Tony Pasin (Barker, Liberal Party) Share this | Link to this | Hansard source

Last evening before the adjournment debate, I was reminding those in this place that consumers have been protected from unfair contract terms since 2010. Despite, in many cases, small businesses having no more market power than consumers, the former government did not see fit to extend the protections regarding unfair contract terms to small businesses. I am grateful to the Minister for Small Business for bringing the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 to the House, which will see, under these new protections, a court able to strike out a term of a small business contract that is considered unfair. It obviously will thereby reduce the incentive to include and enforce unfair terms in contracts with small businesses.

In my former life I would often advise mum-and-dad small businesses not to enter into contracts which, whilst attractive in very many respects, included a term which was clearly unfair and which, if used in an inappropriate way, would do irreparable damage to their business and their operation. I am glad that those who continue in my former profession can sit with their clients in confidence and with the confidence to say that that provision will ultimately be read down by the courts.

I thought I would momentarily digress from the bill to say something about the Minister for Small Business. I think he is the political equivalent of the Energizer Bunny, but that might be for others to determine. He seems to go and go and go. I hope I will have his energy when I am his age—although he is only a few years older than me. It is important to highlight what he has been able to achieve in less than two years as the Minister for Small Business. It is also important to reflect that he served a significant period as the shadow minister for small business during a time when this nation suffered, if you like, a carousel of small business ministers.

In the 2015-16 budget the minister has delivered the nation's biggest Jobs and Small Business package. I do not like talking about the minister's package! Of course, I like talking about his small business package, which is worth $5.5 billion. The small businesses of Australia love that package about as much as a fat kid loves cake, quite frankly. They are absolutely into it. It contains a 1.5 per cent cut in the company tax rate for small businesses, or a five per cent tax discount. There is an immediate deduction for assets valued at up to $20,000. It has breathed fresh air into the small business sector. Over the winter break, I enjoyed visiting many small businesses in my electorate and reminding them that the instant asset write-off is something that they could have availed themselves of but, more importantly, that they can continue to avail themselves of over the next two financial years.

The minister was a member of the cabinet which did away with the carbon tax, saving households $550 a year. He is undertaking a review of Australia's competition laws. He has allocated $8 million over four years to transform the existing Office of the Australian Small Business Commissioner into the Small Business and Family Enterprise Ombudsman. He has established a small business helpline, which has received some 100,000 calls in the last seven months. With the assistance of his colleagues on this side of the House, he has streamlined access to Commonwealth procurement contracts to ensure that bills are paid on time. Under the changes to the Commonwealth Contracting Suite, we are making it far easier for small business to ply their products and services to government. This includes, under his stewardship, a simplified process for tendering for contracts below $200,000.

Franchisees have also benefited from a new franchise code of conduct. An estimated 372,500 small businesses have benefited from the administrative changes to PAYG instalment thresholds that were announced with the assistance of the Minister for Small Business. As a result of the changes, 32,500 small businesses that have no GST reporting requirements will no longer have to lodge the dreaded business activity statements. The minister has assisted in announcing an entrepreneurs infrastructure package. In addition to that, we have the small business advisory services program as well as the Food and Grocery Code of Conduct to protect small suppliers from big supermarkets. In all of this work, the minister is supported by a team of colleagues who understand small business.

Last evening, I mentioned that I come from a small business background. I ran one myself. I spent many an hour in my parents' small businesses. Holidays in our household were either spent at the shop or on the farm. I often reflect on why it is that it is so important to this side of the House that we have a focus on small business. It is not, as some would suggest, because many of us have a background in small business. It is because we understand that small business is, quite frankly, the engine room of our economy. We do not necessarily see that understanding on the other side of the political divide—although, in recent times there has been, effectively, a clamouring to own this space.

I think that, through how well the small business package has been received, there has been an understanding, if you like, from both sides this place of how important the small business sector is. As I said, this was not always the case. There was a time when those opposite did not seek to mislead the Australian people into believing that they were there to support small businesses. Indeed, in July 2000 then Labor leader Kim Beazley acknowledged that the Labor Party was not the party of small business. There was a leader of the Labor Party who was prepared to be honest about the Labor Party—a much stronger Labor Party than the one that traipses its way into this place. He said:

We have never pretended to be a small business party. The Labor Party has never pretended that.

At least in 2000, the Labor Party was prepared to be honest about its propensity or otherwise to support small businesses. What we have now is a party, which is quite correctly described as the party of union officials, pretending to come into this place and be the best friend that small businesses have ever had. We know that that is not the case, and the Australian people know that that is not the case. You need not look any further than at the fact that there was a carousel of small business ministers during the failed Rudd-Gillard-Rudd years. Craig Emerson is no longer here, of course, but he was a minister for small business. He was someone who found himself on that carousel to nowhere—or at least a carousel of no progression with respect to small businesses. He said:

Labor, as a party, was born of the trade union movement. We are proud of our bonds with the trade union movement—we say it long, we say it hard and we say it often. The Liberal Party knows its origins and so do we. We recognise our origins, and we are very proud of our bonds with the trade union movement.

See, that is the problem.

At the moment, in this nation, we are having a debate about the China-Australia Free Trade Agreement. Those on this side of the place are incredibly proud of the work of the Minister for Trade and Investment, Andrew Robb, in establishing that free trade agreement. We understand that it is good for small business. We understand that it is good for farmers—particularly, I must say, those in my electorate of Barker. But those on the other side of this place are seeking to run a campaign to undermine that agreement. They seek to instil fear in ordinary every day Australians. They seek to mislead them that the free trade agreement is not what we say it is—namely, in a new globalised world, a significant economic marker which will be unequivocally good for the small businesses and the workers of Australia. They seek to mislead them that, rather, that agreement is something to be feared.

When people consider that question, I want them to think about the origins of the two major parties in this place. Our origins are deeply embedded with the small businesses of this nation. It is trite but true to say that small business is deeply embedded in the DNA of each of us. Of course, those opposite—including the member for Bendigo, who seems to be leading the charge on this, from the backbench on behalf of the Labor Party—are the party of the union movement. The member for Bendigo thinks that this place ought to be more influenced by the union movement, notwithstanding that, overall, only 12 per cent of workers find themselves as part of a union. Here is the challenge for the Labor Party: are you for jobs or are you for your union mates? Do you want to run scare campaigns or do you want to continue to work to build and strengthen the economy of Australia, because it is good for the small businesses of Australia, which, in turn, are good for the workers of Australia? I extend that challenge across the chamber and across the political divide. I hope that they fall on the side of small businesses, workers and jobs, but I suppose we will soon see.

Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Link to 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.