Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

It is with great pleasure that I rise to again talk about small business, the engine room of our economy, and to speak today about this bill, the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. This bill will amend legislation in order to extend unfair contract protections to small business contracts. Between 1 January 2011 and the end of December 2014, the ACCC received 1,375 small business complaints relating to unfair contract terms. While there are a number of benefits to standard form contracts, as they save businesses time and resources, there are also a number of drawbacks associated with them; in particular, they are not negotiated, and they are often one-sided and include terms embedded in the fine print.

In 2013, the coalition made the election commitment to provide a fair go for small business. I would like to congratulate the Minister for Small Business, Bruce Billson, for this piece of legislation that honours another one of our election commitments in relation to the small business sector. Small-business owners are hard-working and innovative people who are focused on growing our economy, creating jobs and frequently contributing to our local community. Small businesses are often behind the company logos you see sponsoring our local sporting clubs, donating to local charities and creating local jobs. Over the recent parliamentary recess I had the opportunity to visit a number of businesses in my electorate of Forde, and they are just a representative sample of some of the 11,000 small businesses in my electorate. Many of them are already benefiting from the positive effects from this year's budget measures for small business. This bill is another important reform that will help give small businesses access to a level playing field, so they have the capacity to grow, to invest and to create more jobs.

This legislation is a welcome new protection for small businesses, which often lack the resources to negotiate standard form contracts. The measures outlined in this bill have been developed in consultation with a wide range of stakeholders. These include the general public, businesses, industry groups, and Commonwealth, state and territory consumer agencies, as well as regulators and small business commissioners. The 10-week public consultation process to gather information about the extent of the problem attracted more than 80 submissions and around 300 survey responses. As part of the consultation process for this bill, our government found that, like consumers, small businesses are vulnerable to the inclusion of unfair terms in standard form contracts. This is because they often lack the resources to identify unfair terms and to engage in negotiations over the terms of a contract; the bargaining power to successfully negotiate the terms of a contract; and the resources and bargaining power to resist the enforcement of those unfair contract terms.

Consumers have been protected from unfair contract terms since 2010, and it is well and truly overdue that we provide similar protections to small business. Stakeholder feedback found there was significant support for addressing the problem through a legislative extension of the current consumer unfair contract terms law. This bill will amend the Australian Consumer Law, set out in schedule 2 of the Competition and Consumer Act 2010, as well as the Australian Securities and Investments Commission Act 2001, to extend the consumer unfair contract terms protections to cover standard form contracts, which are small business contracts valued below a prescribed threshold. It is time that small businesses receive the protection they need when offered standard form contracts. This bill provides a remedy for small businesses when unfair contract terms have been included in these standard form contracts.

There are three main elements to this bill. Firstly, in both the ASIC Act and the Australian Consumer Law, this bill applies the unfair contract terms provision to small business contracts. A contract is defined as a small business contract if at least one party to the contract has fewer than 20 employees and its value is below the prescribed threshold. Measures relating to the ASIC Act were agreed to by the Assistant Treasurer and the states and territories were notified of the amendments to the ASIC Act, as required under the Corporations Agreement 2002. Measures relating to the ACL were agreed to by the majority of states and territories, as required under the Intergovernmental Agreement for the Australian Consumer Law.

The second branch of the small business contract test is that the value of the contract must not exceed $100,000 or $250,000 for a multi-year contract. This transaction value threshold was chosen so protections apply when small businesses engage in day-to-day transactions, while encouraging them to conduct due diligence on larger contracts fundamental to the success of their business. Based on the consultation survey results, around four in five small business standard form contracts will be covered by these reforms.

The final element of this bill is the mechanism that will allow the government to exempt laws that it deems equivalent to unfair contract terms law. This is about avoiding regulatory duplication and unnecessary compliance costs in sectors where there are equivalent, enforceable protections against unfair contract terms.

Once this bill receives royal assent it will take effect within six months. During that period, the regulators will engage with traders to assist them in complying with the new law. Overall, this bill introduces an important reform to restore time and resources to small business. It will allow small businesses to grow, invest and create jobs rather than investing their time navigating costly and time-consuming contract terms.

We want Australia to be the best country in which to start and grow a small business. We promise the Australian small business men and women a strong economy, less red tape and a commitment to extend to the small business sector the unfair contract term protections currently available to consumers. This reform is an important one and will have a tremendous impact on the small business community. I commend this bill to the House.

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