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CHOICE voting member briefings 2019

CHOICE voting member briefing October 2019

 CHOICE Board Chair Sandra Davey

I hope that you are enjoying the bursts of spring weather that most of the country has enjoyed. But I also know many people are living through prolonged drought and that this summer will bring further water restrictions and a high-risk bushfire season in some parts of the country, so I extend best wishes and thoughts to any of you facing these threats.

I'm pleased to be back in touch with an update on our most recent Board meeting. Since I last briefed you, the Board met on 30 September and discussed:

  • our audited financial statements for 2018–19 
  • our campaigns strategy for 2019–20 
  • the Uluru Statement from the Heart 
  • information security 
  • CHOICE's 60th anniversary 
  • the Annual General Meeting 

Audited financial statements for 2018–19

The Board received a report from our auditors, Pitcher Partners, along with draft financial statements. Our Finance, Risk and Audit Committee had earlier met with the auditors to discuss the reports and outcomes of the audit process. 

You may recall from previous updates that several years ago, after successive above-budget surpluses, we recognised the need to make some strategic investments in the organisation to improve our future sustainability. This has involved several years of planned deficit budgets, using some of the cash we had built up in the preceding years. Over the past few years, this approach has allowed us to grow our profile as a campaigning organisation, improve choice.com.au, update our technology platforms, test new ways of assisting consumers and importantly work with our people, uplifting capability and transitioning our skills base to what we need for the next decade.

During 2018–19, our revenue grew by 3.5%, supported by growth in each of our key revenue sources, while expenses grew by 2%. We ended 2018–19 with a deficit of $1.78m, of which $1.53m was from operating activities and $0.25m was due to expenditure against a grant received in a prior year. This was consistent with the budget approved by the Board. 

We will report in more detail on our financial results and position at the Annual General Meeting but it's important to note that we remain in a strong financial position, with $9.63m in cash and term deposits as at 30 June. This provides a substantial buffer above the cash reserves floor set by the Board, which we review regularly. We're on track to report a significantly lower deficit in 2019–20, as we begin to realise the benefits of our investments across the organisation. 

Campaigns strategy for 2019–20 

Our Director of Campaigns and Communications, Erin Turner, presented our strategy for campaigning for better consumer protection in a range of areas. While this will evolve during the year in response to opportunities, it's important we set clear priorities and objectives at the start of the year.  

The key priorities in the strategy are: 

  • better and safer products – with a focus on the introduction of a new law to require that products sold in Australia are safe 
  • health care – in particular, addressing out of pocket costs and improving the health insurance system 
  • consumer rights – including campaigning for manufacturers to improve their policies on replacing lemon cars 
  • finance – with a focus on key recommendations of the Banking Royal Commission 
  • food – through ensuring that labels include information on added sugar and that the Health Star Rating system is improved 
  • travel – including laws to protect against unfair contract terms in insurance. 

As opportunities present, the team will also work on the funeral industry, renting and consumer data rights, as well as superannuation through our new partnership with Super Consumers Australia. 

The Board is keen to see that the organisation is able to engage a broad range of consumers – including younger consumers – through its campaigning work and will be receiving regular updates on the progress of the strategy through the year. 

The Uluru Statement from the Heart 

It is critical to our purpose as an organisation that we are able to address the needs of Aboriginal and Torres Strait Islander consumers and with this in mind, the Board asked management at our July meeting to consider the issue of whether CHOICE should endorse the Uluru Statement from the Heart

As many of you will know, the Uluru Statement was endorsed by a gathering of 250 Indigenous leaders at Uluru in May 2017, as the culmination of a process that included 12 First Nations Regional Dialogues held across the country over 18 months. While its content has been misrepresented in some commentary, in reality it called for three simple things: 

  1. Voice: Constitutional change to establish a First Nations Voice to the Parliament.
  2. Treaty: A Makarrata Commission to supervise a process of agreement-making between Aboriginal and Torres Strait Islander people and governments.
  3. Truth: For the Makarrata Commission to oversee and facilitate a process of truth-telling about the past.  

The Board was pleased to join many other organisations in endorsing the Statement, as a powerful symbol of our commitment to working in genuine partnership with Aboriginal and Torres Strait Islander communities. 

Information security 

Given our role as a consumer advocate and the amount of member data that we handle, effective information security is of paramount importance to CHOICE. In 2018 we employed our first Chief Data and Technology Officer, to lead our overall technology strategy, including information security. 

The Board received a briefing from Will Walker, our new CDTO, on progress in identifying and addressing information security risks. We recognise that while it's impossible to completely eliminate information security risks, we need good systems for monitoring, mitigating and responding to them. This will require constant investment in improving our core technology and monitoring through our risk register. We were reassured by the information provided in the briefing and will oversee progress through our Technology and Data Committee and regular updates to the Board.  

CHOICE's 60th anniversary 

In exciting news, we've begun preparations for celebrating our 60th anniversary. Can you believe it … 60! There are two dates to mark – the formation meeting of the Australian Consumers' Association in September 1959, and the first edition of our magazine in April 1960. We are planning for the public celebration of our work to peak around March–April next year and have a range of activities planned in the lead-up. As a voting member, you'll shortly receive a survey that will help us to identify some of the most important events and achievements from CHOICE's history. We'd just love to hear your thoughts and look forward to lots of responses. 

The Annual General Meeting 

We approved the formal notice of our AGM, which you will receive in the next few weeks. It will be held in Sydney at 6pm on Thursday 28 November and for Members who aren't able to attend in person you'll be able to participate via a webcast.

The AGM will be preceded by a member forum for people attending in person. 

The Board was recently advised that the number of nominations for the Board equalled the number of vacant positions, so no election will be required. The names of the successful candidates will be announced at the AGM. 

I hope you found this briefing useful. The Board will next meet on 28 November, so I'll be back in touch with an update after that.

As always, I love hearing from you so please email me if you have any questions, suggestions or thoughts.

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board


CHOICE voting member briefing August 2019

CHOICE voting member briefing August 2019

 CHOICE Board Chair Sandra Davey

A warm welcome to voting members wherever you may be in August :) It's lovely to be back in touch with an update from the most recent Board meeting. I'd also like to extend a special welcome to our 448 new voting members.

Since I last briefed you, the Board met on 29 July and discussed:

  • CHOICE's performance during 2018–19
  • the CEO's annual performance review
  • preparations for our election and Annual General Meeting
  • what we know about Australian consumers
  • CHOICE's priorities for the first half of 2019–20

CHOICE's performance during 2018–19

We reviewed some detailed analysis prepared by management on CHOICE's progress against our strategy and targets in 2018–19.

A standout area of performance was in our campaigning work, where we helped win important changes for consumers including:

  • new default prices in the electricity market that will stop millions of consumers from being ripped off by confusing pricing
  • increased penalties for big banks and companies that break consumer laws
  • new laws on superannuation to crack down on underperforming funds and improve insurance within super
  • federal laws that require gift cards to last for at least three years.

We also saw some of our work in previous years result in fines for companies that had broken the law – including a $1.95m fine for Jetstar for misleading customers about their rights to refunds and Pental for making misleading claims about White King 'flushable' wipes.

Although we're doing really well with campaign wins and our advocacy work, progress against our goal to grow the number of people who connect with us online through digital channels like choice.com.au was more challenging. This was largely due to increased competition for web traffic from commercial comparison sites.

During the year, we reorganised our editorial teams to improve the content that we publish to help consumers, and to ensure that we publish it in ways that reaches more people. By the end of the year, this was bearing fruit, with traffic to choice.com.au growing year-on-year. This has been a challenging area for us but I'm really pleased to say we're seeing wonderful progress and we're particularly delighted with our new managing editor Margaret Rafferty.

In terms of financial performance, our draft results show that we ended the year within our budgeted deficit. Longer term voting members will remember that after some years of building very healthy cash reserves, we commenced a cycle of active investment in the business starting a few years ago and which involves running planned deficit budgets over several years. 2018–19 was the peak of this period of investment, with a planned deficit of $1.6m (excluding some adjustments for revenue received in prior years). While the management team had to deal with some unexpected events during the year, including the decision to shut down our Transformer energy switching service, careful management of costs have kept us within the budgeted deficit.

We were pleased to see healthy overall revenue growth, supported by strong growth in revenue from our CHOICE Recommended licensing scheme and modest growth in membership revenue. It's important to note that we made deliberate decisions during the year to forego some revenue from CHOICE Recommended in order to protect CHOICE's reputation - for example, we were not willing to recommend financial products associated with businesses that had performed poorly before the banking royal commission. Without these important decisions, our deficit would have been lower. Despite the deficit, our cash balance at the end of the year remained strong, with a healthy margin over the floor set in our cash reserves policy. We will of course provide more detailed information on our financial results once our accounts have been audited.

Board election and AGM

Under our constitution, three positions on the Board fall vacant each year. Before calling for nominations, the Board is required to identify the most important skill gaps that we need to fill, in order to ensure that we can govern the organisation effectively.

Following a detailed skills audit, the skills that are priorities for this year's election are:

  • data analysis and digital marketing

  • high-level strategic and commercial operations

  • policy, campaigning and/or not-for-profit experience

  • investment capability.

By now you will have received a preliminary notice of our AGM from our company secretary Sarah Coombs, which includes the call for nominations for election to the Board. If you believe you have the skills we are looking for, please contact Sarah for a candidate's pack at companysec@choice.com.au.

We also approved arrangements for the AGM, which will be held on Thursday 28 November in Sydney. As usual voting members who live outside Sydney or are unable to attend in person will be able to join the meeting via webcast. We had active participation from members on the webcast last year with some excellent questions so I encourage you to join us on this channel if you can't attend in person.

What we know about Australian consumers

We had a particularly interesting and detailed session around the current state of our data on the needs of Australian consumers, including people who visit choice.com.au and our members. Voting members sometimes ask me about the demographic profile of our members, so I thought I'd share a few interesting points:

  • 66% of Australians were aware of CHOICE at our last measurement – which is higher than the rate of awareness of the ACCC. While this awareness is weaker among younger generations, 48% of millennials (born 1981–96) are aware of CHOICE.

  • Our membership base skews older (bet you didn't know that!), with 32% of members aged 65 or older (compared to 16% for the general population).

  • We have a healthy distribution of members across the country, including slight over-representation in rural and regional areas (which I just love).

  • When we ask consumers which product and service decision they find most complex, health insurance tops the list, followed by superannuation, mortgages and energy.

  • Although appliance reviews are still the main reason that people join CHOICE, our investment in helping consumers with decisions about services has helped to make health insurance the number three category for attracting new members. (It's increasingly the case that the complexity in decision-making and choice is transitioning from products such as appliances to services.)

There is a lot of work underway to improve access to data, so that the decisions that staff make day-to-day are informed by information on what consumers need from CHOICE. This includes an initiative to improve the way we collate and analyse the feedback that we are constantly collecting through surveys on our website and contacts with our customer service team.

Priorities for the first half of 2019–20

The Board sets three to four high-level priorities for each six-month period. For those interested, we have been using a goal setting framework called OKRs (Objectives and Key Results), initially established by Intel but which has gained enormous traction over the past decade. For the first half of 2019-20, these involve:

  • growing income from subscribers and supporters

  • testing a new model of membership that drives long-term connection to CHOICE

  • testing new ways of helping consumers in services markets

  • achieving better protection for consumers of mortgage brokers.

We spent some time discussing the initiative to test a new model of membership, which we see as fundamental to the sustainability of CHOICE. Just as most of our voting members support us because they believe in the importance of our organisation, we want new members to understand that we are more than just a magazine or product review website. We want to test a model that recognises the importance of everything that CHOICE does in building long-term connections with members. This will involve giving greater prominence to other areas of our work – including our campaigns and investigative journalism.

I hope you found the briefing useful. I'll be back in touch in October with an update in the lead-up to our Annual General Meeting.

As always, I love hearing from you so please email me at sldavey@choice.com.au if you have any questions or suggestions.

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board


 CHOICE Board Chair Sandra Davey

At our Board meeting on 27 May, we discussed:

How we are tracking

We received a range of reports on how we're tracking against our targets and budget for 2018–19.

Under our new strategy, we track CHOICE's performance in three key areas: our impact, our online audience and our revenue.

The key way we track our impact is by the number of wins we help to achieve for consumers. On this measure, we've had a really solid year. Several significant pieces of legislation were passed in the final weeks of the last parliament, including laws to require electricity companies to offer better default prices, stronger obligations on financial institutions to make sure their products are fit for consumers, and powers for ASIC to intervene to curb the sale of dangerous financial products.

To help us grow the number of people who regularly visit choice.com.au, we made a number of changes to our editorial teams in 2018. Hopefully you will have gradually seen us publishing a broader range of articles both online and in our magazine. These changes are starting to have an effect, helping us to grow the visitors to our website, which is important to our sustainability.

Our revenue for the year is not as strong as we had hoped but we are expecting to end 2018-19 with modest growth, year on year.

We are forecasting to end the year with a deficit of around $1.8m, which is broadly in line with our budget and the intentional plan behind the deficit. Longer term voting members may recall that we are in the final stages of several years of deep investment in the organisation, which involves using some of our cash reserves to help the organisation to grow in the areas that are important to our future sustainability. Our cash reserves continue to remain at a healthy level and we expect our budget to move back into surplus within the next few years.

Priorities for 2019–20

Over the past few years we've moved away from setting a detailed annual business plan to setting three to four major priorities for each six-month period, to focus the attention of the organisation on the most important things that we need to achieve.

The management team presented our proposed priorities for the first half of 2019–20, which had been informed by a joint Board-management strategy workshop held in early April. Our priorities focus on:

  • improving subscriptions
  • reimagining membership
  • testing new ways of helping consumers in services markets
  • improving protection for consumers who seek assistance from mortgage brokers.

You will no doubt be pleased to see that membership is a major theme in these priorities.

We plan to improve the range of subscription options we offer to members, and test new ways to attract new members and encourage them to stay with CHOICE.

More importantly, we want to completely reimagine membership to build a new approach based on a deeper connection between members, CHOICE and our impact; a membership model that goes beyond a digital subscription. We're currently doing some research with members and supporters to inform this initiative. It's essential we consider deeply the views and thoughts of members so if you have received an invitation to participate, I encourage you to respond.

2019–20 budget

We approved a budget for next year to provide resources to support our priorities.

We are forecasting growth in revenue, especially from membership and our CHOICE Recommended licensing scheme. This in turn requires targeted increases in expenditure in areas that are necessary to drive this growth.

Overall, we anticipate a significant reduction in our deficit, as the impact of our investment over recent years takes effect. This will put us on track to return to surplus in 2020-21. Despite this deficit, we expect our cash reserves to remain healthy and well in excess of the minimum level required by our cash reserves policy, which is reviewed each year when we set the budget.

As part of reviewing our financial strategy, we also discussed some recent advice on the building that we own in Marrickville, Sydney (for those of you outside of Sydney, take a look at 57 Carrington St, Marrickville, NSW to get a sense of the size of the property). This provides an important home for CHOICE as well as rental income from an onsite childcare centre. The advice confirmed that our property is a valuable asset with a range of possible future uses. This reinforces our overall financial health and ability to continue investing in improving the ways in which we help consumers.

Company Secretary

Following the amicable resignation of our previous Company Secretary, Jessica Hill, earlier this year, the Board was pleased to appoint Sarah Coombs, who will fulfil the role alongside her responsibilities in the CHOICE strategy team. Sarah is legally qualified and has a good understanding of CHOICE's operations, so was an excellent candidate.

Sarah will help coordinate the Board elections and annual general meeting, and is happy to answer any enquiries on these issues. She can be emailed at companysec@choice.com.au.

Board elections

We have begun the process of preparing for the Board elections to be held later in the year. Our first undertaking is a skills audit to identify the most important skills required.

Three current directors will step down, and one – our Deputy Chair Bill Davidson – will reach his maximum term in November. Bill has considerable experience as a senior executive and CEO, including having previously acted as CEO of CHOICE. We have already identified that his departure will leave a critical gap in the Board, so we've started the search process for a person with similar high-level strategic and commercial skills. The position has been advertised online so please feel free to share it with anybody you think may be suitable who has the capabilities and experience we need. Interested candidates can contact Sarah Coombs in the first instance.

We also approved invitations to more CHOICE members to apply to become voting members. Having a large and vibrant base of voting members is important to ensuring that CHOICE remains a strong, democratic organisation. We currently stand at around 5800 voting members, a number which has remained largely steady over the years.

Other updates

Finally, we received updates on some of the important work that is underway inside the organisation.

This included an update on the work to close down our Transformer energy switching service, which provided valuable assistance to a number of voting members. I explained in my last Board briefing that we had decided to wind up this service because although we were excited about its potential, the risks of further investment had become too great.

The Board remains pleased about the impact that Transformer has had, for the individual consumers who we helped to save money and on the broader electricity market. Transformer helped us build the case for fairer default electricity prices (one of the reforms mentioned earlier in this briefing) and provided a model that has since been replicated in the NSW Government's Energy Switch Service, which is now freely available to residents of that state.

As Chair, and I know I speak for Alan as CEO and my co-directors, I feel the weight of the importance of this initiative, of the many positive effects it's had for Australians and for the market, but I also feel the weight of the sizeable risk it presented. It was a difficult decision for the Board, but the right one. As I also mentioned previously, we learned a great deal from Transformer and have worked hard to embed that learning into the organisation.

We are very excited about a new partnership with Super Consumers Australia that has allowed us to establish a small team of superannuation specialists within CHOICE. This will allow us to do deeper analysis of problems in the superannuation market, produce more information to assist consumers and campaign for reforms to the system. This is a meaty, complex area that affects the lives of all Australians so we're keen to get this up and running.

We're also working to secure larger, longer term funding for this project, which might allow it to be established as a standalone organisation. This is a great example of CHOICE using its unique role and expertise to take on a market where many consumers are confused and poorly treated.

I will be back in touch in August, with a further update on our work. As always, if you have any questions or suggestions, please email me at sldavey@choice.com.au – I would love to hear from you.

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board


 CHOICE Board Chair Sandra Davey

Welcome to my Board briefing for March 2019 

At our first Board meeting on 25 February, we discussed the Board's priorities for the year, the outcomes of the banking royal commission, our financial position, the Transformer energy switching service and our technology strategy.

Welcoming a new Board member

Following the 2018 election process, we welcomed Ben Heuston to his first meeting as a director. Ben brings strong commercial, tech and not-for-profit experience and we look forward to his contribution to the Board.

This was the second meeting for Ben Naparstek, who was co-opted to the Board in October 2018. With his background in digital, editorial and publishing he will bring a valuable perspective to the Board's deliberations.

Board priorities 

At the end of each year I spend time talking with each director and typically canvass their views on how the Board went, what their concerns and priorities are for the coming year, and if there are areas for myself, as Chair, to improve on, or pay close attention to. We discussed these further at the meeting and identified the following themes to focus on in our discussions with management during the year:

  • The sustainability of the organisation.
  • Ensuring we have the right targets and metrics.
  • Our technology strategy and investment.
  • Our value proposition and the underlying products and services we provide for members and supporters.

The Board will be joining management in a planning workshop in early April where we will explore these issues further. 

Royal commission

We discussed the outcomes of the banking royal commission, which was a major priority for CHOICE through 2018. It's pleasing to see some of our long-term priorities reflected in the recommendations – including the establishment of a last-resort compensation scheme for people who lose money as a result of poor advice or misconduct, and tighter regulation of mortgage brokers. 

Financial reforecast

As most of you know, management undertakes a quarterly reforecast of our financial performance and we reviewed the latest reforecast at the meeting. Consistent with the cycle of investment that we have been reporting to voting members over the past few years, we have budgeted for a deficit of $1.5m in 2018–19. This is allowing us to invest in technology upgrades and innovation around new business models to help consumers. 

2018–19 is proving to be a challenging year for CHOICE membership. A flat market for household appliance purchases – a key driver of new membership – along with increased competition from commercial comparison sites, means that we have attracted fewer new members than expected. We have, however, been carefully managing expenses, as well as growing our CHOICE Recommended licensing scheme.

Overall, this means that despite a challenging environment, we are on track to end the year close to our budgeted deficit.

Transformer energy switching service

Through 2018, we tested a new way of helping consumers find the best energy deal. The Transformer service was an ambitious innovation that allowed consumers to email in their energy bill, so we could analyse it and identify potential savings from switching to a better deal.

Like any innovation, Transformer required a period of investment while we were trying to see whether it was a viable long-term business model. In December, the Board decided that while we love the product and the positive impact it has had on the market, the risks involved in further investment were too great and it should be phased out. 

The costs involved in phasing out Transformer have been incorporated into our reforecast for the year. Transformer has been a sizeable project and investment for us, so at our February meeting we discussed what we learned through the process. We were particularly pleased with some of the achievements of Transformer, including:

  • analysing more than 13,000 customer bills and helping over 2500 people find a better deal
  • identifying over $1.8m in savings on their energy bills
  • inspiring the NSW government to introduce its own free service similar to Transformer

While we are phasing this product out, as a Board and organisation, we learned a substantial amount about how to grow and scale a new business model, and we developed real capabilities in how the product was developed and brought to market. These learnings will be extremely valuable as we identify and test other ideas.

Technology strategy 

Underpinning our ability to develop new products and services, engage and advocate on important issues for consumers and, importantly, service and look after our members, lies a suite of technology platforms and digital tools. In late 2018, the CEO appointed Will Walker as our Chief Data and Technology Officer. This was a new position recognising that effective use of data and technology is critical to our sustainability.

Will presented his initial thinking on technology strategy to the Board. This will involve ensuring that CHOICE has modern, flexible platforms that support our existing activities and business models, as well as allowing us to innovate and collaborate with partners.

Our technology strategy will require upgrading or replacing some of the big platforms that help drive CHOICE – such as the software we use to manage content on choice.com.au and communicate with members, and the platforms that enable member engagement.

While this will involve investment, we have also identified a number of opportunities to reduce operating costs through smarter technology decisions.

I look forward to keeping you informed of our progress and thinking through 2019. As always, if you have any questions or suggestions, I would love to hear from you: sldavey@choice.com.au.

Kind regards,
Sandra Davey
Chair of the Board

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board



See CHOICE voting member briefings from 2018