

Personal expenses These costs are for items that support everyday living, such as clothes, footwear, toiletries and personal care items. These need to be included in your budget as they are ongoing.

SA PA M P G L ES E

Lifestyle and entertainment costs Any entertainment and social activities should be included in the budget. Depending on the type of person you are and the amount of income coming in, this could be a weekly, fortnightly or even monthly expense.

Health and medical costs

Health and medical expenses like ambulance cover, private health insurance, medical appointments and prescriptions should be planned for. Putting a little away each week will help ensure that you can cover any medical expenses when they arise.

Figure 13.4.5 Household appliances

➜

Figure 13.4.6 There are lots of ways to pay ongoing expenses.

➜

Figure 13.4.4 Shopping for groceries

Figure 13.4.7 Ambulance cover

593

594

Chapter 13 Towards independence

Emergency savings It is helpful to put away some money for any unexpected situations such as repairs or loss of income. The amount of emergency savings will depend on the budget.

Housing Emergency savings

Transport

Expenses related to moving out of home

SA PA M P G L ES E

Health insurance

Food and groceries

Household items and furniture

Contents insurance

Lifestyle and entertainment costs

➜

DOC

Personal costs

Figure 13.4.8 Expenses for living out of home

Activity 13.4.1

Expenses required for living out of home

Download Activity 13.4.1 worksheet

In this activity, you will practise making financial decisions by creating a monthly budget for independent living. Download the worksheet from the Interactive Textbook to:

• choose expenses to suit your lifestyle • decide how much to spend in each category • make sure your total spending fits within a set income • adjust your budget to cover an unexpected cost • review what you have learned in a class discussion.

The different types of insurance and why they are important When moving out of home, having insurance can be an important part of living independently. Insurance helps protect a person from large and unexpected costs that may be difficult to pay on their own. People pay an annual or monthly amount called a premium to an insurance company and then the insurance company pays out a sum to cover losses or costs if something unexpected occurs.

13.4 Managing finances: how much money do I need to move out of home?

595

Insurance provides peace of mind, as it reduces financial stress if something unexpected happens, such as a breakin or accident. While insurance does have a regular cost, it may be cheaper than paying to replace valuable items all at once. There are many different types of insurance.

Contents insurance Figure 13.4.9 Contents insurance

SA PA M P G L ES E

➜

Contents insurance is often worth having because it covers personal belongings such as furniture, clothing and electronics if they are stolen, damaged or destroyed. Replacing these items can be expensive, especially for young people who are just starting out and may have limited savings.

Health insurance

➜

Health insurance helps pay for the healthcare costs that are not covered by Medicare. It can cover costs such as hospital treatment as a private patient, ambulance services and extra healthcare like dental and physiotherapy.

Figure 13.4.10 Health insurance

House insurance

➜

House insurance covers a home against damage and destruction to the building of the place you are in. House insurance is not necessary unless you are purchasing a house, as this should be covered by the landlord.

Figure 13.4.11 House insurance

Life insurance

Life insurance covers a person if they die or are diagnosed with a terminal illness. It can assist family members or dependants by providing financial assistance to cover debts and the cost of living.

Motor vehicle insurance

➜

Figure 13.4.12 Life insurance

➜

Motor vehicle insurance assists in covering the cost of damage, injury or loss involving a car or other motor vehicle. It can pay for repairs to vehicles, damage to property and medical costs depending on the level of cover.

Figure 13.4.13 Motor vehicle insurance

landlord a person or organisation that owns a property and rents it out to tenants

Chapter 13 Towards independence

Activity 13.4.2 Insurance 1.

Copy the following table into your workbook and complete it by matching each insurance type with the correct description:

• car insurance • contents insurance • health insurance. Insurance type

Description Pays for medical expenses Covers accidents and damage related to vehicles

SA PA M P G L ES E

596

Covers items in your home against theft or damage

Hugh is 19 and has just moved into a rental unit. Hugh owns a car and works part-time with little savings.

a. Identify two types of insurance Hugh should consider and explain why. b. Explain how insurance could help Hugh avoid financial stress.

Do you think insurance is more important for adults than teenagers? Explain your answer using an example.

➜

Figure 13.4.14 Motor vehicle insurance may cover a range of costs, depending on the level of cover.

13.4 Managing finances: how much money do I need to move out of home?

The importance of maintaining a healthy credit score

credit score a number that shows how trustworthy a person is when it comes to borrowing and repaying money, based on a person’s past financial behaviour

What is meant by “healthy credit score”? A healthy credit score is a number that shows a person borrows money responsibly. It means they pay bills and loans on time and don’t owe too much money. A good score helps people get loans or credit cards more easily and save money on interest. A lower credit score can make it harder to borrow money or result in higher costs. For example, if a person wants a car loan, a healthy credit score shows the bank they can be trusted to pay it back.

SA PA M P G L ES E

Review 13.4

Knowledge and understanding

Online quiz

Thinking, researching and communicating

Teachers can go online to assign questions, view results, reports and more!

Students can access sample responses and results online

Knowledge and understanding 1.

Outline the main expenses a young person might incur when moving out of home.

Define a budget and explain its importance in managing personal finances.

Summarise the key benefits of having insurance.

Discuss how maintaining a healthy credit score can impact a young person’s financial opportunities.

Identify if the statements below are true or false. Write the true statements in your workbook and rewrite the false statements to make them true.

Statement

True or false

a. Insurance helps protect people from large financial losses.

b. Comprehensive car insurance is legally required for all cars in Australia. c. A premium is the amount you pay when you make a claim. d. Health insurance can help cover some medical costs.

e. Insurance always covers 100% of the cost of damage or loss.

Thinking, researching and communicating 1.

Copy the following table into your workbook to match the insurance type to the situation:

• comprehensive car insurance • house insurance • health insurance. Situation

597

Insurance type

House is damaged by storm Medical treatment at a private hospital Damaging someone’s car in a car accident 2.

Recall one type of insurance that you think you will need in the next five years and describe your reasons for needing it.

Identify how young people could effectively communicate their financial needs and responsibilities to family members. Construct a response to a member of your family. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

598

Chapter 13 Towards independence

13.5

Skills focus: what are my ﬁnancial support options? Success criteria

In this lesson, you will learn how to access financial support options available to young people, develop strategies to manage money effectively, and understand the consequences of poor financial management.

❏ I can describe where to go for financial support. ❏ I can explain how using different strategies will minimise my financial problems. ❏ I can construct a household budget. ❏ I can describe what happens if you don’t look at your expenses and income.

SA PA M P G L ES E

Learning intention

Starter activity Think, pair, share 1.

Think: in your workbook, write down:

• one situation where a young person might need financial support • one place they could go for help • one possible consequence of not keeping track of money.

Pair: share your ideas with the person next to you. Add one new idea from your partner to your notes.

Share: be ready to share one insight with the class about:

• when young people might need financial help • where they can go for support.

➜

Figure 13.5.1 Support can take many forms. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

13.5 Skills focus: what are my financial support options?

599

Forms of government support for young people Young people in Australia can access a range of financial supports to help with study, training, living costs and emergencies. These programs vary depending on age, study status, income and personal circumstances. Table 13.5.1 summarises the main types of government support and what they help with. Table 13.5.1 Types of government support Age group

When you can receive it

What it assists with

Youth Allowance

16–24

Full-time study, apprenticeship or looking for work

Daily living costs

SA PA M P G L ES E

Support type

Austudy

25 or older (students) Full-time study

ABSTUDY

Aboriginal and Torres Strait Islander students

School or tertiary study

Education costs and daily living expenses

Rent Assistance

Renting privately Any age receiving Youth Allowance, Austudy or ABSTUDY

Extra help with rent

Crisis Payment

Any age receiving eligible payments

Severe financial hardship or emergency (e.g. homelessness, domestic violence)

One-off urgent payment

Apprenticeship/ Traineeship Support

Young people in apprenticeships or traineeships

During training/ employment

Skills development, sometimes wage subsidies

Financial counselling

Any young person

Any time

Budgeting advice, planning, transition to work or study

Daily living costs

The availability of and eligibility requirements for these supports can vary, so it is advisable to check with Centrelink (Services Australia) and relevant state government departments for current details.

Activity 13.5.1

Government support 1.

Your teacher will place you into small groups. As a group, discuss the different types of financial support available to young people.

As a group, research key government financial supports for young people. Choose from:

• Youth Allowance • Austudy • ABSTUDY • Rent Assistance

• other types of government

financial support available to young people through Centrelink (Services Australia.)

Youth Allowance a government payment to assist young people aged 16–24 with studying, training or looking for work Austudy government support payment that helps full-time students and apprentices over 25 with living and studying costs ABSTUDY government support that assists Aboriginal and Torres Strait Islander students with the costs of education apprenticeship a program where a person learns a trade while working on the job and in the classroom traineeship a program that combines paid work with skills training and study for a specific job qualification

600

Chapter 13 Towards independence

For each support type you research, answer the following questions. a. What is this type of assistance? b. Who is eligible? c. How do you apply? d. What challenges or obstacles might people face? e. Give an example of a young person who would use this support.

Present your group’s findings in one of these formats:

• an infographic • a classroom poster • a role-play showing how the support works. Finish by summarising what your group learned about financial support for young people.

SA PA M P G L ES E

How do I minimise financial problems?

A young person can minimise financial problems by taking several practical steps and creating good habits. These steps and habits include the following.

Creating a budget

➜

Figure 13.5.2 Creating and sticking to a budget is one step towards minimising financial difficulties.

Creating a budget so that your income and expenses are tracked allows you to plan spending so that the essentials such as rent, bills and food are paid for first. This can be done using a spreadsheet on a computer or a budgeting app on your phone. The budget can be as detailed as you would like. There are several free apps that can be used to assist in this if you would like to just use your phone.

Reduce unnecessary expenses

Cut back on impulse spending, subscriptions and eating out too often. Compare prices before purchasing an item and look at second-hand items and discounts.

Limit debt and avoid scams Don’t borrow money you can’t repay. Avoid high-interest payday loans. Be cautious online as financial scams are common, with reported losses of hundreds of millions of dollars each year in Australia. Access the Scamwatch website for more information on online scams. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

13.5 Skills focus: what are my financial support options?

601

Save regularly Save regularly for both big items and emergencies. Even if it is just a small amount, this adds up and can be used for unexpected expenses.

Build financial knowledge

➜

SA PA M P G L ES E

Learn about bank accounts, savings, credit cards and loans. Attend financial workshops and read up on managing money and budgeting. Seek advice from trusted personnel. Check your eligibility for financial supports such as Youth Allowance.

Figure 13.5.3 Having both short- and long-term financial goals will keep you on track.

Set financial goals

Have short-term and long-term financial goals and work towards them, such as saving for a car or a house.

Seek financial assistance early

If you are struggling, talk to a financial counsellor or support service early. This will minimise the expense that you will have to pay. The longer you put this off, the problem slowly becomes worse.

Activity 13.5.2

Minimising financial problems 1.

As a class, discuss the common financial challenges young people face. Your teacher will record ideas on the board.

Your group will be given a starting budget (for example, $700). This represents a student’s monthly income or allowance. Each group will have a different starting budget.

Play the Financial Choices Game.

• You will receive a set of cards or questions describing different financial choices

or events. • For each scenario, decide how you will respond (e.g. spend savings, cut expenses, seek financial support). You can do this individually or in small groups. • Record every decision you make and update your budget each time.

After all scenarios have been completed, take part in a class discussion about:

• which strategies were most effective in avoiding financial problems • how government supports or good budgeting skills might help in real life. 5.

Write down three action steps you can take to better manage your money and reduce financial problems in your own life.

Take it further: create your own scenario cards based on situations that are realistic for young people. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

DOC

Download Activity 13.5.2 worksheet

602

Chapter 13 Towards independence

What should be in my budget? A budget is a plan that outlines how much money you receive and how much you will spend in a period of time. The timeframe is usually a month. Budgeting helps you manage your finances by keeping track of your income and expenses, allowing you to meet your financial goals and avoid debt.

• Income is the money that you

SA PA M P G L ES E

•

Figure 13.5.4 The sections of your budget won’t be evenly divided. Consider what things will require more of your money and what can be cut back. ➜

receive from working. Savings is the portion of money that you set aside and do not spend immediately so that it can be used in the future.

income money you receive, usually from work or business savings money put aside for future larger purchases or investments

• Expenses can be classified into fixed or variable expenses.

• •

Fixed expenses are regular costs that stay the same each time, such as rent, loan repayments, insurance or subscription fees. They are predictable and must be paid consistently. Variable expenses are costs that change depending on how much you use or do, such as groceries, fuel, electricity or entertainment. These can go up or down each month and are less predictable in a budget.

Activity 13.5.3

Identifying fixed and variable expenses 1.

Copy the following table into your workbook and complete it by categorising each expense as either fixed or variable.

Expense

Fixed or variable

Rent

Electricity bill Food

Mobile phone plan Movie tickets Petrol for car Car insurance Health insurance Eating out Gym membership

13.5 Skills focus: what are my financial support options?

603

What happens if I don’t have good financial management? When a person does not plan, track or control how money is used, this can lead to several problems.

• Inability to meet your needs: this

• • • •

➜

SA PA M P G L ES E

•

happens when spending is higher than income. As a result, basic needs such as food, transport or school items may not be affordable. Debt: a person may borrow money and struggle to repay it. High interest on loans can make the debt grow, causing serious financial problems. Lack of savings: without savings, a Figure 13.5.5 Good financial management should be a habit from your youth person cannot handle emergencies such and all the way through your life. as illness or unexpected repairs. This may force them to borrow money, increasing debt. Late or unpaid bills: this may result in penalties, extra charges, or loss of services such as electricity or internet. Stress and worry: constant money problems can affect a person’s health, school performance and relationships with others. Limit future opportunities: without good money habits, it becomes difficult to achieve goals such as further education, starting a business or buying important assets.

Review 13.5

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the financial support options available to young people.

Describe fixed and variable expenses.

Explain the consequences of poor financial management.

Discuss strategies to minimise financial problems.

Thinking, researching and communicating 1.

Min is a 19-year-old university student who receives a monthly allowance of $200. He spends $180 a month on entertainment and snacks, and does not keep track of his spending. Min has no savings. Transport costs increase and Min finds he is unable to pay for this cost. Min has to borrow this essential cost from family and friends to attend school. Using what you have learned, explain what went wrong and suggest ways Min could improve his financial situation.

604

Chapter 13 Towards independence

13.6

What are the types of accommodation available to me? Success criteria

In this lesson, you will learn how to compare different types of accommodation, calculate affordability and understand the process of arranging a lease, including tenancy rights and responsibilities.

❏ I can describe different types of accommodation that can suit a range of situations. ❏ I can calculate and compare accommodation costs according to different situations. ❏ I can explain a lease. ❏ I can discuss tenancy rights and responsibilities.

SA PA M P G L ES E

Learning intention

Starter activity 1.

In your workbook, write out the following scenarios. Leave two lines underneath each scenario for the next two steps. a. Jamila tracks her income and expenses each week using a budgeting app. b. Cameron uses a credit card to buy clothes but always pays the full amount on time. c. Jordy saves a small amount of money every week for emergencies. d. Simone buys a phone using rent to buy without checking the total cost. e. Mali compares prices online before buying a new laptop.

For each scenario, write a strategy that the person is using; for example, budgeting, saving, responsible use of credit, comparing prices, using high interest.

For each scenario and strategy, write down if you think this is responsible financial management or not. State the reason why you think that.

Discuss your answers with the rest of the class.

How do I choose my accommodation?

Writing focus 13.6 Appositives

credit the ability to borrow money or access goods and services with the agreement to pay for them later; examples include loans and credit cards

When a young person leaves home, it is important to choose accommodation that is safe, affordable and suitable to their needs. Their options may include the following.

Living with relatives or friends

This is often a temporary arrangement and can be cheaper than renting. It provides support but may offer less privacy.

Renting a room This means renting a single room in a house while sharing facilities such as the kitchen and bathroom. It is more affordable than renting an entire house or flat.

13.6 What are the types of accommodation available to me?

605

Sharing accommodation

SA PA M P G L ES E

Sharing a house or flat with other people means you split the rent and household costs, which makes it an affordable option for many young people. However, it also requires cooperation and responsibility. If you choose shared accommodation, make sure all names are on the lease and on utility accounts, because the person listed is legally responsible for the debt. It also helps to agree on rules for visitors, set up a roster for chores, and communicate openly so small issues don’t turn into bigger problems.

Figure 13.6.2 An apartment might be affordable with only one other housemate, since the rent is usually lower. ➜

➜

Figure 13.6.1 Sharing a house is one option, likely with a few housemates to make it affordable.

Living in student accommodation

Young people who are studying may live in student accommodation provided by a college or university. This type of housing is usually close to campus and includes basic services, but it may have rules and limited space.

Living alone

A young person may also choose to rent their own place. This offers privacy and independence but is usually expensive and requires a stable income.

Choosing a place to live

Finding a house or apartment requires careful planning and research.

1. The first step is to decide what you can afford. This includes rent, electricity, water and other monthly costs. Knowing your budget helps you avoid choosing accommodation that is too expensive. 2. The next step is to choose a suitable location. The place should be close to school, work or public transport to reduce travel costs and save time. 3. You can find a house or apartment by searching online, using property websites, social media or community noticeboards. Some people also ask friends, family or teachers for recommendations. 4. It is important to visit the property before agreeing to rent it. This helps you check the condition, safety and size of the accommodation. 5. Before moving in, you should read and understand the rental agreement. This document explains the rules, rent and responsibilities of both the tenant and the landlord. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

606

Chapter 13 Towards independence

Comparing accommodation: can I afford it? When choosing accommodation, it is important to compare costs and check if it is affordable. Affordability means being able to pay for accommodation without financial stress. The first step is to make a budget including accommodation costs, food, utilities and transport. Once the budget has been prepared, it is important to compare different accommodation options as a place with lower rent may be more expensive once transport and utilities have been added.

➜

SA PA M P G L ES E



Figure 13.6.3 Choosing accommodation to fit your budget

To calculate affordability, a person should compare their income to their total monthly expenses. A general guideline is that accommodation costs should not be more than 30% to 35% of monthly income. A simple calculation can be used: Affordability = Monthly income – Total monthly expenses

If there is money left after expenses, the accommodation is affordable. If expenses are higher than income, the accommodation is not affordable. Finally, it is important to consider unexpected costs and ensure there is money left for savings and emergencies.

Activity 13.6.1

Skills for evaluating living costs 1.

Read the scenario below, then copy and complete the table in your workbook. Martina earns around $4000 a month from a full-time job. She drives to both work and study and is choosing between two accommodation options.

Expense

Option A: shared flat

Option B: renting a room

Rent

$1000

$1300

Electricity and water

$300

Included in the rent

Transport

$600

$400

Food

$900

Total

13.6 What are the types of accommodation available to me?

Calculate the total monthly cost for:

a. Option A b. Option B. Work out how much money Martina will have left after expenses for:

a. Option A b. Option B. Decide which option is more affordable. Write a short explanation.

Explain one reason why it is important to compare the total cost of living options, not just the rent.

SA PA M P G L ES E

How do I apply for a lease?

Applying for a lease is the process a person follows to rent a house or apartment. This process involves several important steps.

Step 1: find a suitable rental property

This can be done by searching online property websites, such as https://cambridge.edu.au/redirect/11747 or https://cambridge.edu.au/redirect/11748, or visiting real estate agents. The property should be affordable and located close to education facilities, work or transport.

Step 2: complete a rental application

The rental application form asks for personal details, proof of identity, proof of income and references. The landlord or real estate agent uses this information to decide if the applicant can afford the rent and is a responsible person who will pay the rent on time and look after the place. If the application is approved, the applicant may be asked to pay a holding fee, which is usually equal to one week’s rent. This fee temporarily secures the property while the lease is prepared, and must go towards rent if the tenant signs the rental agreement for the property. The following link provides helpful information for finding and applying for a rental property: https://cambridge.edu.au/redirect/12149.

Step 3: sign the lease agreement

➜

A lease agreement is also known as a tenancy agreement. This is a legal contract between the landlord (the property owner) and the tenant (the person renting) that helps protect the rights of both parties during the rental period. It explains the rules of renting the property, including the rent amount, length of the lease, and responsibilities of both the tenant and landlord, such as how to handle repairs and ending the agreement. The tenant should read the agreement carefully before signing.

Figure 13.6.4 A rental agreement

607

rental application a form that a person fills out when they want to rent a property. It usually asks for information like the applicant’s name, contact details, rental history, employment details, and references tenancy agreement (or lease) a written contract between a landlord and a tenant that outlines the rules and conditions for renting a property

608

Chapter 13 Towards independence

Step 4: pay the rental bond rental bond a sum of money paid by the tenant to the landlord before moving into a property that is returned when the tenant leaves the property in good condition

Step 5: complete a condition report Finally, when moving in, the tenant completes a condition report that records the state of the property at the start of the tenancy. This protects both the tenant and the landlord by creating a clear record to compare with when the tenant moves out, ensuring fair decisions about repairs or bond refunds. It’s important to make this report accurate. Taking photos or a detailed video can be especially useful in case there’s a dispute later.

SA PA M P G L ES E

condition report a document that describes the current state or condition of the property

After signing the lease, the tenant must pay a rental bond (usually up to four weeks’ rent) and rent in advance (usually two weeks’ rent). The bond is held as security to cover any damage, unpaid rent or other costs that might occur during the tenancy and is returned at the end if there are no issues.

new tenant checklist a list of important tasks and things to do when someone moves into a rental property. It helps tenants make sure they have done everything needed for a smooth move-in and to protect their rights

Case study 13.6.1: condition reports

Andrew, a 19-year-old student, moved into a rental apartment in Sydney’s inner suburbs. Before moving in, he was given a condition report by the landlord. This report recorded the condition of the property, including walls, floors, appliances and furniture. Andrew carefully went through the apartment and took detailed notes about scratches on the wooden floor, a small crack in the bathroom wall and a loose kitchen cabinet handle. He also took clear photos and videos of each issue, making sure the date was recorded. He attached the notes and proof to the condition report before submitting it to the landlord and agent. At the conclusion of the lease, Andrew decided to move out. When the landlord and agent inspected the property, the landlord claimed that the scratch on the floor and the crack in the bathroom wall were damages caused by Andrew. The landlord argued that these issues were not on the condition report. Andrew showed the agent and the landlord a copy of the condition report with his detailed notes and photos from the start of the tenancy. The photos clearly proved that the scratches and cracks existed before he moved in. The landlord accepted the evidence and agreed that Andrew was not responsible, and his bond was returned in full.

Information received upon signing a lease

Upon signing a lease, the real estate agent or landlord should give you:

• a copy of the tenancy agreement • a copy of the bond lodgement form • two copies of the condition report (see https://cambridge.edu.au/redirect/11749) • a copy of the new tenant checklist and the addendum

(see https://cambridge.edu.au/redirect/11750) – this shares some of the history of the property, such as health or safety risks, flooding or bushfires in the last five years, zoning laws that mean you will not be able to obtain a parking permit, whether the property has asbestos, and other important information

13.6 What are the types of accommodation available to me?

609

• keys to the property • a repair/maintenance request form • a copy of the by-laws if you are moving into a strata unit complex. Activity 13.6.2 Applying for a rental property 1.

Place the following steps in the correct order when applying for a lease:

SA PA M P G L ES E

• pay the rental bond and rent in advance • sign the lease agreement • complete a rental application form • find a suitable property • fill in the condition report • pay a holding fee (if required).

Copy and complete the following table in your workbook. For each of the documents listed, explain why it is needed in the lease application process.

Document

Reason it is required in the application process

Proof of identity Proof of income References

Condition report

Explain why it is important to read the lease agreement carefully before signing it.

What could happen if you do not complete the condition report properly before moving in?

Review 13.6

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Outline the steps a young person should take when arranging accommodation for the first time.

Identify four different types of accommodation a young person could consider when leaving home.

Explain why it is important to complete a condition report and take photos before moving into a rental property.

Discuss the factors a young person should consider before applying for a rental property.

Thinking, researching and communicating 1.

Salima is about to leave home and start university and is choosing between three accommodation options: living with relatives, renting a room in a shared flat or moving into student accommodation. Her monthly income is limited, and she wants to save money for future goals. Analyse the advantages and disadvantages of each option and recommend the most suitable accommodation for Salima. Justify your choice with reference to the financial and practical reasons.

610

Chapter 13 Towards independence

13.7

What are the major purchases required for independent living? Success criteria

In this lesson, you will learn how to plan major purchases for independent living, including buying a car, selecting household items and comparing payment options.

❏ I can describe how to buy major purchases such as a car or a fridge. ❏ I can discuss the different options available for purchasing major household items. ❏ I can evaluate the best option for purchasing major household items.

SA PA M P G L ES E

Learning intention

Starter activity 1.

With the person next to you, discuss the reasons why you might like to purchase a car.

As a class, share all the reasons you have for wanting to purchase a car. Do you have reasons in common?

Buying your first car

Writing focus 13.7 Creating topic sentences

A car is often the second largest purchase a person makes in their life and involves a financial commitment, for both the initial cost and ongoing expenses. A young person may have several reasons to purchase a car, including the following.

• Independence and freedom:

• • •

Figure 13.7.1 Buying a car will likely be your first major purchase, so it’s important to understand the process. ➜

having a car lets a young person travel on their own schedule without relying on parents, public transport or friends. Convenience: it’s easier to get to school, work, sports or social activities quickly and directly. Job opportunities: some jobs require reliable transport, and having a car can make it possible to earn money and gain work experience. Social life: a car allows young people to visit friends, attend events or go on trips more easily.

13.7 What are the major purchases required for independent living?

Expenses in buying a car When buying a car, it is important to consider all costs, not just the purchase price, because owning a car requires ongoing financial responsibility. Buying a car involves both upfront costs and ongoing costs. Upfront costs are the initial costs when purchasing the car, and ongoing costs are continual costs to keep the car running.

The upfront expenses

SA PA M P G L ES E

• Purchase price: the amount paid for the car. • Stamp duty: a government tax that is paid when you purchase the vehicle. • Registration: this is required to ensure the car is legal on Australian roads. • Compulsory third party (CTP) insurance: this insurance covers the costs of

compensation if someone is injured or killed in a motor vehicle accident caused by the insured driver, and does not cover damage to vehicles or property, only injuries to people. Comprehensive or third-party, fire and theft insurance: optional but is recommended.

•

The ongoing expenses

• Fuel or electricity: so that the car can travel. • Insurance premiums: regular payments for insurance cover. • Maintenance and servicing: inspections and repairs. • Tyres: must be replaced as they wear out. • Loan repayments: if the car is bought with finance, repayments on the loan must be made. Depreciation: it’s important to note that a car loses value over time.

•

Upfront expenses Purchase price Stamp duty Registration CTP Comprehensive or third-party insurance

Ongoing expenses Fuel or electricity Maintenance and servicing Insurance premiums Tyres Loan repayments (if bought with finance)

➜

Figure 13.7.2 Upfront and ongoing expenses associated with owning a car

Once you understand the costs involved in buying a car, you may choose to use savings or borrow money through a loan. If you decide to take out a loan, it is important to compare interest rates from different lenders, such as banks, credit unions and finance companies. Car dealers may also offer finance options, but buyers should be careful, as dealers often receive a commission for arranging loans and the interest rate may be higher than other options.

611

Chapter 13 Towards independence

Where to buy a car When buying a vehicle, the options include purchasing a new car from a dealer, a used car from a dealer or a used car from a private seller.

Buying a used car from a dealer This is usually more expensive than buying from a private seller. However, purchasing from a dealer offers greater protection, as licensed car dealers are regulated by law and must provide certain guarantees that do not apply to private sellers. These include a statutory warranty on some vehicles, assurance that the car has a clear title with no money owing, and that the vehicle is safe and roadworthy at the time of sale. Dealers must also follow the Australian Consumer Law, which requires the car to be of acceptable quality and accurately described.

SA PA M P G L ES E

612

Buying a used car privately

The buyer must be careful because there are fewer legal protections. If you choose to buy a used car privately, you are responsible for checking the following.

• The car should be inspected for damage and mechanical issues, test driven, and • • • •

checked through the Personal Property Securities Register (PPSR) to ensure that it is not stolen or under finance. A PPSR check can be done online using the VIN/chassis number to ensure that the car does not have any hidden problems, such as finance owing, written off status or being stolen. If you do not do a PPSR check, you could be liable for any finance owing on the vehicle. Service records should be reviewed, ownership details confirmed, and the price negotiated based on market value. Finally, all registration transfer paperwork must be completed correctly.

Inspect the car's condition

Confirm seller is the legal owner

Test drive the car

Check through motor registry that car has no money owing and is not stolen

Negotiate the price

Review service records

Check through motor registry that car has no money owing and is not stolen

➜

Figure 13.7.3 Motor vehicle checklist for buying a used car privately

13.7 What are the major purchases required for independent living?

Negotiation tips for smart purchasing

• Do your research: read information on the car you are thinking about, know the • • •

SA PA M P G L ES E

•

common selling price and the market. Inspect the car: look for rust, dents and signs of accident damage. Test the electronics, lights and air conditioning and check for any uneven wear on tyres. This can be done by a trusted mechanic. Look to see when registration runs out: this could allow you to negotiate further if the registration expires very soon. Be smart with your budget: set a maximum budget and start at a price lower than your maximum budget so that you are leaving room for negotiation. Point out comparable prices: you should know the ballpark figures of other similar car sales if you’ve done proper research. Don’t be pressured: don’t agree to a limited-time offer, and walk away if you are feeling pressured or if the offer doesn’t seem fair.

•

Common dealer tactics

• Add-ons: dealers may try to sell extras (such as extended warranties, service • •

packages or paint protection). Decide what you need in advance. Trade-in tactics: separate the negotiation for your trade-in price from the price of the car to avoid any confusion. Pressure tactics: don’t agree to any limited-time offers, such as “this deal ends today”.

Case study 13.7.1: do your due diligence Jack is a 21-year-old student who decided to buy his first car from a private seller he found online. The car seemed to be in good condition and was cheaper than similar cars sold at dealerships. Wanting to save money, Jack did not complete a PPSR check before purchasing the vehicle. Jack was able to obtain a loan to buy the car.

➜

Several weeks later, Figure 13.7.4 Jack did not do his due diligence and suffered the consequences. police contacted Jack and informed him that the car had been reported as stolen and still had money owing on it. The vehicle was repossessed and returned to the rightful owner. As Jack did not check PPSR before buying the car, he lost the car and did not get his money back. He was also still legally responsible for the debt owing on his loan for the vehicle. Jack suffered a financial loss and was left owing money for a car he no longer owned. This situation could have been avoided by completing a simple PPSR check before purchasing the vehicle. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

613

614

Chapter 13 Towards independence

Activity 13.7.1 Buying a second-hand car

In this activity, you will learn practical skills for buying a used car by researching key information, creating an infographic and sharing your findings with the class. 1.

Form small groups of three to four students.

Research the essential skills needed when buying a car, including:

• how to work out what’s a fair and reasonable price • what to look for when inspecting a car • useful negotiation tips • common dealer tactics and how to avoid them. Create an infographic using your research. Include helpful visuals such as:

SA PA M P G L ES E

• warning signs for pushy or dishonest sales tactics • budgeting reminders • checklists for what to inspect.

Present your infographic to the class.

Join a class discussion to identify the most common tips, patterns between groups and strategies to avoid being misled when buying a car.

Are there any other major purchases I need before moving out?

➜

Figure 13.7.5 You might have a lot of purchases to make before you move out of home.

When a young person moves out of home, they need certain items to live independently. If you are sharing a house or apartment, you might only need to buy furniture for your own bedroom, because other household items are shared. But if you are renting a place on your own, the costs are higher, as you will need to buy all the major household appliances and essentials yourself. Some items you may need to buy are shown in Table 13.7.1.

Table 13.7.1 What to buy when moving out

What to buy when moving into an established share house

What to buy when setting up an independent unit or share house

Bedroom furniture Bed and mattress Wardrobe/drawers Desk and chair (optional)

Fridge Washing machine Microwave Living room furniture Table and chairs Television

13.7 What are the major purchases required for independent living?

615

How do I pay for major purchases? When you buy something, you can pay either with cash or with credit.

Paying with cash or using a debit card

SA PA M P G L ES E

You can use physical money (notes and coins) to pay for items, or you could use a debit card. A debit card allows you to buy goods by electronically transferring money from your bank account to the store’s account. This is commonly called EFTPOS, or electronic funds transfer at point of sale. The main advantage of cash or debit is that you can only spend what you have, which helps you avoid debt. There are no interest charges or extra fees, and the item is yours immediately. However, carrying cash can be risky as it could be lost or stolen, and it can be difficult to pay for very expensive items using cash.

Paying with credit

Paying with credit means using a credit card or store card to buy something and promising to pay it back later. Credit allows you to buy expensive items even if you don’t have enough money right away, and many cards offer rewards, points or cashback. It is also very convenient for online shopping or emergencies. The disadvantages are that you can easily spend more than you have, which can lead to debt. Interest and fees can make purchases more expensive if you do not pay on time, and missing payments can harm your credit rating, making it harder to borrow money in the future. Table 13.7.2 on the next page outlines some ways to pay for major purchases.

➜

Figure 13.7.6 Paying with credit is convenient, but it’s important to keep track of your debt and the interest you may be building up on the card. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

EFTPOS (electronic funds transfer at point of sale) allows electronic payments using a debit card. The money is taken instantly from your bank account and transferred to the seller

616

Chapter 13 Towards independence

Table 13.7.2 Ways to pay for major purchases What it is

Advantages

Disadvantages

Buying new from stores

Furniture from department stores, big retailers or specialty shops

Wide selection, brand new, often comes with warranty, delivery available

Can be expensive, delivery may take time

SA PA M P G L ES E

Method

Buying online

Ordering furniture via websites or apps

Convenient, lots of variety, often cheaper, can read reviews

Can’t see or try before buying, delivery fees, return rules may vary

Buying second-hand

Used furniture from online classified marketplaces, thrift stores or garage sales

Cheaper, environmentally friendly, available immediately

Conditions may vary, no warranty, often need to transport it yourself

Renting/hiring

Furniture rented for Low upfront short-term use cost, flexible, maintenance sometimes included

Don’t own the furniture, longterm costs are higher

13.7 What are the major purchases required for independent living?

617

Table 13.7.2 Continued What it is

Advantages

Disadvantages

Renting to own

Rent an item now and have the option to buy later

You are able to use the item immediately, good if you can’t pay full price upfront

More expensive in the long run, if you don’t buy you can lose the extra money you paid towards the purchase

SA PA M P G L ES E

Method

Custom-made to order

Furniture made specifically for you

Unique, fits your space perfectly, matches your style

Bulk/package deals

Buying sets like bedroom or living packages

Often cheaper than Less flexible, buying individually, can’t mix and match styles consistent design

Joint ownership

Sharing furniture with roommates or family

Costs are shared, reduces upfront spending, can get better-quality items by pooling money together

Expensive, longer wait time

Must agree on use and care Conflicts can occur when people move out, especially if the item has depreciated. The furniture item is not fully yours as you share it with others.

Chapter 13 Towards independence

Are there any other options apart from buying major purchases? Sharing economy The sharing economy is a system where people share access to goods or services instead of owning them. Instead of buying something yourself, you can rent or borrow it temporarily from someone else. Technology has made it easier for people to connect and share items safely. Common examples include ride-sharing services like Uber, renting a room or house through Airbnb, borrowing tools or sports equipment and renting designer clothes or kitchen appliances. The sharing economy can save money because you only pay for what you use, reduce waste and help the environment, and even allow people to earn money by sharing their own items. However, there are some disadvantages: you do not own the item, so availability can be limited; some items may be damaged or poorly maintained; and there can be safety or trust concerns when dealing with strangers. For young people moving out or on a budget, the sharing economy can be very useful. You could, for example, rent a fridge or washing machine until you can afford to buy your own.

SA PA M P G L ES E

618

Renting to buy

Rent to buy is when you rent something now but have the option to buy it later. Part of the money you pay as rent can sometimes go towards the total price. This is useful if you can’t afford to pay the full price straight away. You might see this for furniture, appliances, electronics or even a house. The good thing is you can use the item right away and decide later if you want to keep it. The downside is that it can cost more over time than buying it outright, and if you decide not to buy, the extra money you paid towards the purchase might be lost.

Activity 13.7.2

Planning and budgeting for major household items 1.

You are moving out for the first time and will be living with friends. You need to set up your own bedroom and living space. You have saved $1500 to spend on essential household items. a. For the list of items in Table 13.7.3, decide which items you need first and how much you will spend on each one. b. Research the cost of each item online. Copy the table into your workbook and write the price of the item and the website where you found it. c. For each item, choose a purchase option, such as buying new, buying secondhand, renting, or sharing the cost with a housemate. d. Explain your choice for each item, based on your needs and your budget.

13.7 What are the major purchases required for independent living?

619

Table 13.7.3 Items to plan for Item

Option chosen

Estimated cost and website

Why you chose this option

Bed Mattress Bedding (sheets, pillows, doona) Wardrobe

SA PA M P G L ES E

Lounge/sofa Dining table Fridge

Microwave

Washing machine

Answer the following questions after you have completed your table.

a. Which items were your top priorities? b. Did you skip or delay buying any items because of your budget limit? c. Did your choice of purchase option (new, second-hand, rental, joint ownership, etc.) help you stay within budget? d. Which items would you consider sharing or jointly owning with your housemates? Why?

Review 13.7

Online quiz

Knowledge and understanding

Thinking, researching and communicating

Students can access sample responses and results online

Teachers can go online to assign questions, view results, reports and more!

Knowledge and understanding 1.

Identify three common options for purchasing major household items when moving out of home.

Define rent to buy and give an example of an item that could be bought this way.

Discuss the difference between buying a car outright with cash and using credit.

Imagine you are moving into your first home and have a limited budget. Justify which option (buy new, buy second-hand, rent to buy or joint ownership) you would choose for a fridge and explain why this is the best choice for your decision.

Thinking, researching and communicating 1.

Imagine you are moving out for the first time, with a limited budget. You have the choice to buy some items new, some second-hand, and rent others with the option to buy later. Which strategy would help you get the most essential items while staying within your budget, and why? Consider both short-term needs and long-term benefits in your answer.

620

Chapter 13 Towards independence

13.8

Investigation: what are the steps involved in moving out of home? Success criteria

In this investigation, you will learn how to apply the concepts and skills from this chapter to plan a realistic and financially responsible move out of home, including budgeting, accommodation, major purchases and risk management.

❏ I can create a clear, step-by-step plan for moving out of home.

SA PA M P G L ES E

Learning intention

DOC

Download investigation workbook

Independent living project

Moving out of home is a major milestone that requires planning, decision-making and careful financial management. This project guides you through the key responsibilities involved in living independently, including budgeting, finding accommodation, understanding rental obligations, setting up the services you need, and managing transport and major purchases. As you work through each stage, record your answers in the downloadable workbook available in the Interactive Textbook or in another format such as a spreadsheet or notebook. This project will help you apply the commerce concepts and skills learned in this chapter by investigating real-world information, solving practical problems and making informed decisions. This task can be completed gradually as you work through the chapter, or at the end to consolidate everything you have learned.

Your challenge: moving out of home

You have just been offered a job or accepted into a university course in another town. This means it is time to move out of home and begin the next chapter of your life. To prepare for this change, you will complete a series of tasks that simulate the real steps involved in leaving home.

Step 1: your reason for leaving home

Begin by choosing either work or study as a reason for moving out and record this in your workbook. Your choice affects your income for the challenge. If you chose work:

• research a minimum-wage job you could realistically do • find jobs on Seek or Indeed • use the Fair Work Ombudsman website to confirm the minimum wage • record your hourly rate and calculate your weekly and monthly income. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

13.8 Investigation: what are the steps involved in moving out of home?

If you chose study:

• assume you will work casually up to 25 • •

hours per week choose a suitable part-time job from a job website record the minimum wage for that job and calculate your income.

Step 2: financial support eligibility Check whether you qualify for any government financial support. Record the following:

SA PA M P G L ES E

• which payment(s) you are eligible for • the amount you would receive • evidence of eligibility (paste a mock

Figure 13.8.1 Creating your budget is a vital step in this investigation! ➜

•

application in your workbook) any one-off payments available and what you would spend them on.

Add all support payments to your budget.

Step 3: create your budget

Independent living requires a clear budget. In your workbook or spreadsheet:

• record your income from work and any support payments • enter your expenses, including compulsory items marked with an asterisk • update your budget as you complete later steps • adjust your spending if your costs become higher than your income. Step 4: choose health or ambulance cover

You should have either ambulance cover or private health insurance. Complete the following:

• research plans on the suggested websites or your own sources • compare cost and type of cover • record the plan you choose and the amount • add this expense to your budget. Step 5: find your accommodation

You will live in a private rental and share with one to three flatmates. Complete the following:

• search for a rental property online • choose a property in the city or town assigned by your teacher • insert a screenshot into your workbook • explain why you selected this property • record the weekly rent and add your share to your budget. Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

621

Chapter 13 Towards independence

Step 6: complete a rental application Use the rental application form provided in the Interactive Textbook. Complete the following:

• complete the form with realistic information • use “Flatmate 2” and “Flatmate 3” if you do not want to include real names • list the identification documents you would provide (no need to attach them). Step 7: write a flatmate agreement Create a written agreement covering:

• how and when rent will be paid • how utilities will be split • food arrangements • cleaning responsibilities • how joint purchases will be handled if someone moves out.

SA PA M P G L ES E

622

Include names and signatures at the bottom.

Step 8: complete a rental agreement

Fill out the sample tenancy agreement in Appendix B. Record rent, bond and any additional terms. Update your budget with these amounts.

Step 9: complete a condition report

When you move in, you must complete a condition report. In your workbook:

• fill in the report in Appendix C • use photos or the property listing to describe the condition accurately. Step 10: set up electricity and gas

Research energy providers and select the most suitable plan. Record:

• the provider you choose • plan details and any exit fees • the cost added to your budget.

Step 11: set up mobile and internet accounts

Research mobile phone and internet providers and select the most suitable plan, then:

• choose a mobile plan and insert a screenshot • choose an internet plan and insert a screenshot • record both costs • add these expenses to your budget.

13.8 Investigation: what are the steps involved in moving out of home?

Step 12: arrange transport Visit the Transport NSW website to determine your transport needs. Record:

• the type of transport you will use • the cost • the amount in your budget. Step 13: purchase a car You have saved $5000 for a car. To complete this step:

• search for a suitable car online • • • •

➜

SA PA M P G L ES E

or at a dealership create a checklist of what to inspect in a used car explain how you will pay for the car (savings or a loan) Figure 13.8.2 Work through the steps in a logical way, checking things if using a loan, provide a off as you go. screenshot of loan details add car expenses to your budget (insurance, fuel, registration, maintenance).

Step 14: major household purchases

List the household items you need for your new place. For each item:

• research the price • record how you will pay for it • add the cost to your budget.

Step 15: explore budgeting apps

Search for budgeting or financial-tracking apps. Record:

• which app you would use • the reasons for your choice.

Step 16: final moving-out checklist

Create a checklist of everything required when moving out of home.

Are you ready? By following the steps, you will have created your own complete plan for moving out of home one day. You’re ready to take on the challenges of living independently! For your final submission, hand in your workbook (or digital folio) detailing all the decisions you made. This is your chance to show how confidently you have planned for independent living and used the skills you’ve developed throughout this chapter.

623

624

Chapter 13 Towards independence

13.9

Chapter review Access the Interactive Textbook for a range of digital tools to help you review this chapter and build confidence.

Summary

SA PA M P G L ES E

DOC

Download chapter summary

Summary notes

What have you learned about becoming independent? Copy the table and fill it out by outlining your understanding. Aim for two points per topic.

Topic

What I have learned

The right time to leave home

Support services for living independently Personal finance management Accommodation types

Major purchases for independent living

Visible thinking routine Compass points

This exercise in visible thinking asks you to think deeply about the concepts you’ve learned in this chapter and evaluate what you think about living independently as a result. Write down your responses to the following prompts. 1.

What excites you about being independent?

What do you find worrisome about becoming independent? What are you most concerned about?

What else do you need to know to help you become independent?

What is your stance on living independently in Australia? Do you think more support and resources are needed?

Now discuss your responses with the rest of the class. Did the discussion change what you think?

13.9 Chapter review

Questions Scorcher quiz Access a fast, fun, competitive quiz that puts your understanding to the test.

Short-answer questions Identify two reasons why a young adult may leave home.

Identify two reasons why a young adult may continue living at home.

Outline why having forms of legal and medical identification is important.

List three support organisations available to young people living independently.

Outline the difference between establishment costs and ongoing costs.

Identify two types of insurance policies.

Define a healthy credit score.

Outline what Youth Allowance assists with.

List two consequences of poor financial management.

10.

Define what a lease is in the context of living independently and identify the information a tenant should receive after signing one.

11.

Outline why a PPSR check is important when buying a used car.

12.

Identify three things a flatmate agreement could include.

SA PA M P G L ES E

➜

Figure 13.9.1 One factor affecting a young person’s ability and inclination to leave home is the affordability of housing. Teachers, access the Online Teaching Suite for digital resources and tools that support review, assessment and reporting, including:

625

626

Chapter 13 Towards independence

DOC

Download single paragraph model

Writing focus The following activities offer ways to demonstrate your understanding of the chapter and allow you to continue to practise your writing skills.

Answering questions in paragraphs You can use this as a model when writing your own answers to the questions that follow. Question: Analyse the challenges and responsibilities a young person may face when preparing to live independently. Model answer: Moving out of home involves many challenges and responsibilities that require careful planning and mature decision-making. Young people preparing to live independently must consider factors such as their financial readiness, emotional needs and opportunities for study or employment. Preparing for independent living also requires strong financial responsibility, including managing both establishment and ongoing expenses. Without careful planning, these financial pressures can become overwhelming, as young adults must balance rent, groceries, utilities and other essentials while adjusting to new routines and expectations. Understanding legal responsibilities, such as holding the correct identification and reading lease conditions, is also essential for safely and confidently living out of home. This is demonstrated by the consequences of poor financial management, which can include debt, a low credit score or difficulty paying bills on time. For example, a young person who fails to budget for rent or unexpected costs may miss payments and risk eviction, highlighting the importance of sound financial and legal preparation. In this way, the challenges of becoming independent show that young people need to build financial skills, understand legal obligations and make informed decisions to manage the responsibilities of living on their own.

SA PA M P G L ES E

Topic sentence: the first sentence of the paragraph; directly answers the question

Elaborate: extra detail, reasoning, causes, consequences, links between ideas

Linking sentence: reconnects to the topic sentence using the language of the question

Explain: clarify, define and describe

Evidence: specific, relevant evidence to support arguments

Examples: provide credibility and illustrate the argument

Structured-response questions 1.

Explain the difference between fixed and variable expenses when constructing a household budget. Demonstrate how budgeting can help a young person manage independent living successfully. Discuss three strategies a young person can use to minimise financial problems. Why is it important to maintain a healthy credit score when planning for major purchases? Compare and contrast two accommodation options for young people leaving home. Include considerations such as cost, privacy, location and suitability for specific needs. Discuss the advantages and disadvantages of buying new, second-hand, or using the sharing economy for major items. Explain how these options help a young person manage finances when moving out.

Extended-response question 1.

Evaluate the strategies and resources available to help young people make informed financial and lifestyle decisions. In your response, include examples of budgeting, government support, accommodation options, and the use of the sharing economy.

627

Glossary Australian Consumer Law (ACL) the laws, both Australia-wide and in states, that protect the rights of consumers Australian Cyber Security Centre (ACSC) the government organisation responsible for monitoring and providing advice on cyber security Australian Financial Complaints Authority (AFCA) a free and independent dispute resolution organisation that can make binding decisions on matters affecting borrowers relating to complaints about financial products and services, including loans, insurance, bank deposits, investments and financial advice, as well as superannuation Australian Securities and Investments Commission (ASIC) a government organisation whose responsibility is to protect consumers in financial and credit markets, especially in relation to financial products such as loans, insurance, cryptocurrency and superannuation Australian Securities Exchange (ASX) a marketplace where investors can purchase shares in listed companies, which list their shares in order to raise money and grow their businesses Australian Transaction Reports and Analysis Centre (AUSTRAC) the government organisation responsible for regulating and monitoring the financial sector to prevent and detect serious and organised crime; it may also offer assistance to consumers with money laundering, organised crime and tax evasion Austudy government support payment that helps full-time students and apprentices over 25 with living and studying costs availability how easily consumers can access a good or service, including where, when and how it is purchased balance sheet a financial statement that shows what is owned, what is owed and what is left over at a specific time bill a proposed law

SA PA M P G L ES E

abbreviated shorter than usual or expected ABSTUDY government support that assists Aboriginal and Torres Strait Islander students with the costs of education accountability a situation in which someone is responsible for things that happen and can give a satisfactory reason for them account-keeping fees ongoing fees on a bank account or loan by a financial institution accounts receivable money that is owed to you Act a law that has passed through parliament addiction an inability to stop doing or using something, especially something harmful advocacy speaking or acting in support of a cause annual on a yearly basis anti-discrimination against unfair treatment of people because of factors such as their race, gender or sexuality apprenticeship a program where a person learns a trade while working on the job and in the classroom arbitration where a judge intervenes and decides in order to resolve a dispute assets something a business or individual owns Australian Bureau of Statistics (ABS) the government agency that provides trusted official statistics on a wide range of economic, social, population and environmental matters Australian Business Number (ABN) a unique 11-digit number that identifies your business Australian Competition and Consumer Commission (ACCC) a government organisation that enforces the Competition and Consumer Act 2010 (Cth), ensuring ethical and legal conduct by businesses, and investigating false advertising and anti-competitive behaviour

Glossary

binding agreement something that cannot be legally avoided or stopped benefits advantages that a good or service provides to consumers book-up a type of loan held by a store, where account holders have their purchases recorded on their account within a store to be repaid later brand the identity and reputation of a business or product in the minds of consumers brand recognition how easily people can identify a brand when they see it budget a plan that outlines how much money will be earned and spent over a certain period business cycle the regular rise and fall of activity in an economy over time businesses firms that produce goods and services and employ resources business plan a document created by the business owners or managers setting out a business’s goals and how to achieve them capital (business) money invested into starting and growing the business capital (economics) the physical, intellectual or financial resources used to produce value in an economy capital growth an increase in the value of an asset, such as a share or investment cash advance a withdrawal from a credit card in the form of cash; interest is usually payable immediately as a result cash flow money coming in and going out of the business cash flow statement a financial statement that shows how money comes in and goes out over a period of time cheque a document that orders a bank to pay the amount specified on it drawn from the person who owns it to the person nominated on the cheque CHOICE® an independent nongovernment organisation that tests and reviews products, publishes consumer advice, and lobbies (tries to influence governments in their lawmaking) for stronger consumer rights

circular economy a way of using resources to reduce waste by reusing, repairing and recycling products and materials circular flow model a framework to show how money, goods and services move between households and businesses in an economy civil law governs disputes between individuals and groups (such as commercial and government organisations), focusing on private rights and responsibilities code of conduct rules that guide acceptable behavior in a group or organisation collusion when businesses work together to illegally set prices for goods and services, ultimately making them more expensive for all consumers commission income paid to an employee based on the number and amount of sales made; for example, a real estate agent being paid according to how many houses they sell common law a system of laws based on customs and court decisions rather than on written laws made by a parliament comparison shopping comparing goods and services provided by one business with another business based on price, quality, features, warranties, customer service or environmental factors competition the level of rivalry from other businesses offering similar products compliance the act of obeying a law or rule compound interest interest calculated on both the original amount of money and the interest it has already earned conciliation where a third-party appointed by an industrial tribunal helps people in a dispute by suggesting solutions to help them reach an agreement condition report a document that describes the current state or condition of the property Constitution the written set of political principles that guides the rights of people in a country

SA PA M P G L ES E

628

Glossary

cryptocurrency a digital currency (money) that has no legal or intrinsic value except what people are willing to pay for it, causing it to fluctuate in price according to supply and demand; they are widely accepted and can be used to buy or sell things, especially things that are of high value; often seen as something to invest in because of the possibility of an increase in value over time cultural sensitivity understanding and respecting the cultural meanings, values and traditions of different groups of people culture shock the feeling of confusion or discomfort when experiencing a different culture Customary Lore the traditional customs, beliefs and stories that guide behaviour and decision-making within Aboriginal and Torres Strait Islander Communities customer an individual who purchases a good or service customer service the support a business provides to consumers before, during and after a purchase decision debit card a card that is linked to your cheque or savings account and allows you to use your own money to pay for things debt when you owe money to someone you borrowed from debt finance using borrowed money to invest, which must be repaid with interest defendant a person in a law case who is accused of having done something illegal demand when consumers show purchasing interest in a good or service; this may lead to an increase in the price of the product, especially if there is a limited supply detention (immigration) when people who have entered a country without the necessary legal documentation are held in custody development (economic) the material living standards, overall health, education and environmental quality of a country differentiate to make a good or service appear different from competitors’ products in ways that are valued by consumers

SA PA M P G L ES E

consumer an individual who uses a good or service consumer confidence the degree to which consumers feel optimistic about their financial situation and the economy, affecting their willingness to spend consumer journey the stages an individual moves through from first becoming aware of a product to using it contingency a backup plan or extra allowance for unexpected events or costs convicted being officially found guilty of a crime in a court of law cooperative (co-op) a type of legal business structure that is owned by its members to serve their interests, with a focus on serving the needs of members and in doing so generating profits that are shared to improve the benefits they offer their members counterterrorism action taken to prevent violence for political purposes Country lands, waterways, seas and skyways to which Aboriginal and Torres Strait Islander Peoples are connected credit the ability to borrow money or access goods and services with the agreement to pay for them later; examples include loans and credit cards credit card a loan account provided by a bank with a physical card that allows individuals to use the bank’s money to purchase smaller items; it usually has a high interest rate credit rating a score given to individuals who borrow money to rate them as good or bad borrowers; this is used to decide the amount of risk they present to a future lender and could impact on their ability to borrow money in the future or the conditions of the loan contract credit score a number that shows how trustworthy a person is when it comes to borrowing and repaying money, based on a person’s past financial behaviour criminal law the body of law that prohibits behaviours that are seen as harmful to society

629

Glossary

direct debit a request to the bank by the account holder to make payments regularly from one bank account to another diversification an investment technique that involves spreading out risk between different types of assets such as shares, cryptocurrency, property and gold dividend a portion of a company’s profits paid to its shareholders domestic relating to or occurring within one’s own country or home duress threats used to force a person to do something earnings money earned by consumers, usually from working or investing economic growth the increase in the size of a country’s economy over a period of time, usually a year economic problem how we use our limited resources to satisfy our needs and unlimited wants efficiency using resources in the best possible way to produce the maximum output with minimal waste EFTPOS (electronic funds transfer at point of sale) allows electronic payments using a debit card. The money is taken instantly from your bank account and transferred to the seller electoral roll an official list of people who are allowed to vote eligibility the set of requirements you must meet to qualify for something elevator pitch a short description of a product or business idea, especially one given to a possible investor employee turnover the rate at which employees leave a company and are replaced by new employees employment the jobs created by a business endorsement when an individual publicly recommends a good or service entrepreneur a person who takes a risk with their money, time and skills to create and manage their own business entrepreneurship the process of identifying opportunities and creating value by starting and growing ventures, often by innovating and taking calculated risks

environmental goals targets set by a business to improve the environment around it and how it impacts the environment environmental, social and governance (ESG) a set of criteria used to evaluate a company’s impact on the environment, its treatment of people, and the quality of its leadership and ethics equilibrium a state where things are balanced and not changing because opposing forces are equal equitable based on fairness, where the court considers the specific circumstances of a case rather than applying strict legal rules equity finance using your own money to invest in an asset, giving you full ownership establishment costs expenses involved in setting something up ethical societal and consumer beliefs about what is morally right and wrong exchange rate the value of one currency compared to another, showing how much of one currency you get when you exchange it for a different one exchange traded funds (ETFs) a type of investing where investment experts put together several types of company shares as a portfolio for investors to invest in expenses the costs or money spent to run a business, organisation or personal life, such as things like rent, bills, salaries, supplies and other necessary items or services fair trade an approach to business that promotes equity, justice and fairness in how people involved in making the product are treated feasibility study an evaluation of whether a project or idea is practical and viable features characteristics of a good or service, such as what it has or what it can do federal related to the central government of a country, as opposed to the government of a specific state or region financial planner a person whose job is to advise people on how to manage their financial arrangements

SA PA M P G L ES E

630

Glossary

households individuals and families who consume goods and services and provide factors of production impasses situations in which progress is impossible because the parties involved cannot reach an agreement inalienable unable to be removed or taken away income money you receive, usually from work or business income statement a financial statement that shows how much money a business made and spent over a period of time (profit or loss) indictable offence an offence that someone can be accused of in a court of law indivisible cannot be separated into different parts inflation the rate at which prices for goods and services rise over time despite no added value to the product, leading to the same amount of money buying less over time inherent existing as a natural or basic part of something initial public offering (IPO) the first sale of a company’s shares to the public innovation the process of bringing about new ideas, products and services to allow for continual improvements to what can be offered to consumers inputs materials used in the production of a business’s goods or services; inputs may be tangible or intangible insurance a service that helps protect you from financial loss by providing money if something bad happens, like an accident, illness, or damage to property intangible not able to be seen or touched but still having value interdependent depending on each other interest the cost of money applied to a loan by the bank interest groups groups that try to influence government decisions on issues they care about international involving or operating between different countries

SA PA M P G L ES E

financial statements a set of reports that show how a business is managing its money fiscal policy a government’s plan for deciding how much money to borrow and to collect in taxes, and how best to spend it, in order to influence the level of economic activity float the number of shares in a company available for public trading franchise a business model where a person pays to operate under an established brand and system franchisee a person who buys the right to operate a franchise (often as a Pty Ltd company) franchisor a business that owns the brand and business system fraud the crime of obtaining money or other objects of value by deceiving people free rider problem when people benefit from a good or service without paying for it goods and services goods are tangible items (like cars, food or electronics) that are produced, sold and owned, while services are intangible activities or skills (like haircuts, banking or healthcare) provided by one party to another goods and services tax (GST) a tax that is added to most products and services you buy or sell in Australia goodwill the intangible value of a business beyond its physical assets, such as its brand, loyal customers, good reputation and employee talent grant funding provided to a business, usually by a government or organisation, to support a specific project or purpose gross domestic product (GDP) the total production of goods and services in the economy that indicates the size of an economy guarantor (passport) a person who confirms your identity and photo in your application hacking getting into someone else’s computer system without permission in order to find information or do something illegal

631

Glossary

inventory stock investing the process of putting your money into a new business, an existing business such as by buying shares, or buying other assets such as property in the expectation of earning a profit investment portfolio a collection of financial assets, such as shares, bonds, and cash held by an individual or organisation itinerary a planned schedule of travel activities and destinations jaywalking walking across a street at a place where it is not allowed or without taking care to avoid the traffic job description a list of the tasks and responsibilities that an employee will be expected to perform as part of a job job specification the skills, qualifications and experience required for a job jury a group of people chosen to listen to all the facts in a court of law and decide if a person is guilty or innocent or if a claim has been proved jury empanelment the process of selecting jurors to form a panel key performance indicator a way of measuring a business’s progress towards the goal it is trying to achieve labour the human effort, both physical and mental, that goes into producing goods and services landlord a person or organisation that owns a property and rents it out to tenants law enforceable rules about how things should be done law of demand when prices go up, people usually buy less; when prices go down, people usually buy more law of supply as price rises, quantity supplied increases; as price falls, quantity supplied decreases lay-by a payment arrangement where a consumer pays off goods in instalments over a period of time (sometimes up to six months) until they are fully paid off, allowing them to then collect them

lease a legal contract between a landlord and a tenant that allows the tenant to rent a property for a fixed period of time. It explains how long the rental lasts, how much rent must be paid, and the rights and responsibilities of both parties legal capacity a person’s legal ability to understand and make binding decisions or enter into enforceable agreements, such as contracts, and to be held responsible for those decisions under the law legislation a law made by parliament liabilities amounts a company owes that it must pay in the future liability the fact that someone is legally responsible for something litigation the process of taking a case to a court of law so that an official judgment can be made macroeconomic policies government actions that affect the whole economy, such as policies that affect inflation and employment marginal benefit the benefit of one additional unit marketing the activities a business does to tell people about their product or service so they will be encouraged to buy them; for example, advertising or promoting marketplace a physical or online place where many sellers of goods or services come together to sell their goods market research the process of researching what is happening in the business environment so that a business owner can make informed decisions market share the percentage of total sales in a market that a company or brand has markets places or systems where buyers and sellers exchange goods and services mass-marketing promotion to the whole market using a single promotional message materials the goods used to produce a good or service by a business mediation a process where a neutral third person helps people in a dispute communicate and reach an agreement

SA PA M P G L ES E

632

Glossary

NSW Fair Trading a government organisation that handles consumer complaints, provides advice, and educates consumers and businesses in New South Wales after a consumer has already tried to resolve issues relating to goods or services purchased offender a person who is guilty of committing a crime ongoing costs expenses that continue to happen regularly over time while you own or use something online broker a person or company that buys and sells foreign money, company shares and more for other people online opportunity cost what you give up when you choose something else output the goods or services produced at the end of the production process over-representation when a particular group makes up a larger proportion of a system or outcome than it does in the general population partnership a type of legal business structure that has between 2 and 20 owners (partners) who conduct a business payday lending types of loans that are short-term, high-interest and offered very quickly by lenders PAYG withholding where businesses withhold tax from payments to employees or contractors and send it to the ATO on their behalf peremptory expecting to be obeyed without any delays or questions plaintiff someone who makes a legal complaint against someone else in court platform a set of policies, ideas or plans that a political candidate presents to voters poverty the condition of being extremely poor precedent a new standard set by judges in deciding a court case premium the amount of money paid for an insurance policy price elasticity of demand how much the amount people buy changes when the price of something goes up or down price mechanism how prices change to match supply and demand

SA PA M P G L ES E

merger when two businesses come together and become one larger organisation merit goods goods or services that are good for people and society, like education and healthcare microeconomic policies government actions that affect individual businesses or industries monetary relating to money or in the form of money monetary policy actions taken by a government to control the amount of money in an economy and how easily available it is; for example, by changing the interest rate multiplier effect when an initial increase in spending leads to a larger overall increase in economic activity munitions weapons, ammunition and other equipment used by the military, including bombs, missiles, bullets and the machines or tools needed to use or transport them natural monopoly when one business can supply a good or service more cheaply than many businesses, such as electricity networks need something essential for survival, such as food, water, clean air and shelter negotiation a discussion between two or more parties to reach an agreement and resolve a conflict without going to court new tenant checklist a list of important tasks and things to do when someone moves into a rental property. It helps tenants make sure they have done everything needed for a smooth move-in and to protect their rights non-excludable people cannot be stopped from using the good, even if they don’t pay non-rival one person using the good does not stop others from using it too NSW Civil and Administrative Tribunal (NCAT) a government organisation providing services to help consumers resolve issues or disputes fairly and according to the law up to the value of $100,000; NCAT is a low-cost, informal way for consumers and businesses to settle disputes

633

Glossary

pricing how much to charge for a product or service primary research a type of research created specifically for what a business would like to know; this may include conducting a survey or asking your customers direct questions relating to your business or product, such as what they like or dislike private company a type of business legal structure that is a separate legal entity from its owners; the owners have limited liability, meaning that the private assets of owners are protected process the steps taken to produce a good or service by a business producers businesses or people who make or provide goods and services product a good or service, or combination of both production the part of the business that focuses on making the good or service profit money you have left after you pay for all your expenses progressive (tax) a tax where people with higher incomes pay a higher percentage promotion activities that influence consumers’ awareness, interest and purchase decisions property investments involving land, such as houses, units or factories proprietary limited (Pty Ltd) showing that the company is private and the owners’ liability is limited to the money they invested and not more prosecution the lawyers in a trial who try to prove that a person accused of committing a crime is guilty of that crime prosecutors legal officials who accuse someone of committing a crime, especially in a courtroom prospectus a document that provides information about a company and its shares to help investors decide whether to invest public company a large business listed on the Australian Securities Exchange (ASX) public goods goods or services provided by the government that everyone can use

punitive actions actions intended as a punishment quality the standard of a product, reflected in things like its durability, reliability and performance quality improvement the emphasis of a business on continually trying to improve its product and processes to lead to an improvement in the product and service quality recession a period of economic decline when overall spending and business activity fall, often leading to slower growth and higher unemployment recidivism percentage of former prisoners who are rearrested for a similar offence reckless doing something dangerous and not worrying about the risks and the possible results remuneration money paid to someone for their work or services reconciliation the process of making two opposing parties or ideas agree recruitment the process of attracting and then hiring people to work in a business referee (passport) a person who confirms your identity when you apply for a passport regressive (tax) a tax where people with lower incomes pay a higher percentage of their income regulatory relates to checking whether an individual or business is working according to official rules or laws rehabilitation the process of helping someone return to a healthy or good way of life remedies the actions or solutions a court provides to fix a harm or enforce a right rent the money a tenant pays regularly, usually each week or month, to a landlord in exchange for living in or using a property, as agreed in a rental or tenancy agreement rental application a form that a person fills out when they want to rent a property. It usually asks for information like the applicant’s name, contact details, rental history, employment details, and references

SA PA M P G L ES E

634

Glossary

shares a part of a business sold to an investor, making them a part-owner of the business simple interest interest based on the principal amount only, and does not include the effect of compounding slave labour when someone is forced to work under threats or pressure and is not free to leave, resulting in their labour being exploited by others smoking ceremony a traditional First Nations Cultural Practice in which smoke from burning native plants is used by Elders to cleanse a place, welcome people and mark significant events social enterprise a type of business that is not developed to produce profit but to improve the community it serves; an example may be a charity social goals targets set by a business to improve the community and how the business serves it social norms the unwritten rules about how people are expected to behave in a society; they differ from country to country society a large community of people who are united by a shared culture, institutions and typically a common legal system and structured relationships, living within a defined geographic area sole trader a type of legal business structure where there is only one owner who has all financial liability and decision-making responsibility for the business spending money used to satisfy consumer wants and needs sponsorship when a business supports an organisation, event, team or venue in exchange for brand exposure stakeholder person or group that has an interest in a company and can be affected by its actions, such as employees, customers, owners or investors statute law laws made by parliament statutory remedies or solutions created by laws to solve disputes strict liability offences these offences don’t require proving intent or knowledge of the act. The act occurring is sufficient

SA PA M P G L ES E

rental bond a sum of money paid by the tenant to the landlord before moving into a property that is returned when the tenant leaves the property in good condition restorative the act of returning something or someone to its earlier good condition or position retribution a punishment that is deserved revenue money that a person or business earns risk the chance that something may go wrong in a financial or business situation risk mitigation actions taken to reduce the chance of a loss or negative outcome risk versus return risk is the uncertainty that an investor may possibly lose the money invested; return is the money generated by taking the risk rule a guide to how things should be done rule of law a concept that states everyone is equal before the law salary fixed annual amount paid in regular instalments, such as fortnightly or monthly, to employees for time worked sales the number of units of product sold by a business savings money put aside for future larger purchases or investments scam a dishonest scheme created by criminals to deceive consumers with the purpose of stealing their money or personal information Scamwatch an organisation that provides information on the latest scams affecting consumers and also provides a place where victims can report scams scarcity when something is scarce, there isn’t enough to satisfy all of our wants secondary research a type of research that involves using readily available information to learn more about the business environment segment a specific group of consumers with similar characteristics sensationalism the act by the media of presenting information in a way that is shocking or exciting shareholder a person who owns shares in a company and may receive profits and vote on how the company is run

635

Glossary

submission written feedback given to government during consultations summary offence an offence that is a less serious criminal violation sunk cost a cost that cannot be recovered superannuation savings for retirement that are invested, allowing them to grow over time; most people who work in Australia receive super contributions from their employer, which usually form a large part of the savings suppliers people or businesses that provide goods or materials to another business SWOT analysis a business process that involves a business owner or manager analysing the strengths, weaknesses, opportunities and threats affecting a business; this is then used to make decisions on how to improve tangible able to be seen and touched target market the market segments that a business focuses on when promoting and selling its goods and services tenancy agreement (or lease) a written contract between a landlord and a tenant that outlines the rules and conditions for renting a property tenant a person who rents and lives in a property owned by someone else terra nullius a Latin term meaning “land belonging to no one” trafficking the act of buying and selling goods illegally traineeship a program that combines paid work with skills training and study for a specific job qualification trial the hearing of statements and showing of evidence in a law court to decide a case or a legal matter unconscious biases unknowingly allowing personal opinions to influence judgement, resulting in the unfair treatment of some people unconscionable acting in a way that is unfair or exploits another party

undermine to gradually weaken something and make it less powerful or less likely to succeed unemployment rate the percentage of people who want jobs but cannot find work unfair practices the actions of a business that may unfairly impact on a consumer; such practices may include contract terms that are unfair, false and misleading claims, and not delivering products or services that are paid for unlawful intrusion the act of illegally becoming involved in a situation where you are not wanted or don’t belong unlimited liability the owner of a business being personally responsible for business debts, therefore carrying a high level of personal financial risk for the business verdict an opinion or a decision made at the end of a trial after judging the facts presented visa official permission to enter another country voidable if something is voidable, it becomes possible to remove its legal force volatile likely to change suddenly and unexpectedly wage payment made to employees based on how many hours they have worked, and is therefore likely to fluctuate, such as with a casual job want something that is not essential for survival but can improve our quality of life, such as a new phone wealth the total value of a person’s money and investments work tasks or services performed by an individual or organisation in exchange for payment work environment the physical, social and psychological conditions in which an employee performs their job Youth Allowance a government payment to assist young people aged 16–24 with studying, training or looking for work

SA PA M P G L ES E

636

Acknowledgements

Acknowledgements The author and publisher wish to thank the following sources for permission to reproduce material: Cover: © Getty Images / Prasit photo.

SA PA M P G L ES E

Images: © Getty Images / Bloomberg, Chapter 1 Opener / Matsabe, Chapter 1 Icon / Morsa Images, 1.2.1 / Mevans, 1.2.2 / Twenty47studio, 1.2.3 / Douglas Sacha, 1.2.4 / Ljupco, 1.2.5 / Senez, 1.3.1 / Dougal Waters, 1.3.2 / Deagreez, 1.4.1 / Tasha Vector, 1.4.2 / Ron Levine, 1.4.3 / Andreswd, 1.4.4 / Images By Tang Ming Tung, 1.5.3 / Seksan Mongkhonkhamsao, 1.6.2 / Olesiabilkei, 1.6.3 / Natalia Lebedinskaia, 1.6.4 / Nastya_Ph, 1.6.5 / Witthaya Prasongsin, 1.6.6 / andresr, 1.7.2 / Rudzhan Nagiev, 1.9.2 / Malte Mueller, 1.9.3 / Yuliya Taba, 1.10.1 / Stakes, p.40, p.49, p.66, p.71 / We Are, 1.11.3 / Abraham Gonzalez Fernandez, 1.11.4 / siraanamwong, 1.12.1 / Eugene Mymrin, 1.12.2 / Klaus Vedfelt, 1.13.1 / Luis Alvarez, 1.14.1 / Jayk7, 1.14.2 / Courtneyk, 1.14.3 / Westend61, 1.15.2 / Isabel Pavia, 1.16.1 / cherdchai chawienghong, 1.17.2 / Prostock-Studio, 1.18.4 / fizkes, 1.19.1 / Lacheev, 1.19.2 / SolStock, 1.19.3 / MilanEXPO, 1.19.4 / Fly View Productions, 1.20.2 / Don Arnold, 1.21.1 / TukTuk Design, Chapter 2 Icon / Manfred Gottschalk, 2.1.1 / Fairfax Media, 2.1.2(a) / Bloomberg, 2.1.2(b) / Bloomberg, 2.1.2(c) / Hulton Archive, 2.2.1 / Yuuji, 2.2.2 / Lisa Maree Williams, 2.3.1 / Porcorex, 2.4.1 / John Eder, 2.4.2 / Creativaimages, 2.4.3 / Mphillips007, 2.5.2 / Pixelfusion3d, 2.5.3 / Yongyuan, 2.5.4 / Andrew Merry, 2.6.1 / WILLIAM WEST, 2.6.2 / The Sydney Morning Herald, 2.6.4 / Belinda Howell, 2.6.5 / Sopa Images, 2.7.3 / Maskot, 2.7.4 / Oscar Wong, 2.7.6 / Thomas Barwick, 2.7.7 / Catherine Falls Commercial, 2.8.1 / Hiramtom, 2.8.4 / Spawns, 2.9.1 / Maria Korneeva, 2.9.8 / EyeOfPaul, 2.9.9 / Shima, 2.10.1 / Transcendental Graphics, 2.10.2 / Theo Wargo/ NBC, 2.11.1 / Spencer Platt, 2.11.2 / Vectormine, 2.11.6 / Baona, 2.12.1 / Visual Capitalist, 2.13.1 / Nils Petter Nilsson, 2.13.3 / William West, 2.14.1 / Skaman306, 2.15.1 / Fairfax Media, 2.15.4 / Prasert Krainukul, Table 2.16.1(a) / Gatot Supandri, Table 2.16.1(b) / Prasert Krainukul, Table 2.16.1(c) / Calvindexter, Table 2.16.1(d) / Catherine Falls Commercia, 2.16.1 / Andriy Onufriyenko, 2.16.2 / Hal Beral, 2.16.3 / Andrew Merry, 2.16.5 / Ayman Haykal, 2.17.2 / Maskot, 2.18.2 / Mark Kolbe, 2.19.1 / Matsabe, Chapter 3 Icon / JackF, 3.3.5 / Deimagine, 3.3.9 / AleksandarGeorgiev, 3.4.3 / Miniseries, 3.5.1 / Tolgart, 3.5.5 / David Gray, 3.6.1(a) / James D. Morgan, 3.6.1(b) / Jeff Greenberg, 3.6.1(c) / Katharina13, 3.6.1(d) / Zmeel, 3.6.2 / AzmanL, 3.7.2 / Helen King/Corbis, 3.8.2 / Cate Gillon, 3.8.3 / Creative Images Lab, 3.9.1 / Aluxum, 3.9.8(a) / Peter Dazeley, 3.9.8(b) / KaanC, 3.9.8(c) / 24K-Production, 3.10.2 / Dimensions, 3.10.3 / Chirayu, 3.10.4 / Svetikd, 3.11.1 / Vera Vita, 3.11.2 / Kelly Sullivan, 3.12.1(a) / Bloomberg, 3.12.1(b) / Monica Schippe, 3.12.1(c) / Morsa Images, 3.13.1 / Halfpoint Images, 3.14.1/ DrAfter123, 3.15.1 / MoMo Productions, 3.16.1 / Userba011d64_201, 3.16.3 / Bloomberg. 3.17.1 / Matsabe, Chapter 4 Icon / Urbazon, 4.1.1 / Seetwo, 4.2.2 / Ashley L Duffus, 4.2.3(a) / Oleg Opryshko, 4.2.3(b) / Yarra Riviera, 4.2.3(c) / ReformBoehm, 4.2.4 / Reinhard Krull, 4.3.1 / Witthaya Prasongsin, 4.3.2(a) / Jose Luis Agudo Gonzalez, 4.3.2(b) / Oscar Wong, 4.3.2(c) / Paul Bradbury, 4.3.2(d) / Rae Allen, 4.3.3 / Cristian Storto Fotografia, p.248 / F. Brooks, 4.4.1 / Hilary Wardhaugh, 4.4.2, 4.4.3 / Keystone, 4.4.4, 4.4.5 / Fairfax Media Archives, 4.5.1 / Martin Keep, 4.5.2 / Pelooyen, 4.6.1 / Fairfax Media Archives, 4.7.1 / TkKurikawa, 4.7.3 / Slovegrove, 4.7.4 / TkKurikawa, 4.7.5 / Chameleonseye, 4.7.6 / JohnCarnemolla, 4.8.1 / Seksan Mongkhonkhamsao, 4.8.2 / Olga Serba, 4.8.3 / Bloomberg, 4.8.4 / Asanka Ratnayake, 4.8.5 / NurPhoto , 4.8.6 / Allkindza, 4.9.1 / Raja Islam, 4.9.3 / Georgia Curry, 4.9.4 / Douglas Sacha, 4.10.3, 4.10.4 / Saeed Khan, 4.11.1 / Chris Jackson, 4.11.2 / William West, 4.11.3 / Hilary Wardhaugh, 4.14.2 / Pool/Pool, 4.14.3 / Fairfax Media Archives, 4.15.1 / James D. Morgan, 4.15.2 / Alistair McLellan, 4.16.1 / ImagePatch, 4.16.2(a) / Kathryn8, 4.16.2(b) / Oleksandr Hruts, 4.16.2(c) / David Gray, 4.16.3 / Lisa Maree Williams, 4.16.4 / Martin Keep, 4.17.1 / SOPA Images, 4.17.2 / Martin Keep, 4.17.3 / Hilary Wardhaugh, 4.18.1 / Afriandi, 4.19.1 / Amr Bo Shanab, 4.19.2 / Brendon Thorne, 4.20.1 / TukTuk Design, Chapter 5 Icon / Clu, 5.1.1(a) / Ruizluquepaz, 5.1.1(b) / JaaakWorks, 5.1.2(a) / Hofred, 5.1.2(b) / Architetta, 5.1.2(c) / Zaricm, 5.1.2(d) / Onime, 5.1.2(e) / Daryna Terokhina, 5.1.2(f) / Syahrir Maulana, 5.1.2(g) / Wetcake, 5.3.1 / Morsa Images, 5.3.2 / Richard Newstead, 5.4.1 / Amr Bo Shanab, 5.4.2 / Nadiia Lapshynska, 5.4.3 / Tufan, 5.4.4 / UCG, 5.5.1 / Morsa Images, 5.5.2 / Peter Dazeley, 5.6.1(a) / Courtneyk, 5.6.1(b), 5.7.1 / Drazen_, 5.7.2 / Teelapon Hromchit, 5.7.3 / Searsie, 5.8.1 / Courtneyk, 5.9.1 / John M Lund Photography Inc, 5.11.1 / VectorMine, 5.11.4 / StockNinja, 5.12.1 / CSA Images, 5.12.2(a) / Illustrator de la Monde, 5.12.2(b) / UnitoneVector, 5.12.2(c) / AtomicCupcake, 5.12.2(d) / A-Digit, 5.12.2(e) / Kbeis, 5.12.2(f) / Axllll, 5.12.2(g) / Studiostockart, 5.12.2(h) / Marlanu, 5.12.2(i) / Visual Generation, 5.12.4 / Jameslee1, 5.13.1 / Steve Christo - Corbis, 5.13.2 / Tom Werner, 5.14.1 / Bloomberg, 5.15.1 / Gavin Guan, Options Focus Areas Opener / Priyanka Gupta, Chapter 6 Icon / Andrew Merry, 6.1.1(a) / Mochammad Hendrianto, 6.1.1(b) / Genestro, 6.1.1(c) / Coquet Adrien, 6.1.1(d) / Santi Visalli, Final pages • Cambridge University Press & Assessment © Khair, et al 2026 • 978-1-009-78780-2 • (03) 8671 1400

637

Acknowledgements

6.1.2 / Frédéric Soltan, 6.2.2 / Pool/Pool, 6.2.4 / Visual Capitalist, 6.3.1 / Tamati Smith, 6.3.2 / Andrew Merry, 6.3.3 / The Denver Post, 6.4.2 / NurPhoto, 6.5.1 / Nerthuz, 6.6.1 / Pop_Jop, 6.6.4 / Fairfax Media Archives, 6.8.1 / SOPA Images, 6.8.2 / Claylib, 6.9.1 / Nextrecord Archives, 6.10.1 / Graphic Stock, Chapter 7 Icon / Maskot, 7.1.1 / Chameleonseye, 7.1.2 / Trevor Williams, 7.2.1 / Westend61, 7.2.2 / Witthaya Prasongsin, 7.3.1 / Nitat Termmee, 7.3.3 / Fotografia Inc., 7.4.1 / Catherine Falls Commercial, 7.4.3 / CraigRJD, 7.5.2(1) / Rawf8, 7.5.2(2) / Issarawat Tattong, 7.6.1 / Muhammad Aqib, 7.6.3 / Bloomberg, 7.6.5 / Andrii Dodonov, 7.7.1 / PixelsEffect, 7.7.3 / Oscar Wong, 7.8.2 / Olga Pankova, 7.8.4 / Images By Tang Ming Tung, 7.8.6 / Tfilm, 7.9.1 / Israel Sebastian, 7.9.3 / Jacob Wackerhausen, 7.9.5 / Brothers91, 7.10.1 / Jason Edwards, 7.11.1 / Bloomberg, 7.12.1 / undefined undefined, Chapter 8 Icon / NurPhoto, 8.1.1 / Ina Fassbender, 8.1.2 / Jamie Grill, 8.2.1(1) / Izhar Khan, 8.2.1(2) / Daniel Knighton, 8.2.1(4) / Stefano Guidi, 8.2.3 / DBenitostock, 8.3.1(b) / Darrenplatts123, 8.3.1(d) / Yagi Studio, 8.4.1(a) / Olga Yastremska, 8.4.1(b) / Don Heiny, 8.4.1(c) / J. Michael Jones, 8.4.3 / Peter Cade, 8.4.4 / PaoloGaetano, 8.6.1 / David Thomson, 8.6.3 / Olga Pankova, 8.6.4 / Adsr, 8.7.3 / Scott Taetsch, 8.7.6 / Robert Alexander, 8.7.8 / Fabrice Coffrini, 8.7.10 / Boonchai Wedmakawand, 8.8.1 / Klaus Vedfelt, 8.8.2 / Mikimad, 8.8.3 / Emanuele Cremaschi, 8.9.1 / Milorad Kravic, 8.10.1 / Andriy Onufriyenko, 8.10.4 / Bloomberg, 8.11.1 / Vladimir Rys, 8.11.3 / Tommy Cheng, 8.12.1(b) / Anadolu, 8.12.2 / Big_Ryan, p.465 / Nora Carol Photography, 8.14.1 / James D. Morgan, 8.15.1 / lynnebeclu, 8.15.2 / Graphic Stock, Chapter 9 Icon / MoMo Productions, 9.1.2 / Kilito Chan, 9.2.1 / Courtneyk, 9.2.2 / MoMo Productions, 9.3.1 / Paperkites, 9.3.2 / Thurtell, 9.4.1 / Phototrip, 9.4.2 / Creative Images Lab, 9.5.1 / Jacob Wackerhausen, 9.6.1 / Witthaya Prasongsin, 9.6.2 / Olga Pankova, 9.6.3 / Ommaphat Chotirat, 9.7.1 / Ridofranz, 9.7.2 / Andresr, 9.8.1 / James D. Morgan, 9.11.1 / Haris Mustofa, Chapter 10 Icon / Sadeugra, 10.1.1 / Fotosearch, 10.2.1 / Derya Mercan, Activity 10.2.1(a) / Panchanok Premsrirut, Activity 10.2.1(b) / Booblgum, Activity 10.2.1(c) / Daniel Slim, 10.2.5 / LeoPatrizi, 10.2.6 / CasarsaGuru, 10.3.1 / Carol Yepes, 10.3.3 / ImagePatch, 10.4.1 / Imamember, 10.4.3 / Chris Ryan, 10.5.1 / Angel_1978, 10.5.4 / P_Wei, 10.5.5 / The Sydney Morning Herald/KATE GERAGHTY, 10.6.2 / PDerrett, 10.7.4 / David Espejo, 10.8.1 / Fairfax Media Archives, 10.8.4 / Narumon Bowonkitwanchai, 10.9.1 / Amr Bo Shanab, 10.9.3 / Fertnig, 10.10.1 / Olga Yastremska, 10.11.1 / Justin Paget, 10.11.2 / Illustrator de la Monde, 10.12.1 / Stígur Már Karlsson/Heimsmyndir, 10.12.2 / Fairfax Media Archives, 10.13.1 / Katharina13, 10.13.2 / Irwan_Nartadi170, Chapter 11 Icon / Roni Bintang, 11.1.1 / LeoPatrizi, 11.1.2 / Klaus Vedfelt, 11.2.1 / Jenny Evans, 11.2.4 / FilippoBacci, 11.2.6 / Amr Bo Shanab, 11.3.1 / Jose Carlos Cerdeno, 11.3.2 / Jenny Evans, 11.3.3 / Fiordaliso, 11.3.4 / Matt Cardy, 11.3.5 / Sean Gallup, 11.3.6 / VectorInspiration, 11.4.1 / Imagestock, 11.4.4 / STR, 11.5.1 / Erhui1979, 11.6.1 / Boonchai Wedmakawand, 11.6.2 / South_Agency, 11.7.1 / Alberto Menendez Cervero, 11.7.2 / Maskot, 11.7.3 / Denizunlusu, 11.8.1 / Paperkites, 11.8.2 / Dougal Waters, 11.9.1 / Jacob Wackerhausen, 11.9.2 / John W. Banagan, 11.10.1 / SOPA Images, 11.11.1 / Zhenya Symonishen, Chapter 12 Icon / PT Stock, 12.3.3 / Katharina13, 12.2.1 / Jacobs Stock Photography Ltd, 12.4.1 / Pakin Songmor, Table 12.4.1(a) / OsakaWayne Studios, Table 12.4.1(b) / Constantine Johnny, Table 12.4.1(c) / Carol Yepes, Table 12.4.1(d) / Tim Robberts, Table 12.4.1(e) / MirageC, Table 12.4.1(f) / Jose carlos Cerdeno, 12.4.2 / Oscar Wong, 12.5.1 / Mustafahacalaki, 12.6.1 / Photobyphotoboy, 12.7.1 / Nanci Santos, 12.8.1 / J_art, 12.8.2 / Issarawat Tattong, 12.9.1 / Andriy Onufriyenko, 12.10.1 / Prostock-Studio, 12.10.2 / Nadzeya Haroshka, 12.10.3 / Rzelich, 12.11.2 / Roberto Moiola/Sysaworld, 12.11.3 / Damircudic, 12.12.1 / Frank Bienewald, 12.12.2 / Westend61, 12.12.3 / Pixdeluxe, 12.13.1 / PT STOCK, 12.13.3 / Twenty47studio, 12.13.5 / Alexander Spatari, 12.13.6 / Handout, 12.14.1 / Oxana Plotnikova, Chapter 13 Icon / Natalia Hoffmann, 13.2.2, 13.2.3 / Mariia Morozova, 13.2.5 / Solskin, 13.3.2 / Lock Stock, 13.4.1 / Nadia_Bormotova, 13.4.2, 13.4.3, 13.4.4, 13.4.5, 13.4.6, 13.4.7 / Bsd studio, 13.4.9, 13.4.10, 13.4.11, 13.4.12, 13.4.13 / SimpleImages, 13.4.14 / Fiordaliso, 13.5.1 / Kseniya Ovchinnikova, 13.5.2 / We Are, 13.5.3 / Richard Drury, 13.5.4 / Xavier Lorenzo, 13.5.5 / EyeWolf, 13.6.1 / Busá Photography, 13.6.2 / Andrew Merry, 13.6.3(a) / Pamspix, 13.6.3(b) / Kmatta, 13.6.4 / Jordi Mora igual, 13.7.1 / Sue Thatcher, 13.7.2 / Fotostorm, 13.7.4 / Klaus Vedfelt, 13.7.5 / CandyRetriever, 13.7.6 / ljubaphoto, Table 13.7.2(a) / Thai Liang Lim, Table 13.7.2(b) / Pete Muller, Table 13.7.2(c) / Maroke, Table 13.7.2(d) / Hispanolistic, Table 13.7.2(e) / Alicia Fdez, Table 13.7.2(f) / Catherine Ledner, Table 13.7.2(g) / Staticnak1983, Table 13.7.2(h) / Mikroman6, 13.8.1 / Jakub Zerdzicki, 13.8.2 / Lisa Maree Williams, 13.9.1; Reproduced with the permission of Effie Zahos, 1.1.1; Reproduced with the permission of Afterpay, 1.5.1; Reproduced with the permission of Stripe Inc., 1.5.2(1); Used from Square, 1.5.2(2); Reproduced with the permission of Xavier O’Halloran, 1.17.3; Reproduced with the permission of Ecstra Foundation, 1.20.1; FlixPix/Alamy, 2.5.1; China Government, Public domain, via Wikimedia Commons, 2.9.7; Adapted from the © Reserve Bank of Australia, 2.11.4; Adapted from the © Reserve Bank of Australia, The Business Cycle, CC BY 4.0 Licence, 2.11.5; Reproduced with the permission of Bega Circular Valley, 2.11.7; Based on free material from GAPMINDER.ORG, CC-BY LICENSE,

SA PA M P G L ES E

638

Acknowledgements

SA PA M P G L ES E

2.13.2; Adapted from the © Reserve Bank of Australia, Graphs on the Australian Economy and Financial Markets, CC BY 4.0 Licence, 2.14.2, 2.14.3, 2.14.4, 2.14.5, 2.15.2; Adapted from the Australian Bureau of Statistics © Commonwealth of Australia and the © Reserve Bank of Australia, The Australian Economy and Financial Markets, 2025, 2.15.3; Used from the © Reserve Bank of Australia, What is Monetary Policy?, CC BY 4.0 Licence, 2.16.4; Used from the © Reserve Bank of Australia, Causes of Inflation, CC BY 4.0 Licence, 2.16.6; Adapted with the permission of the e61 Institute from ‘The Effect of the COVID-19 Recession on the Youth Labour Market in Australia’ (2022) by Dan Andrews, Josephine Auer, Matthew Elias, Gianni La Cava and Leah Mercie; Used from Canva/ The Conversation, Unpaid ‘women’s work’ is worth $427 billion, new research shows. See how much your unpaid labour is worth, November 2, 2025, 2.18.1; Reproduced with the permission of Jahin Tanvir, 3.1.1; Reproduced with the permission of Pepe Saya, 3.2.2, 3.2.3(a), 3.2.3(b); Reproduced with the permission of Elevate Education Consultancy, 3.3.3(a); Reproduced with the permission of Zaynab Salim, 3.3.3(b); Reproduced with the permission of Rashays, 3.6.4; Reproduced with the permission of © Pablo & Rusty’s Coffee Roasters, 3.7.49(a), 3.7.4(b), 3.7.4(c); Reproduced with the permission of LUSH, 3.9.2; Reproduced with the permission of Qantas Airways Limited, 3.9.3; Reproduced with the permission of The Bread & Butter Project, 3.9.4; Reproduced with the permission of © Pablo & Rusty’s Coffee Roasters, 3.9.5; Reproduced with the permission of Who Gives A Crap, 3.9.6; Reproduced with the permission of Bunnings, 3.9.7; Reproduced with the permission of Chebbo, 3.12.2; Reproduced with the permission of MYBOS, 3.13.2(a), 3.13.2(b); Reproduced with the permission of Leah Bennett, 3.14.3; Boston Spa School, CC BY-SA 3.0, via Wikimedia Commons, 4.2.1; Jim McEwan/Fairfax Media, 4.6.2; Reproduced by permission of © Rule of Law Education Centre 2026, 4.7.2, 4.9.2; State Library of Queensland, Public domain, via Wikimedia Commons, 4.10.1; Vandyck Photographers, Public domain, via Wikimedia Commons, 4.10.2; Timeshift9 at en.wikipedia, CC BY 2.0, via Wikimedia Commons, 4.12.2; JJ Harrison, CC BY-SA 3.0 via Wikimedia Commons, 4.12.3; Used from the © State of New South Wales through the Parliament of New South Wales, 4.13.1; Adapted from the Department of Foreign Affairs and Trade website – www.dfat.gov.au, CC BY 4.0, 6.2.1, 6.6.2, 6.6.3, 6.6.4; Used from the Australian Bureau of Statistics © Commonwealth of Australia, 6.4.1; Used from the © Reserve Bank of Australia, 6.4.4, 6.4.5; Used from Australia in the World - 2025 Snapshot © Commonwealth of Australia 2025, represented by the Department of Foreign Affairs and Trade, 6.6.5; David Shankbone, CC BY-SA 3.0, via Wikimedia Commons, 6.4.3; Justin McManus/The Age, 6.8.3; Reproduced with the permission of © 2026 Jim’s Group Pty Ltd, 7.5.2(c); Brian Teutsch, CC BY 2.0, via Wikimedia Commons, 8.2.1(3); Petar Milošević, CC BY-SA 4.0, via Wikimedia Commons, 8.3.1(a); Petar Milošević, CC BY-SA 4.0, via Wikimedia Commons, 8.3.1(c); adsR/Alamy, 8.7.1, 8.7.5; AJ Pics/Alamy, 8.7.7; Imago/Alamy, 8.9.2; Ray Tang/Shutterstock, 8.9.3; Con Chronis/AAP Image, 8.11.5; Reproduced with the permission of Dr Karl Kruszelnicki, 8.11.4; Easy On The Eye image library/Alamy, 8.11.6; Landmark Media/Alamy, 8.12.1(a); Andrii Shevchuk/Alamy, 8.12.1(c); Reproduced with the permission of Guzman y Gomez, 9.1.1, 9.1.3; Reproduced with the permission of ASX, 9.10.1; Courtesy of ABC News, 10.3.5; Reproduced with the permission of the State Government of Victoria, 10.5.2; Kate Geraghty/Fairfax Media/The Sydney Morning Herald, 10.6.1, 10.6.2; Stephen Dwyer/Alamy, 10.7.1; Yu Chu Chin, CC BY-SA 4.0, via Wikimedia Commons, reproduced with the permission of Charlotte Walker, 11.5.3; Reproduced with the permission of Clean Up Australia, 11.7.4; Reproduced with the permission of Alec Khalaf, 12.1.1, 12.1.2, 12.1.3(a), 12.1.3(b), 12.1.3(c), 12.1.3(d); Reproduced with the permission of Kobi Weiss, 13.1.1. Data: Used from the Australian Bureau of Statistics © Commonwealth of Australia, Case Study 1.10.2; Used from the World Health Organization, CC BY-NC-SA 3.0 IGO, p.135; Used from World Bank, CC BY 4.0, p.135; Used from UNICEF, p.143; Adapted from the Department of the Treasury © Commonwealth of Australia, CC BY 4.0, 2.17.3; Used from the Australian Bureau of Statistics © Commonwealth of Australia, Table 4.9.1; Used from Jobs and Skills Australia © Commonwealth of Australia, 5.6.2, 5.6.3; Used from © International Bank for Reconstruction and Development / The World Bank, 6.2.3; Used from the Productivity Commission © Commonwealth of Australia, Table 6.8.1; Reproduced with the permission of Buckland, A., Duncan, A., Farhad, M., Hailemariam, A., Kiely, D., Sanchez Arenas, V., and Sotirakopoulos, P. Australia’s Trade and Economic Relationship with China: Benefits to Australian Households. Bankwest Curtin Economics Centre, June 2024, p.7-8 [Report available online at https://bcec.edu.au/assets/2024/06/ACBC-Benefit-to-HouseholdsNational-Report.pdf], 6.6 Starter Activity; Used from the Australian Bureau of Statistics © Commonwealth of Australia and the © Reserve Bank of Australia 6.7.2; Used from the Australian Bureau of Statistics © Commonwealth of Australia, 7.3.6.

639

Acknowledgements

Text: Used from ‘Financial illiteracy: The hidden threat to Australia’s economic future’ by Loretti Isabella Dobrescu and Alberto Motta, University of Padua, published by Business Think, p.78; Used from ‘An Inquiry into the Nature and Causes of the Wealth of Nations’ by Adam Smith, W. Strahan and T. Cadell, London, p.89; Used from © Australian Taxation Office for the Commonwealth of Australia, p.121; Used from © The Reserve Bank of Australia, CC BY 4.0, p.143; Used from © Organisation for Economic Co-operation and Development (2024), Understanding infrastructure market capacity constraints in Australia, www.oecd.org/content/dam/oecd/en/publications/ reports/2023/04/providing-local-actors-with-case-studies-evidence-and-solutions-places_20b385f4/ understanding-infrastructure-market-capacity-constraints-in-australia_ee35e44a/fa8dbdbf-en.pdf, p.145; Used from Franklin D Roosevelt, p.150; Reproduced with the permission of the e61 Institute from ‘The Effect of the COVID-19 Recession on the Youth Labour Market in Australia’ (2022) by Dan Andrews, Josephine Auer, Matthew Elias, Gianni La Cava and Leah Mercie, p.154; Used from ‘An Inquiry into the Nature and Causes of the Wealth of Nations’ by Adam Smith, W. Strahan and T. Cadell, London, p.155; Used from the © Commonwealth of Australia, Department of Finance, p.299; Content courtesy of CVGT Employment. Source: Why Work? 10 Benefits of Being Employed’ (cvgt.com.au), 5.3.2; Reproduced with the permission of Nike, 8.7.9; Reproduced with the permission of Kobi Weiss, ‘Kobi’s story’, p.580-581.

SA PA M P G L ES E

640

NSW Commerce 7-10 Syllabus (2024) © NSW Education Standards Authority for and on behalf of the Crown in right of the State of New South Wales, 2025. Every effort has been made to trace and acknowledge copyright. The publisher apologises for any accidental infringement and welcomes information that would redress this situation.