Peter Hendy (Eden-Monaro, Liberal Party) Share this | Hansard source

I would like to thank the member for Oxley for tabling this motion. I am a bit surprised that he would raise the topic of the Franchising Code of Conduct, where the Rudd-Gillard-Rudd governments spent six years fluffing around; however, he has done so. Labor tell us that in 2010 they made 'the most sweeping reforms' in this area in 12 years, yet they immediately initiated yet another review. The member for Oxley effectively noted in the motion that after years of government they eventually got around to receiving yet another review of the franchising code, and then five minutes before midnight, so to speak—before the 2013 election—they put out a government response to the review. That was it. In that instance they did not implement anything; they just made some announcements. Where have I heard that story before? It seems very familiar!

But let's not dwell on that. As a former chief executive of the Australian Chamber of Commerce and Industry I know a bit about this topic and am well aware of the difficult balancing act that government regulation—rightfully, I might add—has to play in the relationships between franchisors and franchisees. Indeed, further to that, I was personally involved in the introduction of the Franchising Code of Conduct by the Howard government in 1998. In 1998 I was the then chief of staff to the minister for small business. I was involved in a lot of the negotiations and know how difficult this area can be.

As the Wein review summarises:

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As my colleagues have noted, the coalition government recognises that the franchise industry is a significant and growing part of the small business sector. The minister has informed me that the most recent Griffith University survey indicated that franchising contributes more than $130 billion to the national economy and employs over 400,000 Australians. There are over 70,000 franchise business arrangements in Australia today.

The difficulties in dealing with regulation in this area are highlighted by the fact that there have been eight official reports at state and federal levels into the code and the franchising sector over the last eight years. This has created a high level of review fatigue. In moving forward in the light of the recent review, we are very cognisant of that fact. Indeed, the coalition government is committed to generating certainty in the sector and strengthening the effectiveness of the franchising code.

The most recent report, as referred to in the motion by the member for Oxley, is Mr Alan Wein's report, dated 30 April 2013. Mr Wein stated, 'We have a good franchise industry model in Australia,' but nonetheless recommended some reviews. Thus Mr Wein made 18 substantive recommendations in relation to the code and the Competition and Consumer Act 2010, which of course is the renamed Trade Practices Act 1974. He also recommended about 24 technical amendments to improve and clarify the code rather than change the underlying policy. He was examining good faith in franchising, the rights of franchisees at the end of the term of their franchising agreements and provisions for enforcement of the code.

The government will not be rushed into making any quick decisions. I think businesses in the franchise industry will thank us for that. Rushing in with policies that are not properly thought through is exactly what we have had over the last six years. Under Labor, 412,000 jobs were lost in small business, while the number of employing small businesses declined by 3,000. When Labor came to government, small business employed some 53 per cent of the workforce. It is now just 43 per cent. That is a devastating blow to small business—and do not forget that most franchise businesses are small businesses. One thing I can say is that we are keen to prevent additional state based regulation of the sector.

In the end, the story is very simple. We highly value the franchising industry. As a result, we will not hurt the industry by rushing into policies that are not evidence based. We will be going through the issues in a purposeful and methodical manner. We will get it right and provide for a sustainable and strong franchising sector.

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