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CHOICE voting member briefings 2016/2017

Thanks to everyone who was able to join us for our Annual General Meeting on 23 November, in person or via webcast. We also held our final Board meeting for the year that day, so this final Board briefing for the year is an update on both events.

Annual General Meeting

Our AGM agenda was relatively straightforward, with no resolutions on the notice paper other than approval of the minutes of the 2016 meeting.

I reported on our achievements in 2016–17 on behalf of the Board, highlighting some of our significant campaigns wins, the new digital tools that the organisation has built in areas like health insurance, growth in CHOICE membership, and our achievement in becoming carbon neutral.

I also had the privilege of paying tribute to the work of outgoing Chair Nicole Rich, whose final term on the Board ended at the AGM.

In terms of Board elections, I was re-elected to the Board, along with Helen Wiseman and new Board member Alexandra Kelly. Alex is Principal Solicitor of the Financial Rights Legal Centre, so brings strong consumer policy experience, which we knew we'd miss with Nicole retiring.

The Chair of our Finance, Audit and Risk Committee Helen Wiseman presented the financial reports. As explained in my October briefing, we ended 2016–17 with a deficit. Helen explained that CHOICE is in a strong financial position and that the Board has decided to invest some of our cash reserves in the organisation to improve its long-term sustainability, which means that we're willing to entertain deficit budgets for several years. This, as I've said before, will be closely monitored.

Members were obviously keen to understand our thinking and how we're managing the risks of deficit budgets. This was a very constructive discussion, so I'd like to thank those members who contributed to it.

CHOICE CEO Alan Kirkland spoke about how CHOICE work in the past year had fed into Australian Competition and Consumer Commission investigations and enforcement action, including in relation to problems with new cards, airline passenger rights, misleading claims by Nurofen and product safety issues.

He also gave a preview of some changes to CHOICE's logo that the organisation has been working on which will be gradually introduced from early next year.

Board meeting

The major item on our Board agenda was a workshop to kick off the process of reviewing our strategy.

We are in the third and final year of our current strategy, so over the next six months we'll be thinking about what needs to change. In the context of big changes like increasing concerns about energy security and affordability, the arrival of new business models like Amazon, the increasing dominance of mobile devices and the growth of voice-activated technology, we need to make sure that we're doing everything we can to ensure that CHOICE remains relevant and sustainable.

We will be spending more time thinking through the implications of these changes in the new year, and will be inviting input from voting members.

Commissioners from the Australian Securities and Investments Commission (ASIC) meet with the CHOICE Board every year as part of their engagement with major stakeholders. This year we took the opportunity to highlight areas of risk for consumers that we encourage ASIC to monitor, including credit-related risk in the housing market.

Finally, we reviewed financial performance for the first quarter of the financial year. As we have set a deficit budget for 2017–18, we are monitoring income and expenditure carefully. Having said that, the Board was happy with how management has been managing the finances in the first part of the year.

If you have any questions or comments on any of these issues, please feel free to email me.

Kind regards, 

Sandra Davey

Chair of the Board

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This is my second briefing to voting members, covering the Board's meeting of 9 October. I was unfortunately unable to attend this meeting so it was ably chaired by our Deputy Chair, Bill Davidson, who has filled me in on the Board's discussions.

At this meeting, the Board considered our audited accounts for 2016–17, proposals for an intervention in the electricity market, a review of CHOICE's brand and the agenda for our upcoming Annual General Meeting (AGM).

Audited accounts

The Board received a report from Pitcher Partners, who had recently completed the audit of our 2016–17 accounts.

Overall, Pitcher Partners reported that the audit had gone well, with no material adjustments required and no new issues of significance identified. The Board approved the audited accounts so that they could be distributed with the notice of the AGM.

In terms of financial outcomes, the accounts reflect the fact that 2016–17 was a year of growth and investment, with increases in both income and expenditure. The greatest areas of increased investment were in the teams responsible for building and improving digital tools like our website, and in our 'New Things' team, which is charged with experimenting with new ways of helping consumers and new business models to support our purpose.

The bottom line result was a deficit of $0.9m, which would have been $0.4m if not for the effect of a grant received in a previous year. We had reported at the 2016 AGM that we expected to report a break-even result but during the course of the year it became clear to management and the Board that we needed to make an even greater investment in improvement and innovation. The $0.4m deficit, after the effects of the grant, largely represents investment in these areas.

While CHOICE cannot run deficits indefinitely, we are in a situation where we can invest some of the organisation's cash in increasing our impact, and the Board feels that this is what we need to do. We expect that deficits in the short term will result in surpluses in the medium to long term, creating a more sustainable organisation. We started to see some returns in 2016–17, with a 5% increase in revenue, driven in part by growth in memberships.

We ended the financial year with $11.2m, well in excess of the cash reserves floor of $4.7m set by the Board.

The Board is carefully monitoring financial performance in 2017–18 to make sure that our underlying financial position remains sound.

Intervening in the electricity market

Over the past few years, we have adopted the ambitious goal of transforming some markets where consumers are being ripped off because the market is simply broken.

At the start of this year, we identified the electricity market as one in which we might want to intervene and at the Board meeting management presented its analysis of the issues faced by consumers and the opportunities for CHOICE to make a difference.

One clear problem is that even if you want to check if you are on the best deal, this is very hard to do. Some voting members may already have participated in the trial of a new switching service that allows consumers to submit their electricity bill to CHOICE so that we can identify the best deal and then switch providers for the consumer. Having demonstrated that this service is feasible, CHOICE is now planning to launch it for all consumers early in 2018.

This won't, however, fix the very problems that mean that such a service is necessary. Far too many people are on expensive energy deals because the market is too complex to navigate. We are therefore planning to campaign for a range of changes to make it easier for consumers to compare deals and switch retailers, as well as better protection for consumers who don't switch, so that they don't end up being parked on the most expensive deals.

The Board will be excited to see these ideas progress in early 2018.

Brand review

Our marketing team presented on some work they have been doing to review and improve the CHOICE brand. Given the costs and effort involved in making any changes, this is something that we have approached with caution but we now have clear data to demonstrate that there is a problem. When people use some of our products and services – such as the CluckAR free range egg app and our Complane airline complaints tool – most fail to recognise that these have been developed by CHOICE. That means that we're missing an opportunity to build awareness of our work, especially among younger consumers.

As a result, we're considering some changes to make CHOICE stand out more wherever people come into contact with us. This will include a change to our logo and a redesign of our website, apps and magazines. The Board had a look at the proposed changes and was very supportive. They provide a stronger, fresher representation of CHOICE without being a radical departure from our previous logos.

The CHOICE Consumer Insights team is currently testing some of the proposed changes with consumers. Assuming this research finds a positive reaction, the changes will be rolled out gradually, from late 2017.

Annual General Meeting

The Board approved the agenda for our AGM on 23 November, which you will receive within the next week. I hope that you will be able to join us in person or via the webcast. If you have any questions about the AGM, please contact our Company Secretary, Linda Magee, on lmagee@choice.com.au.

New home page

If you have not already checked out the new CHOICE home page, I encourage you to have a look. It does a much better job of presenting everything that CHOICE does, including our campaigns and investigations. It was developed in-house, which demonstrates the benefits of increased investment in our in-house digital team.

If you have any questions or suggestions for the Board or the CHOICE team, please feel free to contact me at sldavey@choice.com.au.

Kind regards,

Sandra Davey

Chair of the Board

It's such a pleasure to send you my first Board briefing as the new Chair of the Board. If you are one of the new voting members whose applications were recently approved by the Board, welcome to the first of these emails that I will be sending following each Board meeting.

I was appointed Chair of the Board with effect from the end of our meeting of 24 July. The vacancy in the role of Chair was created by Nicole Rich's decision to step down after four years in the role. We spent some time at the meeting acknowledging Nicole's significant contribution. Nicole has been an excellent Chair, who has worked hard to build a highly skilled Board with a positive culture. She's also put a lot of time and effort into communicating with voting members and I hope that I can live up to that record. Nicole will remain on the Board until her term as director ends in November.

I have been a member of the Board since 2012, a CHOICE member for more than a decade, and am truly excited about some of the changes that the Board has overseen. Across that time, we have tasked management with working hard to improve the core things that CHOICE does – in particular, the tools, products and services that we provide to members and in many cases now, to the broader Australian community. We have also asked the organisation to experiment with new ways of helping consumers and we're just now starting to see positive results from this work.

Review of 2016–17 performance

Much of our meeting was focused on reviewing the organisation's performance for 2016–17. As part of this, we also reviewed the performance of our CEO, Alan Kirkland.

On balance, the Board considered this to be a strong year, with:

  • some significant campaign wins, with the government agreeing to reform credit card laws and the ACCC investigating consumer guarantees in the new car market, to name a few
  • some new ways of helping consumers launched - including CHOICE.community
  • increased revenue from membership, our CHOICE Recommended licensing scheme and laboratory testing
  • significant reductions in our carbon emissions through improved energy efficiency.

Our net financial result was, however, poorer than budget, with our preliminary results showing a net deficit. While our financial position remains strong, with a healthy level of cash reserves, we will carefully monitor costs over the next year, particularly given that we have decided to budget for a deficit in order to invest some of our cash reserves in growing the organisation. We will be investing in our people, particularly skills and capabilities, and identifying new products and services and new ways to respond to changing demands and expectations from consumers.

The Board was particularly pleased to note the increase in the number of CHOICE memberships, which rose four percent across the year to 182,484, the highest end of year result since 2010. This was a significant improvement, after a number of years of membership being relatively flat. We also know that many other consumer organisations around the world are facing declining memberships, so we commended the CHOICE staff for achieving this result. We are also quietly confident that the transformation initiatives started a couple of years ago are beginning to deliver benefit.

AGM and election

We made a number of decisions that were necessary to get the process for our 2017 Annual General Meeting (AGM) and Board election underway and as I'm facing election this year, I did not participate in these decisions.

The Board completed a detailed skills audit, to identify how the skills currently on the Board map against the skills that we feel are needed to guide the organisation. As a result, the Board identified the following skills as priorities for the 2017 election:

  • High-level financial and risk management skillsbcommensurate with the scale of CHOICE's operations, and the financial strategy and controls that this requires.
  • Demonstrated skills in consumer policy, campaigning and/or similar not-for-profit experience: Demonstrated skills in complex policy or campaigning on consumer rights issues, or relevant experience in similar not-for-profit policy/advocacy environments.
  • Digital products and services: Skills and experience in the development, design and launch of innovative digital products and services.
  • Digital business transformation: Experience in the leadership or governance of organisations requiring major transformation in response to technological change and digital disruption.

Candidates will be asked to identify how their skills and experience match one or more of these priorities and they will be interviewed by a Nominations Committee, which will prepare information that will be provided to assist you in the voting process if an election is required. If you have skills in one of these areas and are interested in standing for the Board, please contact our Company Secretary, Linda Magee at lmagee@choice.com.au. Nominations close on 25 August 2017.

The Board also approved the preliminary notice of AGM that was sent out on 27 July, and agreed that the election should be through online voting (with paper ballots available on request). We also agreed that the AGM should be webcast so that members who are unable to attend in person can still participate.

The Board appointed a Nominations Committee to assist with the election process if required. This would normally be chaired by the Chair of the Board but seeing as I am standing for election, our Deputy Chair, Bill Davidson, will fulfil this role. The other members will be outgoing Chair Nicole Rich, and voting member Ian Jarratt. (Ian will be well-known to some of you as a champion of unit pricing, who was awarded the Medal of the Order of Australia in January.)

New voting members

Around the middle of each year, we invite members who have been with us for over three years, along with CHOICE Plus and CHOICE Premium members, to apply for voting membership. Over 340 people responded to this invitation this year and we were pleased to approve these applications, which come from right across Australia, representing a broad range of backgrounds.

Campaigns strategy

Campaigning for change in areas that matter for consumers has always been an important part of CHOICE's role, so the Board was pleased to review our Campaigns Strategy for 2017-18. This is an ambitious strategy that will see us push for improvements to the Australian Consumer Law, especially in the area of product safety. CHOICE's recent investigation of problems with the Takata airbag recall highlights just how critical these changes are. We will also campaign for improved consumer protection in banking, insurance, superannuation, air travel, food labelling and tenancy. The Board was particularly pleased to see a commitment to working with disability organisations to identify any shonky sales practices that may emerge as the National Disability Insurance Scheme rolls out.

We have a massive year ahead, with some big plans for improving our impact for the benefit of consumers. I look forward to keeping you up to date on the work of the Board and of course, if you have any questions or suggestions, please feel free to contact me at sldavey@choice.com.au.

Kind regards, 

Sandra Davey

Chair of the Board