Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Hansard source

Mr Speaker, it is my first opportunity to say how genuinely and personally delighted I am with your elevation to the chair. I wish you much success in a very challenging and important role in our parliament. Congratulations, sir.

I would like to thank those members who have contributed to this debate. The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 gives effect to the government's promise to provide a fair go for small businesses by extending the unfair contract terms protections for consumers to the small business sector.

In framing this bill, the government consulted widely. Last year we conducted a 10-week public consultation process to gather information about the extent of the problem and to canvass views on policy options. We received over 80 submissions and around 300 survey responses as part of this process.

Commonwealth, state and territory consumer affairs ministers formally agreed to amend the Australian Consumer Law in April, as required under the intergovernmental agreement. In line with the Corporations Agreement of 2002, the Commonwealth outlined to the states and territories that these legislative protections would be mirrored in the Australian Securities and Investments Commission Act 2001, with no objection being raised.

Based on these consultations, we then invited public comment in May on the exposure draft legislation. Almost 50 stakeholders took this opportunity to comment on the drafting of the bill. Overall the feedback showed that small businesses across a wide range of industries had real concerns about unfair contract terms. In particular, it became apparent that small businesses, like consumers, are vulnerable to the inclusion of unfair terms in standard form contracts because, like consumers, they often do not have the time, the legal expertise or, frankly, the negotiating muscle to critically analyse and push back on contracts offered to them. Notably, there was significant support for addressing this problem by extending the current consumer unfair contract terms laws. The feedback we received guided the effective development of the law and will support its implementation once it has been passed by the parliament.

This bill extends the consumer unfair contract terms protections to small business when they agree to low-value standard form contracts. It contains amendments to both the Australian Consumer Law and the Australian Securities and Investments Commission Act 2001. It enables a court to declare void an unfair term—for example, one that allows one party to unilaterally change the price—that may be contained in a contract where at least one party was a business with fewer than 20 employees when it agreed to the contract and where the value of the contract does not exceed $100,000 or, if the contract is for more than one year, $250,000.

The size of a business will be determined by headcount, with casual employees only included if they are employed on a regular or systemic basis. This approach, used by the Australian Bureau of Statistics, best represents the normal workforce of a business and is a simple and accessible way for all businesses to record the size of their business at any point in time.

Having a transaction value threshold limits the protection to lower value day-to-day transactions where the cost of seeking advice on a contract's terms may be disproportionately high, while maintaining the onus on responsible small businesses to undertake due diligence for high-value or, should we say, enterprise-critical contracts fundamental to the success of the business. There is a significant difference between high-value contracts and those day-to-day contracts thrust before small businesses.

It is not the role of the government to be a 'contract nanny'. It is right and reasonable for all enterprises to seek advice on larger enterprise-critical contracts. Responsible and savvy small businesses understand this responsibility. Whether a contract falls within the transaction value threshold of $100,000, or $250,000 if the contract is for more than one year, will depend on the value of the contract based on the consideration payable under the contract known at or before the time the contract is agreed to.

I acknowledge that some people found the limits too low, while others argued that the limits were too high. However, we found from consultation that these limits will cover the vast majority of standard form contracts that small businesses enter into.

I further acknowledge that some concerns have been raised regarding duplication with existing laws. Recognising the importance of avoiding duplication and red tape, the bill contains a mechanism for exempting legislation and regulation deemed enforceable and equivalent to the Australian Consumer Law and/or the Australian Securities and Investments Commission Act 2001 contract terms protections. In making such an exemption, the Commonwealth minister responsible for competition and consumer policy must first consider what impact the proposed exemption would have on small businesses, and on businesses generally, and whether it is in the public interest. This will ensure that, no matter what, small businesses can be sure they are protected.

This bill is an important reform that will have a significant positive impact on Australia's two million small businesses. Since 2010 these protections have been available to consumers and it is time that small businesses, who often face the same vulnerabilities as consumers, received the same protections when offered 'take it or leave it' contracts.

This bill provides small businesses more than a remedy for unfair terms. It will also mean that, in drawing up contracts with small businesses, contract proponents will think twice before including or enforcing unfair terms in these contracts. It will reinforce ethical contracting and it will give small businesses greater confidence to enter into contracts that enable them to invest and grow their business.

The protections in this bill will take effect six months after it receives royal assent. Over this six-month transition period, regulators will produce guidance material, including interactive web pages with animated videos, a guide for small businesses and a compliance manual for businesses that deal with small businesses. To facilitate this, the government provided $1.4 million to the Australian Competition and Consumer Commission as part of last year's budget. After the new laws have been in place for six months, the ACCC intends to work with industry to identify and address any problematic contract terms.

The cost of complying with this law will be predominantly borne by larger businesses that frequently engage in contractual dealings with small businesses and offer particularly complex contracts. Some small businesses that offer complex standard form contracts to other small businesses may also need to review their contracts. That is appropriate, because smaller businesses should be protected from unfair terms, no matter whether they are dealing with a larger enterprise or another small business. Where businesses are not willing to voluntarily amend contracts to remove unfair terms, enforcement action may be necessary. Importantly, we will be conducting a post-implementation review to make sure the unfair contract terms protections are working as intended to protect small businesses. We can draw from the insights and experiences with the current consumer protection and apply those lessons to this area of small business application.

As part of this review we will also be able to consider any concerns that the small business community may have. This reflects the ongoing commitment to consult and collaborate effectively. The coalition made a commitment to implement this measure in two successive elections. In fact, it was announced well in advance of the 2010 election. It has been worked through in great detail via an extensive process of collaboration and consultation.

I particularly want to thank the Treasury team—Ben, Aidan, Shakira, Abigail and Nirmalen—who have been very active in the Treasury portfolio, and also, my own staff in the ministerial office: Vincent, Daniel, Ineke and Joshua. It has been a long journey, but an important one.

This bill introduces significant reform that will level the playing field for small businesses to grow, invest and create jobs. With this legislation, the government is helping small businesses to invest in their businesses' success, rather than spending time and money navigating a maze of contract terms. It is another part of our plan to make Australia the best place to start and grow a business. I commend the bill to the House.

Question agreed to.

Bill read a second time.

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