There is fear that AI will cause mass unemployment. This will not happen. The study of Economics is based on the premise that human wants are endless. For as long as people continue to want something, there will be other people willing to satisfy those wants (for a price). This will go on to the end of time. We have experienced change before. When heavy machinery replaced manual labour, people feared jobs would disappear forever. When telephone exchanges were automated, switchboard operators were no longer needed. When electricity generation became centralised, many local power station jobs vanished. Typing pools faded away once computers and keyboards became ubiquitous. Computers themselves were once expected to cause huge redundancies. Unemployment did not permanently rise because of these changes. The reason is simple. Technology changes the nature of jobs. It enables businesses to be more productive. It enables them to perform tasks that were previously too slow, too costly or simply impossible. Some tasks will disappear, especially repetitive (and boring) ones. New and more interesting tasks will materialise. AI can be wrong. It can miss context. It does not replace human responsibility, common sense or experience. It cannot feel empathy. Psychology plays a vital role in accounting. Accountants cannot give the best advice if they do not know their clients well. AI cannot “feel”. Make no mistake. Even with its flaws, AI is sensational. I use it daily. It will soon enhance production, communication and service to levels previously beyond reach. Exciting times.

The ATO and Fair Work Australia are investigating sham contracting, which is when employers classify workers as contractors when they are actually employees. The penalties are savage, up to $19,800 for individual employers, $99,000 for businesses with 15 or fewer employees and, for larger business, the greater of $495,000 or three times the underpaid amount. In addition, employers risk penalties such as PAYG withholding and super guarantee penalties. Workers who are treated as contractors might be deprived of super, overtime, penalty rates and leave entitlements. Sometimes the employer simply does not want all the paperwork and pays a contract rate high enough to cover all these benefits (and more). The bad news for those employers is that all the penalties still apply. Data-matching, tip-offs and complaints from sham contractors increase the risk of detection. The best advice we can give to businesses is to take this very seriously. Assess whether your contractors are really in the nature of employees. Are the paid on an hourly or weekly rate or are they paid to produce a result? Who controls when and how they work? Can the contractors delegate or sub-contract? Who carries the risk of defects? Who supplies the major tools (minor tools do not usually influence the outcome)? Seek advice.  If there is a significant risk of your contractors being classified as employees, make them employees. Eliminate the risk. It is not worth it. If you do choose to accept the risk, make sure you stay very friendly with your contractors. A falling out could result in a complaint to the ATO and Fair Work Australia. Once this happens, an audit will investigate every one of your workers, not just the one who complained. It does happen.