Judi Moylan (Pearce, Liberal Party) Share this | Hansard source

I thank the member for Canning for bringing this motion to the chamber. I have to say that I concur with many of the comments that I have heard while sitting in this chamber, particularly those of the member for Gilmore, who spoke very passionately and strongly about this issue. It is an important issue for the future of Australian small business.

In many respects, franchising has flourished in Australia since the introduction of the franchising code, and we have had an excellent opportunity to round off the franchise industry regulation by replacing previous poor practice, which has threatened the reputation as well as the future of the sector. The problem is well recognised and acknowledged as that of franchisor opportunism. In May this year, the Small Business Ministerial Council recommended the inclusion of a good faith provision in the code as part of further amendments to give greater certainly to franchises. The Minister for Small Business, Independent Contractors and the Service Economy, the honourable member for Rankin, also made an election promise to introduce a good faith clause. The minister said:

... Labor believes that the Franchise Code should include good faith obligations as long as the scope of this obligation is well defined.

It begs the question: what has the member for Rankin done, then, about fulfilling this promise?

Recent inquiries into franchising by both the South Australian and Western Australian parliaments have highlighted huge deficiencies in the current franchise code of conduct. Surely this is enough to convince us that something needs to be done and it needs to be done urgently. The most recent and relevant example of these deficiencies is a decision handed down by the High Court in the Ketchell case. Although the franchisee lost on the facts, the High Court confirmed that the courts have the power under the TPA to rewrite franchise agreements that breach the code. The problem is that the code is defective, and until it is fixed franchisees are no better off. Any instance where a franchisor does not renew the franchise agreement and forces the franchisee out of business purely and simply to set up its own business at the same location is something that I consider to be absolutely unconscionable.

I concur with the comments made by both the member for Parramatta and the member for Hasluck this evening regarding the matter of KFC in Australia. As Jack Cowin of Competitive Foods Australia has said previously, franchising is a unique form of relationship. At the core of the franchise relationship is a belief that franchisees and franchisors will work together in good faith to build a business for their mutual benefit. It is well recognised that this relationship is more like a commercial partnership than a simple supply of services between two parties. Mr Cowin is right about that, and he probably has more to lose than anyone. We have heard from the members I have previously mentioned about the case of KFC—and I do not propose to go into those details again—which is a very disturbing one indeed.

The coalition recognises the importance of having both diversity and balance in the marketplace. While we recognise the importance of promoting and encouraging the growth of small business, this should not be to the detriment of corporate Australia. Finding the balance between the two has always been the strength of the coalition. Competition increases efficiency, lowers prices for consumers, provides greater choice, encourages innovation and the uptake of new technology and lifts productivity. This is the very reason the Trade Practices Act was written: to develop and maintain a free and fair market that benefits consumers as well as business owners, both large and small.

The four points raised here by the member for Canning are excellent, and I again thank him for bringing this motion to the House. Adapting franchising regulations in the Trade Practices Act would cover many contentious issues and dubious practices and would ensure a stronger future for the industry. I strongly support this motion and I call on the government to act and to act now.

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