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

It is a pleasure to be speaking about the Competition and Consumer Amendment (Industry Code Penalties) Bill 2014. This bill amends the Competition and Consumer Act 2010 to insert a number of provisions. It allows regulations to be made that prescribe a pecuniary penalty, not exceeding 300 penalty units, for the breach of a civil penalty provision of an industry code. It will also allow the Australian Competition and Consumer Commission to issue an infringement notice, in the amount of 50 penalty units if the person is a body corporate and 10 penalty units in any other case, where it has reasonable grounds to believe a person has contravened a civil penalty provision of an industry code. It would be important to note, I think, that much of the work in this area was done in a bipartisan manner, particularly through Labor in government working with the franchise industry, by looking at ways we could improve some of the behaviour and improve some of the regulations, including an agreement right across the sector that pecuniary penalties ought to be matters that are regulated appropriately.

This bill seeks to introduce changes to the code stemming from the Wein review, commissioned in 2013 by the former Labor government, into the franchising code of conduct. The recommendations from the Wein review were mostly accepted by Labor in government, under Minister Gary Gray, following extensive consultation with the franchising sector. The bill is largely consistent with the position of the former Labor government who supported the introduction of the pecuniary penalties for breaches of the franchise code of conduct.

The bill will allow for a pecuniary penalty of up to $51,000, which is equal to 300 penalty units. From what I can tell, it is very, very similar to the former Labor government supported changes to the code which would have allowed for pecuniary penalties of up to $50,000. So if that is the only change then, of course, I welcome the bill that we had introduced in those terms. The intent of the changes in the bill are substantially similar to what we had done in government.

Of course, Labor supports this bill. The specific purpose of the bill is to introduce changes to the CCA that allow for those penalties to be prescribed within the franchising code of conduct. So in order to be able to achieve that, changes needed to be made in the Competition and Consumer Amendment (Industry Code Penalties) Bill. The changes are consistent with the majority of the feedback from the Wein review and consistent with the view of the former Labor government. The bill is also largely consistent with the position of the former Labor government, who supported the introduction of pecuniary penalties for breaches of the franchise code of conduct. Labor did commission the Wein report and was in the process of bringing forward the majority of those recommendations.

There are around 73,000 franchisees and 1,180 franchisors in Australia, contributing more than $130 billion annually to the national economy. It represents one of the most significant and exciting segments of the diverse small business community. The code is a mandatory industry code under the Competition and Consumer Act, which regulates the conduct of franchisors and franchisees alike. It was introduced in part in recognition of the imbalance in bargaining power between franchisors and franchisees. Broadly it seeks to achieve this by requiring franchisors to disclose specific information to franchisees and to follow set procedures in their dealings with their franchisees. The code provides minimum standards of disclosure and conduct to assist both franchisors and franchisees in undertaking the due diligence process. The ACCC enforces compliance with the code, which is very important.

Franchising, as many members of parliament would be aware, has been the subject many state based reviews, a major federal government review and countless reports on its future and better regulation. In recent years there has been broad agreement from all sides of politics and the sector itself on the way forward to ensure a bright and healthy future for both franchisees and franchisors. In the end what we want is a good, effective, efficient market that allows for the continual and continuous growth of this very important small business sector.

Most notably, following the PJC report and recommendations that were made, some changes were made that were further enhanced in 2010 with a full review of changes done by the eminent Mr Alan Wein in his now bipartisan and almost fully accepted review in 2013. I want to congratulate him and thank him for the work he has done in that respect.

The changes proposed involved all major stakeholders and representative organisations, plus more than 160 responses from the community on the way forward to remove unnecessary regulation and red tape duplication in the states and to provide a consistent approach across the country. This was really important work in terms of removing those inequities that exist across state and territory boundaries and further bring into line and harmonise regulation to assist small business. Labor in government did much of that work and in opposition will continue to support any work that better supports small business.

It also provides a balance in the relationship between franchisees and franchisors, particularly building on an effective disclosure regime by ensuring that disclosure remains relevant, timely, effective and reflects modern changes in our economy, such as the growth of online shopping. It also has very important changes which clarify that the government expects franchisors and franchisees to act in good faith towards one another by making it a requirement under the code. I know over a period of time this was controversial and debated, but I think there is enough evidence, enough clarity and now through this amendment bill to see that it is the right way to go. The changes are also about enhancing compliance and enforcement of the code by providing additional tools to the Commonwealth regulator and the Australian Competition and Consumer Commission. The changes also provide for the clarifying of policy intent of provisions of the code which have caused unintentional confusion or any administrative burden without any corresponding benefit. I welcome all of those changes.

If it were not for the intervention of the September 2013 election, the recommendations from the review would now be largely in place. One has to wonder why it has taken the government almost a year to get this far. And while I do congratulate them—and I note that the minister is here and that the minister and I have worked, I would like to think, in a good spirit of bipartisanship, to the betterment of franchising. The former minister is also here.

Mr Dutton interjecting—

In his other hat, yes. We have all worked with one singular view in mind: to provide a better, more effective environment for small business and for franchisors and franchisees. Of course, every single one of Australia's franchisees are themselves a small business and, while it is probably not the place right down to go on a whole lengthy explanation as to the diversity of small business, needless to say it is a very diverse area of business in Australia and one that needs continual review and continual work to improve all the circumstances that small business people find themselves in.

Labor's record in government on small business is one I am very proud of. We were a doing a government—we were a government that took note of some of the challenges small business had, that the economy was going through, and made sure that in practical ways we do all the things that perhaps some others just talk about but we actually did. Labor did many things, include introducing our first Australian Small Business Commissioner. I am very proud of that. A very good position it is and it is good to see that that position is being continued on in this parliamentary term. For the first time in our nation's history what this Small Business Commissioner does is give business a direct voice to government, representing their interests and concerns directly. It is very, very important. Also having a cabinet minister with responsibilities for small business I think is important. You need that voice from a small-business community perspective directly to government, but you also need that voice at the top table.

Labor introduced the national business-names registration system, a saving-time, saving-money and reducing-red-tape initiative reducing all of those burdens on small business. Under the old state based regime, businesses were required to register their business in multiple jurisdictions. If they wanted to register in all states and territories it meant eight lots of paperwork to fill out, at a total cost of about $1,000. But under Labor's changes, it was one form to fill out any time, seven days a week, for a cost around the time—or now—of $33 for one year and $76 for three years. That is a real cost saving, real red-tape reduction and real saving of time for small-business people who quite commonly, these days, will register across more than one jurisdiction.

Labor introduced a streamlining of business-reporting requirements through the use of the online Standard Business Reporting initiative, something that really does go a long way, in practical terms, in reducing the workload burden for small-business people, who should be focusing more on growing their businesses than just on filling out paperwork. Labor also introduced the 'Prompt payment protocol' discussion paper prior to the election that encouraged small businesses to adopt the protocol to improve business-to-business payments, unlocking much needed cash flow and strengthening business relationships. If there is any one area in this, whether it is a franchisee or a small business—of any shape or size—one of the top-order issues that always comes out is that it is a cash-flow matter, in terms of their survivability during tough times. We are very proud of all those things we did.

Labor also introduced an R&D tax offset for small-business, providing a generous 45 per cent tax offset for research and development. This was a very important piece of public policy. I would go so far as to say that for some businesses it is the only way they can financially survive, from year to year, because of the type of innovative work they might be doing. We also increased the small-business instant-asset write-off threshold from $1,000 under the Liberal government to $6½ thousand under a Labor government as well as an accelerated initial reduction for motor vehicles costing $6½ thousand dollars or more.

There was another very important measure for many of Australia's small businesses and franchisees—and franchisors—because it absolutely was a practical piece of assistance. It helped them carry out their business and level out the peaks and troughs that you might find in any small-business enterprise, whether a franchise or not. It went a long way to improving their cash-flow position and helped them better invest in their own business future. This was worth more than $1 billion to small business. That is a substantial amount of money and one that was very well taken up, because small business understood how they could better use this good public policy and government assistance to reinvest in their own enterprises.

In the 2012-13 budget, Labor announced it would provide tax relief for companies by allowing them—for the first time—to carry back tax losses of up to $1 million so they could receive a refund against tax previously paid. It was an unprecedented move and an important one. It really recognised that if you want help small business, franchises and the economy a business could, coming up to the end of a tax year, organise itself in order to claim back some tax it had paid in the past, depending on its circumstances. We extended that ability to carry back tax losses for two years. Treasury modelling identified that 90 per cent of companies that expected to benefit from this proposed tax measure were small businesses. That is the important point. If we talk about small business, talk is fine—I appreciate the talk and I always talk positively and encourage—but, in the end, you also have to deliver practical things.

These three tax benefits for small business, when combined, were worth in excess of $4 billion. That is four real billion dollars that the former Labor government put on the table for small business. Incredibly, the new government now wants to cut all three of these important tax measures. Whichever way you look at it, that is a cut, a new tax and a disincentive. This will hurt small business and it will hurt franchisees right across the country. In my view and in Labor's view, it is important to maintain an environment where small business can growth and be supported by a progressive tax regime that recognises the challenges faced by small business, every single day, particularly their cash-flow challenge. The measures we put in place were directly and squarely aimed at addressing some of those matters for small business.

On an issue which seems to be very close to this parliament's heart—and it certainly was when we were in government, because we did practical things about it—is red tape and regulation reduction. There were many things we did, and I want to place on the record some facts about red tape and regulation. The previous Labor government's record on removing regulation is a matter for the public record, but it has been the subject of some scurrilous accusations by others, particularly these so-called 22,000 new regulations introduced since 2007. The 22,000 number was the one most quoted during the federal election last year.

Of this 22,000, 3,400 were simply airworthiness directives, which have no impact on small business but were designed to maintain and enhance public safety. Countless others relate to non-business functions of government, such as family law, military justice and homelessness. I have always found it pretty incredulous that the Liberal Party would continually trot out this figure of 22,000 so-called new regulations to scare small business and franchisees with this notion that they have to, in some way, deal with 22,000 new pieces of something. I have often asked them at small-business meetings and forums, in question time, when we had a bit of an open discussion: 'How many of the so-called 22,000 new regulations are you aware of and can you name them for me?' I have asked this of my Liberal opponents from time to time but they struggle to find one let alone two. I also asked: 'If you can find one, how does it directly impact you?' We are talking federally. It is a well-known scare tactic and, unfortunately, it is one that damages small business and franchisees. I wanted to squarely put on the table the fact that this misguided misinformation is just about scaremongering and has no place in the small-business environment.

Of those 22,000 so-called new regulations, over 4,200 were tariff-concession orders issued at the request of business. They were actually about reducing costs and burdens. When it comes to repealing redundant regulation, our record in government is a strong one. In 2013 alone, Labor repealed over 7,500 regulations. Labor also cut the red-tape burden for restaurant and cafe owners by removing the need for separate menus on weekends and public holidays by amending the Competition and Consumer Act. We also introduced the aforementioned National Business Names Registration Service and the Small Business Superannuation Clearing House for businesses with fewer than 20 employees. What that did was enable small businesses to pay all of their employees' super contributions to a single location in a single electronic transaction rather than to different individual super funds. Again, this was welcomed by the small business community as another very important piece of assistance.

As shadow minister, I have a strong focus on identifying and, where possible, removing impediments to the normal operations of a small business. Rather than scaring the economy, scaring small business and scaring franchisees, governments ought to do practical things, which may not always be trumpeted from the ivory towers of this place but which make an enormous, direct difference to small business.

Of concern to me—and there are a number of concerns that I have and that Labor shares—and to many small business people are the significant cuts to a range of programs that assist the economy and the sector. These include the complete abolition of Commercialisation Australia. For the life of me, I could not find a reason why you would take away funding for one of the most important and fundamental services that any federal government could provide—that is, help in taking things from an innovation phase to a commercialisation phase. Anyone who has done any work or even read an article on innovation and commercialisation understands the difficulty that small business faces in a whole range of areas. To cut out Commercialisation Australia is just retrograde. It is, actually, negative for our economy.

The new Liberal government has also abolished the Innovation Investment Fund. Again, why would you abolish innovation? You cannot send us back to the fifties by doing these things. People still want to innovate but they do need some small assistance. The Innovation Investment Fund was the way to do that. Also, the new Liberal government has abolished the Enterprise Solutions Program. They have also abolished the Industry Innovation Councils, the Enterprise Connect program, and the industry innovation precincts. Again, I think this story speaks for itself.

The government has removed industry innovation precincts, Enterprise Connect and all of those small business assistance measures that directly helped people to help themselves. These programs were not about just throwing money onto the table and watching it disappear; they were about helping Australian businesses, inventors, innovators and entrepreneurs to lift up and create jobs. In the end, what innovation does for all of us is create jobs.

I think now we are just starting to see the slow-burn impact of the abolition of all of these things. Unemployment is now on an upwards trajectory. More and more Australians are finding it harder to get a job. Unemployment is rising, and we will find that the abolition of these very important government programs will have a negative impact on our economy, a negative impact on small business and a negative impact on franchising. It is detrimental to our collective economic health, including the collective health of the small business economy.

The Prime Minister, Tony Abbott, said before the election he would be a champion of small business. But what he actually did in his first budget was cut nearly $3 billion in support for small business and skills programs. This will have a massive impact on the small business sector. It will have a massive impact on franchising, which employs, right across the whole small business sector, more than five million Australians and contributes around 47 per cent of private sector employment. This is very important and significant. It has often been bandied around this place that small business is the backbone of the economy. Well, I just say that, if it is, then do something practical about maintaining the good health of that backbone of the economy.

Remember that these budget cuts come on top of the $4 billion in tax benefits for small business that they also want to scrap in this budget. It is, obviously, taking a very long time to do that because it does not have a lot of support. Every small business owner will also feel the impact—a negative impact—of the reintroduction of the $2.2 billion fuel excise tax increase. It is a new tax, a big tax and a tax on small business. For a Liberal Party that said there would be no new taxes, there appears to be many. I will not go through all of them, but this one, in particular, is a direct new tax. The budget also cuts the Tools For Your Trade program, worth nearly $1 billion in support for apprentices, and another $1 billion worth of skills and training programs. This is just bad news; it is bad news for our apprentices and bad news for small businesses that employ them, as well. Anyone who reads surveys and looks at what small businesses say they need, knows that they certainly need better equipped premises and more investment in skills and training. This is the big area for small businesses. They say that cash flow is very important, but skills and training is equally important.

Another real concern is the significant funding cut to the regulator—the Australian Securities and Investments Commission. Its funding has been cut by more than $120 million over five years. Those cuts are significant on their own, but they come at a time when the small business community needs a well funded, well resourced regulator that can support and protect them from predatory behaviour, protect them from big business, and protect consumers, as well.

There is no doubt the success of the small business sector is dependent, to some extent, on governments getting their policy framework settings right. Achieving the right balance between regulation and free enterprise, setting an effective taxation regime that will encourage growth and making sure that policy settings enable small businesses to become bigger businesses, are the real challenges for this government—not misrepresenting whether it is red tape reduction or so-called new regulations, or misrepresenting the number of small businesses in the economy. I can say that I am very proud that, during the six years of Labor in government, these measures of success certainly increased on all fronts. So they are the realities.

More than 1.337 million small businesses have an annual turnover of less than $200,000 a year. Anyone who understands what that means would know that it would be very difficult for a small business with a turnover of that number to be employing one or more people, or to be, perhaps, a large enough business to sustain a whole family. This is just turnover of $200,000.

Many of these entities would be nonemploying businesses that have an effective marginal tax rate the same as any PAYG taxpayer. Needless to say, these small businesses will not benefit from a lower company tax rate which the government has put forward. The vast majority of these small businesses would also be home based microbusinesses. Many hundreds of thousands, in fact, turnover less than $50,000 a year. For them, time is needed and is one of their most precious resources. Issues important to them include lower regulatory and compliance burdens, access to finance so they can grow and a favourable taxation framework as well—all things that Labor had already placed into operation and some of the things which we had already done which now have been abolished under this new Liberal government.

I believe that small business, which employs more than 5 million Australians, are well placed to increase their productivity and employment with the right policy settings. That ought to be the focus. This bill certainly goes to some measure of that: high productivity and better regulation—and I am not going to say that it is more regulation in this area. I am tempted—I am almost tempted—to accuse the government of just regulating more, because every time we come here in effect that is what we are doing. But I will just take one step forward and say, 'How about it is just better regulation.' Yes, it was Labor that basically wrote this but I am really proud of it and proud to say that Labor is pleased to support this bill.

Debate adjourned.