Bernie Ripoll (Oxley, Australian Labor Party, Shadow Minister Assisting the Leader for Small Business) Share this | Link to this | Hansard source

I move:

This parliament for far too long has talked about the franchising sector and done a little but not quite enough. That is both sides of this parliament over a long period of time. The opportunity is now before us for whoever is in government to actually finish the good work that has been done over the past few years. We have moved way beyond the politics for the franchising sector. It is without doubt that there is a natural majority of support for the franchise changes and amendments that have been proposed under the previous Labor government. There is support not only I think in the parliament—in fact, I know there is support in the parliament—but there is also support in the community. And there is support from the sector itself. This is not as if anyone is arguing against any of the proposed changes that came out of some very, very good work over a long period of time—much of it bipartisan if not nearly all of it—particularly now given that the sector has come to also desire the changes that are being proposed.

Labor's record in government of taking forward the vast bulk of the recommendations from the Wein review into Australia's $130 billion franchise sector speaks for itself. In contrast, it has now been 12 months since Mr Wein handed his recommendations from the review to the former Labor government on 30 April, and the coalition has now to act. That is all that is left in this long, enduring saga of introducing some new regulations in this place—but do not take that the wrong way. By introducing a little bit of good, better regulation, you get rid of lots of other bits of regulation and lots of red tape and lots of complexity and lots of uncertainty. By doing a little bit here, we actually help the sector to get rid of a mountain of red tape, bureaucracy, uncertainty and other things.

Just as one example, by us better regulating in this place we take away the uncertainty and the regulation of each and every other state, and their capacity to regulate in this area and the difficulty that not only franchisors but franchisees face in terms of dealing with a national economy on a state-by-state and territory-by-territory basis. This is unworkable. This is red tape. What is before us now is how to reduce that burden; how to make franchisees and franchisors—both sides of the equation—more competitive, have more productive capacity to get on with their daily work, rather than having to deal with different jurisdictions, different rules and regulations and different pieces of uncertainty across the sector.

The Minister for Small Business said on 6 January this year, 'The coalition is working as we speak to ensure changes are made.' The minister is supportive. I support him in that. We have had a long record on some of these matters. Again on 7 January he said, 'The coalition will act early in 2014 to maintain world-class regulatory support for a crucial part of the economy.' I say good on you but I say get on with it. That is what I am saying today: get on with it. Twelve months will be too long since the Wein review was carried out, following on from the work that Labor did in terms of the codes of conduct, in terms of bridging the gap between franchisee and franchisor, doing the very important work of building on the effective disclosure regime that everyone in the sector wants, clarifying that the government expects franchisors and franchisees to act in good faith towards one another in making a requirement under the prescribed code that I talked about. This will enhance compliance and enforcement of the code by providing additional tools to the regulator and the Australian Competition and Consumer Commission. This will actually reduce red tape, it will reduce costs. This is what business wants, this is what the sector wants. This is also what government wants. So I say to the government, 'I applaud you but get on with the job.'

It also clarifies the policy intent of provisions of the code which have caused in the past, before these changes come through, unintentional confusion and administrative burden without any corresponding benefit to franchisors or franchisees. So I say today, I implore the government, please move beyond the politics, move beyond the hollow, rhetorical calls for burning of empty pages of red tape and all sorts of rubbish. Do that, but if you can chew gum, walk and perhaps even breathe at the same time, do the good stuff as well. That is what the community expects of you. This is what our economy needs. So have your two minutes in the sunshine talking about regulation and red tape reduction but then come to the table and do something about it as well. This is what I am calling on the government to do. This is what the minister, Bruce Billson, said he would do. So let us see him now put that into action.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I second the motion the reserve my right to speak.

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

I thank the member for Oxley for bringing this motion to the House because at the end of the day it allows us to reflect on what this new government is doing in comparison to what the previous Labor government failed to do. I note that the member himself had previously made the comment that the former Labor government was committed to providing certainty and confidence in the franchising sector. I am most pleased to hear that, because I am sure there are plenty of us in this House who would be more than happy to see some certainty, stability and clarity brought to the franchising sector for the benefit of both franchisors and franchisees.

To reflect on the member's motion, the Wein review into the franchising code was handed to the previous government at the end of April last year. On reflection, the previous government had those recommendations in hand for at least five months before there was a change of government. Yet at the end of the day it is only now when they are in opposition that they push for some urgency on this issue. But I think it is worth reflecting on their record of urgency in any number of matters on which we are now having royal commissions and other investigations and reviews because of inordinate waste, incorrect drafting of legislation—all manner of things that in their haste to implement they got wrong. I think it is quite prudent on our part as the new government to ensure that we treat these recommendations with the consideration that they deserve to ensure that as they are implemented they are implemented in a manner that works for all concerned.

However, we welcome what appear to be the first signs of enthusiasm for improving and enhancing the franchise sector. The franchise sector would be feeling relieved to know that these important reforms are now being left for the coalition to implement, because we understand small business and the franchisee sector.

We understand the enormity of the contribution small businesses make to our communities and to our economy. We know that small business employ around 4.6 million Australians, accounting for 43 per cent of private sector employment. We know that under Labor, 412,000 jobs were lost in small business alone while the number of employing small businesses declined by 3,000.

In Forde, the fall in this sector has had a huge impact on the higher than national average unemployment rate, as the small business sector is the largest employer in the electorate. The member's motion has drawn attention to our action for small business over the past six months, and I would like to thank him for providing this opportunity to restate some of the decisions we have already taken for the benefit of our small business sector.

We have appointed a Minister for Small Business in cabinet and moved small business from Industry to Treasury. We have moved to protect the privacy of home based businesses on the Business Names Register and implemented a dedicated small business support line with Fair Work. We are in the process of a root and branch review of competition laws, and this has commenced with the release of draft terms of reference. We also passed legislation to remove the carbon tax and we introduced new assistance to small businesses affected by natural disasters in the form of concessional loans of up to $100,000, which will be administered by state and territory governments. We have introduced legislation to remove 10,000 regulations and acts of parliament to cut unnecessary red tape—the largest single bulk repeal in the Commonwealth's history. Work has also commenced on building the roads of the 21st century, because we know that small business people and self-employed people, many of whom are franchisees, know that sitting in traffic jams does nothing to improve the productivity or profitability of their businesses.

These are our efforts to date. So what did the Labor government achieve for small business in the first six months of their government six years ago? Not much really, and to top it off down the track they sought to strangle small business with more red tape and more taxes. It was only in 2012 that they put a minister into cabinet. Only the coalition can reform the code so that the sector will grow and provide employment opportunities for Australians.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I would like to begin by thanking the member for Oxley for moving this important motion. The member for Oxley is a relentless advocate for Australia's small business community, and this motion is evidence of that fact. As a former small business owner myself, I know firsthand the challenges of running your own business—challenges such as juggling your own marketing, administration, tax and superannuation at the same time as keeping clients happy by ensuring you deliver the best possible product and the best possible service.

For franchisees, these challenges can be particularly acute. In addition to the general challenges faced by all small businesses, franchisees face their own unique challenges, such as running a small business with limited autonomy and managing their relationship with and obligations to their franchisor. A number of my constituents are either franchisees or franchisors. I have a number of friends who run McDonalds chains here. Also, one of the highly successful Canberra business women, Louise Curtis, owns Lollypotz, which has been franchising for about the last two years. Like so many small businesses, that business began at the kitchen table and is now an absolute empire. I take my hat off to Louise Curtis for her great work and her great business.

These challenges aside, a franchise can be an incredibly rewarding endeavour. A franchise can provide entrepreneurial business owners with a model for growing their business and sharing their expertise with other aspiring small business owners. For those looking to start a business, franchising can provide them with the opportunity and confidence to do so. Like every business, franchises need the right regulatory environment to operate in. Labor understands this. That is why, on 4 January 2013, the Labor government appointed Alan Wein to review the franchising code of conduct and to make recommendations to ensure the franchising sector was operating in the best interests of its participants as a whole.

Mr Wein undertook a wide-ranging review. Central to his review was consultation with Australian franchisees and franchisors. He submitted his final report to government on 30 April last year. After we received the review Labor issued a consultation paper that was open for submissions from 17 June to 9 July. The aim of this consultation process was to ensure we understood the practical impact to the franchise community of accepting Mr Wein's recommendations. This process received over 160 submissions and included targeted consultation among key stakeholders.

On 24 July last year, at the COSBOA small business summit in Brisbane, Labor announced its response to the review. It included a regulation impact statement so that these recommendations could be implemented as soon as possible. The key changes recommended included building on an effective disclosure regime by ensuring that disclosure remains relevant, timely, effective and reflecting modern changes in our economy such as the growth of online shopping; clarifying that the government expects franchisors and franchisees to act in good faith toward one another by making it a requirement under the code; enhancing compliance and enforcement of the code by providing additional tools to the Commonwealth regulator, the Australian Competition and Consumer Commission; and clarifying the policy intent of provisions of the code that have caused unintentional confusion or administrative burden without any corresponding benefit.

As we all know, the federal election intervened before we had the chance to implement these recommendations. However, in good faith we believed that the new Abbott government would do so shortly after coming into power. We had every reason to believe it. On 7 January this year the Minister for Small Business is quoted as saying that the coalition would act early in this year to maintain world-class regulatory support for a crucial part of the economy, and on 6 January he is quoted in SmartCompany magazine as saying 'the Coalition is "working as we speak" to ensure that changes are made, with a regulatory impact process expected to be completed by mid-year'. Yet here we are nearly seven months after the election, and the Abbott government has done nothing to implement the recommendations of the Wein review. The great irony is that one of the key aims of the Wein review was to provide certainty to Australia's franchise sector, yet now the sector has less certainty than ever because it does not know if or when the Abbott government might implement these recommendations.

We recognise that small businesses are the backbone of our economy; that is why we moved to implement the recommendations of the review as a matter of priority while in government last year. This delay simply is not good enough, and Australian small businesses, including about 73,000 franchises and about 1,180 franchisors, demand better.

Peter Hendy (Eden-Monaro, Liberal Party) Share this | Link to 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:

…   …   …

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.

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

I congratulate the member for Oxley for moving this motion. The franchise sector is incredibly important to our economy. Every one of us in this House would have many in their own electorates that do a remarkable job, employ people and provide good services to our community, and they deserve our absolute consideration in this place.

Before I go on, though, I would like to refer to the contribution by the member for Forde. We seem to have over and over again in this place at the moment the rather untrue statement about the level of regulation under Labor compared to Liberal. It has been repeated again today, and I would like to repeat again what I said in the House: under the last two years of the Howard government, there was more regulation by far than there was under the first two years of the Labor government. We did introduce 21,000 regulations and legislative instruments, including nearly 7½ thousand which were air safety directives or relating to tariff concessions, which business wanted—in most cases relating to just one instance—but we also repealed 16,000. Sixteen thousand went out during our time. Under the Howard years, they came in at a far greater rate than they did under us. So a little bit of truthfulness—where is Sharman Stone when you need her, quite frankly!—in this area would come in handy.

I also want to take him up on the statement he made about Labor's response to the Wein review when it came down on 30 April. He flippantly said, 'Oh, five months later they still hadn't done anything.' I think that, again, they might just want to think about the truthfulness of these statements and what they are trying to get across. The 30th of April was a couple of weeks before the budget, just for a start. What we did was that we managed very quickly to issue a consultation paper, in spite of the fact that it was 30 April. We ran a consultation from 17 June to 9 July 2013 to better understand the practical impacts of accepting the Wein recommendations. Then on 24 July we announced that we had already developed a regulatory impact statement and we would be legislating in August. Of course parliament did not return and an election was called.

Again, the use of a small amount of truth to create a rather large untruth is something that the people on the other side of parliament seem to be very good at. As I said in the last speech, I wonder what they say to their children about that kind of behaviour. 'Do as I say and not as I do. We can make this stuff up because we are the government.' Perhaps they say that, I don't know, but I would urge them to try to behave themselves the way they would expect decent people in their broader community to behave—and this is not the way of it.

The Wein review was incredibly important. It came at the end of a lengthy process of consultation with franchisees and it made a number of recommendations which have been welcomed by the sector. The Minister for Small Business, Bruce Billson, said that early in 2014 the government would implement these recommendations. Now we hear from the member for Eden-Monaro that that is actually not right. They are not going to do anything. They value the sector but they are not going to rush. They are going to do another review—they are going to review again. They are going to have another look on top of the one that was already done, which had bipartisan support prior to the election and after the election.

Quite frankly, if they want to create certainty for the franchise sector, perhaps the thing to do as government is stop changing their mind. They supported it during the review process. It was bipartisan. I sat on the corporations committee that did the inquiry into this. Through all the consultation process there was bipartisan agreement. An election was held. The Minister for Small Business confirmed that he was committed to it, promised to do it, said that he would do it early in 2014. And now we are hearing that that is actually not the case. If someone on the other side can tell me how that creates certainty for the franchise sector, I think that would be really interesting. It might be helpful to me to hear how changing your mind so quickly provides certainty for the sector.

These changes are changes that the sector wants. They have been consulted extensively. They have made contributions on the practicality. They have been promised action. Quite frankly, it is about time this government delivered on its promise to this all-important sector.

Craig Laundy (Reid, Liberal Party) Share this | Link to this | Hansard source

I just want to start by going through the ironies of this motion in my humble opinion. I have chased the member for Parramatta all over the building today, talking about small business. As far as I am concerned, if those opposite want to keep putting out their chin and talking about small business, I will be metaphorically quite prepared to keep whacking them on that chin.

Unlike most of them, and in the defence of the member at Parramatta, she does have a background in it. Unlike most of those opposite, I come from the sector. I come from family business and I understand the important part that it plays day in and day out not only in my electorate of Reid but in every electorate Australia-wide. I laugh at the suggestion that we are a government that will not provide certainty given the six chaotic years that those in this sector have just endured.

The second irony is that 412,000 people in this small business sector lost their jobs under the six years of the Rudd-Gillard-Rudd governments. That is quite ironic because what we are talking about today is about 400,000 people, so line ball! In other words, in the six years that we have just had, we have lost the franchising sector or its equivalent in employment in our small business sector, and that is a disgrace—and I will move on to where I believe this government, if they are serious, can make a real difference to small and family business in a minute. But I say to the member for Parramatta, the member for Canberra and the member for Oxley: thank goodness that our government is at the helm and that our minister is in charge of implementing these changes, because they will be implemented. They will be implemented in a timely fashion.

I also find it ironic that we have been here for six months. What have I heard from the member for Oxley, followed by Canberra, followed by Parramatta, is that we have had a review and now we have been here six months. I say to the member for Parramatta that one of the keys to this is changing the powers that the ACCC have in enforcing franchising agreements that adversely impact people who take the ultimate decision to start a small or family business—for many of them, their first attempt to do so.

So I could not help but be more confident in the minister and confident that these will be enforced or implemented in a timely fashion, but I want to move the conversation. We have an employment and underemployment problem in this country, no doubt. Both sides agree. Where we disagree, and where I want to yell and scream, is how we will solve that. It will not be solved by big business, by unions or by government; it will be solved by SMEs, small- and medium-sized businesses. As of 2011—these are unfortunately the most recent reliable stats I can get my hands on—they employed 70 per cent of the workforce in Australia. They have been the backbone of this country—not only the electorate of Reid but every electorate Australia-wide—throughout our country's history, and that will not change.

They deserve better, and I will tell you how this plays out in the streets of Reid and the family and small businesses. The best thing those opposite can do, if they are serious about not only franchise operated businesses but all small businesses, is to get out of the way with the carbon tax. At every stage of the supply chain, this adds expense, so the end user, the business operator, has to pass this on to customers. Guess what: consumer confidence is shot and has been for six years. I go back to the previous point about the six years of uncertainty that we have endured. Traditionally family business and small business owners would pass on price increases to counter the fact that every line of their P&L has had an increase, but they cannot, so what do they do as a result? They change the way they run their business, and they do it in two main ways. Firstly, they casualise their workforce and lay off casual staff, working more hours themselves and simply not paying themselves to do so. Secondly, they alter their trading hours. They do not open on Sundays and public holidays. Guess what we get in Reid and in every other electorate: underemployment, which mainly strikes our youth. Casual employment is the pathway to our youth being employed.

I think this motion brought by the member for Oxley is just an example of a slight snapshot. You are talking about 4½ or five per cent of the employment in this country. If those opposite are serious about being the friends of small and family business, they should move the agenda from this on to things that make a real difference in the everyday lives not only of the people of Reid but the people in the electorates of Oxley, Canberra and Parramatta and other electorates, no matter where they live in Australia.

Debate interrupted.