Aaron Violi (Casey, Liberal Party) Share this | Hansard source

I rise to speak in support of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. This bill significantly increases the fines and penalties that can be imposed upon Australian businesses for breaches of competition and consumer law and, most importantly, it protects small business.

My electorate of Casey is home to many small businesses across various industries. These small businesses are the engine room of the economy. It is these small and medium businesses that are often the ones driving innovation and economic growth, bringing new ideas to the marketplace and creating new jobs. Small business provides 4.7 million jobs in our nation. Small-business owners have risked their financial security to chase their dream but, because of their size, they are vulnerable to the coerciveness of big business. I worked in the small-business environment for 15 years and I saw, directly and indirectly, the pressure that small business faces when working with bigger players. These are negotiations and conversations that you don't forget. When owners know that it's their house and their mortgage on the line, and they're negotiating with a business with significant cash reserves, it's an unfair balance. So we need to protect small business, and this legislation goes towards that.

But small business isn't just about the economic benefits. Small business truly is the heart of the community, especially where I live in Casey. Small business supports community groups like the CFA, sporting clubs and charities. In our time of need, it is small business that is connected to the community and has the agility and the will to support the community. I see this every day in my electorate and living in my community, but I saw it last week when I was at Mount Evelyn IGA to celebrate the Ingpen family owning that business for 50 years. They really are pillars of the community. It was amazing to see the number of members of the community who came, including Rick, from the Mount Evelyn CFA. At that celebration, Tony, the owner, presented him with a cheque for financial support that the IGA provides every month to the CFA. Normally Tony does that in private and doesn't make a big show of it, but it was a great occasion to celebrate. When you hear Rick, who is a CFA captain, talk about the importance of that money to their organisation and to protecting our community, it's just another reminder of the importance of small business and protecting it. Rick also talked about how, in times of emergency—whether it's fire or flood, as we're experiencing at the moment—Tony and the team open their doors and provide any supplies that the CFA need, with not a question asked and no bill run up. Straightaway the doors are open. That's what small businesses do. They support our community, and we need to support them.

We saw this also during COVID. The IGA were talking about how they could support our communities, making sure those most vulnerable got the support they needed, whether it was food or toilet paper. They had the agility and the ability to adapt and provide our community with those vital resources that they needed. That's why the previous coalition government recognised the importance of small business to the economy when we committed to JobKeeper, to the cash flow boost payments and to 50 per cent wage subsidies for apprentices. We supported around one million businesses and four million jobs. I'm proud of the things the coalition did during their time in government to allow small business to flourish. During the campaign, as a new candidate, and since being elected as the member for Casey, I've had had many businesses thank me for the previous government's support to get them through COVID. Again, they talked about how it wasn't just about their business; it was about their family and being able to put food on the table for their children.

This bill will help to further support and protect those small businesses, by sending a clear message that unfair trading will be penalised. As I said in my first speech, we must acknowledge and recognise that big business will naturally support regulation and red tape which stifles small business, to the detriment of competition. As a Liberal, I instinctively support free markets and the benefits they bring to the economy and the nation. However, we have to acknowledge the risk of having dominant players in a market, a risk that I saw firsthand working in the food industry. For Australia to continue to prosper as a nation, we need to ensure our legislation supports the growth of small business in every way.

These reforms will better protect small business and consumers, by increasing penalties for anticompetitive behaviour. This will ensure that the price of misconduct is high and will bring our penalties in line with those in other countries. As I said, this is so important, because small-business owners are risking their homes; big businesses do not have that risk.

The changes brought about in this bill are similar to the previous coalition government's proposal under the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022. We supported the amendment to existing unfair contract term provisions and the introduction of a civil penalty regime. There is also bipartisan support for the expansion of a class of contracts covered by the unfair contract provisions.

The 2018 report by the Organisation for Economic Co-operation and Development found that Australia's maximum penalties for anticompetitive conduct were lower than those in the UK, the US and the European Union. At the moment, the maximum penalty for breaches of competition laws in Australia is $10 million or 10 per cent of annual turnover, whichever is greater. This bill will take those maximum penalties from $10 million to $50 million, adding a significant deterrent to big business. Businesses can also be fined 30 per cent of their turnover during the offending period for engaging in anticompetitive behaviour, with maximum penalties for breaching civil penalty provisions jumping from $500,000 to $2.5 million.

The bill will amend three pieces of legislation—the Competition and Consumer Act, the Australian Consumer Law and the ASIC Act—to strengthen the existing protections from unfair contract terms in consumer and small business standard-form contracts. It will introduce a new civil penalty regime for those small businesses that use and rely on unfair contract terms in standard form contracts. Unfair contract terms are those that disadvantage one party but are not necessary to protect the interests of the other. Examples of unfair terms are excessive exit fees, automatic renewal terms, unreasonable termination terms, or price increases affecting only one party. Another example is reserving the right to vary the contract at any time and removing liability for interruptions in supply. And, again, this is a challenge for small business, because many big businesses have the legal support within their organisation to make sure they can review contracts with a fine toothcomb. Small business does not have the ability to spend hundreds of thousands of dollars on lawyers so are at another disadvantage—not just size, but the resources from a legal perspective.

For small businesses, which often have a lower bargaining power, these clauses bring about a lot of risk. As I mentioned, I've seen this firsthand in my career. You need to understand this threat and what it means to a business. I've been in these conversations with an owner of a business dealing with multinationals. You know that business represents over 50 per cent of your revenue, and one phone call overnight could close your business. And it's not just closing the business for you; it's not allowing you to put food on the table for your family. It's for those employees that took a risk to join your business. And that can be shut down overnight when a big business has a significant part of your revenue. That's the reality that we have in Australia. One example is the food industry. Two major players, Woolworths and Coles, are a significant part of that industry. If you want to grow your business within the food industry, you need to work with Woolworths and you need to work with Coles. But they have and use significant power in those negotiations.

It's so important that we continue to protect small business so they can innovate. All the new food products that we get to enjoy come from the small businesses that are looking to create a unique niche in the market. Whether it's food, technology or any industry, if they don't have that ability, we lose that innovation and we lose our advantage as a nation, so we need to continue to protect those small businesses. Protections against unfair contracts currently apply to small-business contracts where at least one of the contracting businesses employs fewer than 20 people. This bill will increase the scope of these protections by increasing them to businesses that employ fewer than 100 employees and turn over less than $10 million. This is such an important change because in the current environment, at any time, 100 employees is not a large business. A hundred employees is a small business; their cashflow is still exposed.

We also want to encourage and incentivise businesses that have got 15 employees to grow to 50 employees and not feel that, by moving over a threshold, they lose some of the protections that they have. I can tell you firsthand that I worked in an amazing company called Yarra Valley Snack Foods, and when I joined that company we were at 70 employees, and when I left we were at over 130. But even at that time we were still a small business, we were still exposed and we did not have cash reserves. We were investing that back into the business so we could employ more locals and support the farmers who were growing the organic products that we sold. What we need to do is protect those businesses so they can go from being a small business to a larger business.

This change from 20 to 100 employees is significant. I think it's something we need to continue to review, to make sure we get that number right, because even with 150 to 200 employees a lot of those businesses don't have the market power and they don't have the cashflow. And that's the important part: it's the cashflow; it's the ability to go to the lawyers if you need it. It's also not allowing a supplier to be a significant part of your business. And we need to acknowledge the size of our markets in Australia. Whether it's the banking industry, financial services, the food industry, there will always be large players within our market. That's just the nature of our country and our economy, and that's why it's our obligation in this House to continue to protect those small businesses that are risking it all to provide so much for our country.

Consumers and businesses can apply to the courts to have certain unfair terms deemed void. However, this has not been enough to deter some businesses from including unfair contract terms in their standard form, and this is because those big businesses know that small businesses doesn't have the resources to go to court. They don't have the lawyers to review the contracts, and, in many cases, they don't have the time to negotiate on those long form contracts. That's why it's so important that we give the courts new powers to determine an appropriate penalty, such as an injunction order. So, if they do go to court and invest that time, they can continue to operate while that decision is being made.

By strengthening penalties, Australia will be promoting competition and setting standards for corporate behaviour. Increased competition means prices are kept in check, and there is more choice for Australian families. With the current cost of living soaring, the last thing small-business owners need is the headache of navigating dodgy business contracts. It is vital that we support small business to thrive. They've survived two years of COVID and state-imposed restrictions on their trading. They are currently going through significant rising costs with energy and with labour shortages. It has never been tougher to be in small business.

For Australia to continue to prosper, we must ensure our legislation supports the growth of all businesses. These new offences and higher penalties will make business think twice before including unfair terms in their contracts. Larger fines for anticompetitive behaviour will ensure a more level playing field for business. I will always support small business; it's in my blood, and that is why I am supporting this bill today.

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