Karen McNamara (Dobell, Liberal Party) Share this | Hansard source

I rise to support the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. This bill seeks to extend the consumer contract term protections for small business and to deliver on another election commitment made to small business during the 2013 election campaign. Small business interests are front and centre in the thinking of this government. In opposition we made more than 20 specific promises to small business at the last election. This bill to extend the unfair contract terms protections to small business is delivering on another of these promises.

This government has runs on the board in support of the vital role that small business plays in the Australian economy. Australia's two million small businesses produce more than $330 billion in economic output and employ over 4.5 million people. As a government, we do not just recognise but value the contribution made by so many who courageously embrace this challenge and who take the risks. These are the men and women who invest and strive for success in the creation of opportunities for themselves and others in their community. We on this side of the House recognise the self-employed for the valuable contribution that they make to the economic health of this country and to their local communities. Our commitment to small business is real, durable and embedded in our DNA.

The bill before the House today will ensure that small businesses are provided with the same protections currently limited to consumers. The unfair contract terms protection for small business legislation will give them a fair go and support within the business environment in which they operate and compete. Small businesses, like many consumers, lack the resources and the skills to understand and negotiate contract terms. Many small businesses find themselves operating on a take-it-or-leave-it basis, which tends to place many of them at a disadvantage. Stakeholder feedback indicates that small businesses across a wide range of industries had concerns about unfair contractual terms. It also revealed that small businesses, like consumers, are vulnerable to the inclusions of unfair terms in standard form contracts. The government will provide $1.4 million to the ACCC to assist businesses in complying with the new law.

What does this mean small businesses? Simply this bill extends existing legislation to small businesses that employ fewer than 20 staff and enter into contracts with a value of no more than $100,000 or $250,000 for multi-year contracts. It will extend the consumer unfair contract terms and protections to cover standard form small business contracts that are valued below the prescribed threshold. Consumers have been afforded protection from unfair contract terms since 2010, but the former Labor government decided not to proceed with offering similar protections to small business. It has taken this government to address this inequity and put in place the protections that are outlined in this bill.

Under the new protections, courts will be able to strike out the terms of small business contracts that they determined to be unfair. A remedy for small businesses when an unfair contract term is included in a standard form contract will also be provided. This bill will reduce the incentive to include and enforce unfair terms in contracts, providing for more efficient allocation of risk and giving small business greater confidence to enter into contracts and to invest and grow. Under the new protections, the contract will be a small business contract, if at the time it is agreed to, at least one party employs fewer than 20 employees. A head-count approach, rather than full-time equivalent, will also simplify the application of the law.

The reforms assume that small businesses will find it easier to recall the number of people they employ at the point of entering into a contract rather than a full-time equivalent calculation. Additionally the contract must not exceed $100,000 or $250,000 for contracts of more than one year in duration. This transaction value threshold has been chosen so the protections apply even when small businesses engage in day-to-day transactions. It was also designed to encourage small businesses to conduct due diligence on large contracts fundamental to the success of their business.

Research indicates that four to five small business standard form contracts will be covered by this reform. The ACCC's enforcement action will also have an impact beyond businesses or transactions falling within these thresholds. The bill will also provide a mechanism that will allow the government to exempt laws that it believes are equivalent to unfair contract law. The protections will apply to small business contracts and for all contracts that meet the criteria, regardless of whether the small business is involved in the acquisition or supply of goods and services. In calculating persons employed, each full-time, part-time and casual employee constitutes one person. Only casual employees who are employed on a regular basis—that is, not on a seasonal roster—are to be counted, consistent with the approach used in the Fair Work Act.

The minister will have the power to exempt the application of the unfair contract term protections for small businesses, where industry-specific legislation or regulation is deemed enforceable and equivalent. The protections proposed by this bill will come into effect six months following royal assent. Over this six-month period, the appropriate regulators will engage with industry to produce guidance material and other information to assist traders to comply with the new legislation.

The measures proposed under the government's $5.5 billion Small Business Package legislative reform provides amendments to various taxation laws to provide tax relief and reduce red tape for small businesses. Many organisations have put their hands up in support of this important reform for small business, such as the Australian Chamber of Commerce and Industry. Its Director of Economics and Industry Policy, Mr John Osborn, stated:

Small business is the backbone of the economy and they deserve the same protections against unfair contracts as everyone else.

Professional Contractors and Consultants Australia have said the extension of unfair contract term protections to small business 'will help address the power differential of parties involved in commercially based work arrangements'.

On this side of the House, we understand that you cannot have a strong and healthy society without a strong economy to sustain it, and you do not have a strong economy without profitable businesses. Statistics released by the ABS on 29 June 2015 reveal that the Abbott coalition government has overseen a period in which the number of jobs in small business has increased by 146,000. This is in contrast to the almost half a million jobs lost in small business under the Rudd-Gillard-Rudd governments. Small business entries are up 18.71per cent and exits down 12.5 per cent. Statistics are also indicating that more women than men are actually starting new businesses in Australia. These are women who are finding new avenues of innovation and skills and are doing so while balancing the other priorities in their lives, such as work and family.

I am constantly working with small businesses in my electorate of Dobell to identify and address the barriers that prohibit growth and employment opportunities. In Dobell small business is our largest employer and we have many small business achievers. Achievers such as Nicky and Wade Mann, who emigrated from Zimbabwe in 2002 and started their business, Roses 2 Go. Lately they have started growing blueberries. I know from talking with them that they welcome our proposed legislation on unfair contract terms. There is another company, called SpotGo, and this is a local success story whose products are now on the shelves in Woolworths and IGA stores. This is a family business that, like so many small businesses, took a risk and succeeded. Then we have local small business women like Christine Hornery, the CEO of the FMS Group, who has established Pearls of Wisdom. It is a business support group that is providing mentoring, support and assistance to other business women on the Central Coast.

Small business plays a crucial role in ensuring there are local jobs available for mums and dads, school leavers and mature Australians returning to the workplace. My electorate is a great place to live, grow and raise a family and it is home to 8703 small businesses. There is plenty of room and opportunity for others to take the risk and open a new small business. We want to see business thrive and grow, and at the heart of our economic plans for growth is small business. The 2015 budget focused on growing jobs and helping small business innovate and grow. The $5.5 billion Jobs and Small Business package is the biggest small business package in our nation's history. It reduces the tax rate for more than 90 per cent of incorporated businesses with an annual turnover of under $2 million. The package will also allow small businesses with an annual turnover of under $2 million to immediately deduct for each and every asset costing less than $20,000. The provision for unincorporated businesses with an annual turnover of under $2 million will mean they will receive a five per cent tax discount, capped at $1,000 per taxpayer. Red tape will be further reduced within the fringe benefits tax system by expanding the exemption for work-related portable electronic devices for small business.

This government has a plan for our future and is keeping our commitment to the Australian people. This bill is yet another step along the road being walked every single day by the Minister for Small Business as he puts in place the measures that will allow this sector to thrive and grow. In commenting on this bill the Council of Small Business of Australia stated:

COSBOA congratulates Bruce Billson and the Abbott government on today's announcement to extend legal protections from unfair contract terms to a million small business operators.

CEO Mr Peter Strong stated:

… when COSBOA was formed in 1977 one of the key issues on our policy platform was fair contracts. This policy need has been ignored for all these years until Bruce Billson stepped up and pursued fairness and now we have it. It is a moment to savour.

I join with these sentiments and also congratulate the Minister for Small Business. I commend this bill to the House.

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