Kelly O'Dwyer (Higgins, Liberal Party, Minister for Small Business) Share this | Link to this | Hansard source

I move:

That the amendments be agreed to.

Michelle Rowland (Greenway, Australian Labor Party, Shadow Assistant Minister for Communications) Share this | Link to this | Hansard source

I rise to support the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 and the amendments that have come back. I note that this has arisen today, whereas the minister issued a media release on the government supporting these provisions a week ago. I am glad we have come here today, a week after the media release was issued, and we are actually dealing with this legislation.

I point out a couple of provisions that are relevant to this matter. Firstly, I note the minister's statement on 13 October included:

The Government has worked with crossbenchers and stakeholders to secure the support of this change to enable protections for small businesses throughout Australia.

The reality is that the government voted against these amendments in the Senate. I am very happy that they have accepted the amendments and they are going to be put through, but it is imperative to recognise that, on some of the key provisions relating to matters such as the threshold levels to which the protections apply, the government voted against them.

I note that the minister liked to point out, in her answer to a question last week, the comments by COSBOA, for example, heralding this bill. I will point out an alternative point of view on that matter. It is a very intelligent one put by Robert Gottliebsen on 14 September in his column. It relates to exactly this issue and is the exact opposite analysis to that provided by the minister on this point. It is instructive to note that Mr Gottliebsen said:

Today in the Senate—

that is, on 14 September—

the ALP and the Greens signalled they would target a big section of small business at the next election. They gave the signal, with the support of most of the independents, by making a significant amendment to the government’s fair contracts legislation.

The government via Senator Mathias Cormann has signalled the Coalition will not support the amendment. In effect, Cormann has turned the government's back on a million people in the small business community.

The history of the Coalition’s betrayal of small business in Australia is very sorry one.

They are not my words, but I will happily echo them; they are the words of Robert Gottliebsen. He talks about the 'promise to extend the fair contracts protections available to consumers into the arena for small businesses'. He says:

In theory, it kept the promise by introducing fair contracts legislation.

But under pressure from the public service, big corporations and franchisers ... it capped the limit to contracts involving less than $100,000. That $100,000 meant almost no small or independent contractors will be covered by the legislation. It was a total breach of promise under the guise of honouring the undertaking.

The ALP, the Greens and most independents amended legislation in the Senate today, lifting the cap to $300,000. A cap at that level will cover most IT, engineering and other independent contractors, including those in the public service. It will also cover small owner-drivers.

I end with this quote from Mr Gottliebsen:

Tony Abbott might have the China free-trade agreement to batter the ALP with but, in the end, the Government’s complete small business betrayal at the behest of its big supporters will be a very valuable weapon in the election.

I raise these matters because they are indeed relevant to some of the issues that have been raised in the financial services inquiry response that has come out today. I note, for example, the amendments that were put forward by the Greens—I give credit where it is due—to increase the threshold from $100,000 to $300,000 for contracts up to 12 months long and from $300,000 to $1 million for contracts greater than 12 months.

I will quote Peter Strong, who is the person whom the minister quoted the other day. Peter Strong, the chief executive of the Council of Small Business Australia, said the government's support for increased thresholds is 'very encouraging'. I quote from him again. He said:

It was a surprise given it was an amendment from the Greens supported by Labor ...

It is important to recognise that, while we have these provisions—which the ALP will support here, just as we supported them in the other place—the issues were pointed out when they originally came up for discussion in the Senate.

I look to the comments of Senator Kim Carr on 14 September. He rightly points out:

Labor senators have received many representations from the business community who have noted their strong concerns about these costs—

he talks about particular costs involved—

along with other substantive issues ... They include ... the $100,000 up-front price threshold for a small business contract ...

He ends by saying:

These are matters that we believe the government has an obligation to take on board.

(Time expired)

Kelly O'Dwyer (Higgins, Liberal Party, Minister for Small Business) Share this | Link to this | Hansard source

While I was listening to the contribution by the member for Greenway, it must be the longest agreement with the government going. We have stood in this place and said that we were not only prepared to legislate unfair contract provisions for small business, extending the consumer protection laws to small businesses, but were also prepared, very happily, to listen to the crossbenchers and to listen and discuss the thresholds with those in other parties. This is a government that is committed to listening but also doing, which is why we are bringing forward this legislation and passing it here today.

The member opposite is part of an opposition that had six years in government to do something for small business and actually put forward the legislation that we will be passing in this place today. Unfortunately, they did not do that, but we have. I am happy to stand here on this side of the table to commend the legislation and commend the amendments to ensure that the more than two million small businesses in this country will be able to take advantage of the provisions that we are making available to them today.

Michelle Rowland (Greenway, Australian Labor Party, Shadow Assistant Minister for Communications) Share this | Link to this | Hansard source

The minister might like to talk about these unfair contract provisions and try to assert that Labor did nothing when in government, when in fact it was Labor that introduced a national law to regulate unfair contract terms between individuals, consumers and businesses. This was introduced in 2010 under the reforms underpinning the Australian Consumer Law. While the government might like to conveniently forget that, they also might like to conveniently forget some of the words of Senator Cormann in this very debate. These are his words:

We have said that a certain category of transactions—transactions of up to $100,000 in value for contracts of 12 months or less or up to $250,000 in value for a period of more than 12 months—will come within the scope of this extended protection, which historically has been available only to consumers. We are making that available to small business, consistent with the commitments we made in the lead-up to the last election.

…   …   …

In the end, when you put in this additional regulatory mechanism, you have to draw the line somewhere. We have made judgement, based on consultation, having considered all of the outcomes of that consultation very carefully. … All I would say is that the government is very confident that we have got this right.

Then they ended up voting against these provisions. They come in here today and say that they will support the very things they voted against in the other place.

I am very happy that these provisions are going ahead. They cannot figure out what they are doing. They are still divided over myriad issues to do with big business versus small business and franchises versus employers. Bring back Bruce to give some certainty to this portfolio!

I will point out that we have a government that does not quite know what it is doing here. We know they are having an internal argument about some very key issues that are a very significant concern to the sector, including matters such as reform of competition law. We will let them have all those bun fights internally. But, since the minister rose to speak on this issue and stated they have gotten this right, it is a sorry timeline that has led to this over the last couple of months. I look, for example, at some of the comments of the independent contractors and their peak group, the ICA. It points to the hypocrisy of this government, which likes to talk big on small business but, when it comes to actually making decisions that are in the interest of small businesses, but they have to be dragged kicking and screaming by Labor, the Greens and a number of crossbenchers. I am happy for them to be dragged to this point, but we need to get some facts on the table. Have a look at the views of the independent contractors on 26 August. The ICA said:

Since 2010 ICA has campaigned hard for the unfair contract protections available to consumers to be extended to small business people. The Abbott Coalition promised to do this when in opposition and again repeated the promise on winning government.

The Bill is now in Parliament. Yet we’re opposing it! It’s been sent to a Senate Committee for review. Here’s our detailed submission to the Committee.

Our grounds for opposition?

This part is important:

There’s been a simple ‘trick’ inserted into the Bill: the protections against unfair contracts are limited to contracts under $100,000.

This theme of sneaky behaviour and trickery is one that permeates these comments by the independent contractors. On 2 September they stated:

Politics works like this. You make big election promises. Then, once in government, appear to deliver the promises. But in the detail kill off the promise. The suckers in the electorate won’t notice!

That’s the situation with the Coalition’s key promise to small business people to extend consumer unfair contract protections to them. We expressed our shock last week.

They quote a commentator who is not usually kind to our ilk of politics, Grace Collier. These are Grace Collier's words in TheWeekend Australian:

This bill was supposed to extend some basic rules about commercial contracts (for small businesses) … the government put an exemption in, which pretty much exempts everyone and makes the bill meaningless.

Where has the minister gone? Speaking of trickery, she has left the chamber.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

We lost Bruce, too.

Michelle Rowland (Greenway, Australian Labor Party, Shadow Assistant Minister for Communications) Share this | Link to this | Hansard source

We lost two of them. I hope the member for Mitchell can step up. The ICA website quotes:

A lynch pin of Tony Abbott’s 2013 election campaign was that he would introduce legislation to make standard, non-negotiated contracts fair to the small business person. But his government … is putting through legislation that protects absolutely no one.

It goes on— (Time expired)

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

It was very interesting listening to the member for Greenway, with her new-found enthusiasm for small business. I would ask the member for Greenway: where were you during the last six years of the Labor government when no less than 500,000 jobs were lost in the small business sector? Where was the member for Greenway then? And where was the member for Greenway's new-found enthusiasm for the unfair contracts legislation applying to small business?

Member for Greenway, I can well remember that that was actually a promise of the Labor Party, back in 2007. I remember what happened in the chamber here. Although I was not here I was following it very closely from home. I can remember that the now member for McMahon was rolled by one Craig Emerson. They deceived small business. They promised that they would introduce the unfair contracts legislation and extend it to small business, but when they got into office they rolled back on that promise and never did it.

This government has achieved a lot. I would rate the achievement of this unfair contracts legislation as perhaps the third most important achievement of this coalition government, behind stopping the boats and repealing the carbon tax. The genesis of this goes back to 1997—to the 'finding a balance' inquiry held under the Howard government, where it was recommended that unfair contracts legislation be brought in. For all the great things the Howard government did, unfortunately the recommendation from that committee was watered down and, instead, they extended it only to unconscionable conduct. Over those 17 long years we have seen the unconscionable conduct provision in our Trade Practices Act prove inadequate.

It is important that we give small business in this country, the entrepreneurs of this country, the job creators of this country and the innovators of this country protection if they know they are going to put their own capital on the line, as small businesses normally do. If they go into a market and are exposed to a larger company that is misusing its market power against them and is trying to extort them for unfair rebates, unfair discounts, unfair trading terms, unfair common-law penalties or changing contract terms, we will now have legislation in this country that prohibits that. To those people in small business, this is one of the greatest achievements of this coalition government, something we should be very proud of.

Often we criticise the process of this government, but, in this case, we have to give credit where credit is due. We should give credit to the Senate for raising the threshold to which these contracts apply to $300,000. Personally, I believe that there should have been no threshold limit because this is not about the value of the contract; it is about the imbalance of market power that enables those unfair terms to be put into a contract where that small business, because of the market power, does not have the ability to negotiate fully. Our contract common law has long recognised this. For over a century, we have had provisions against unfair penalties. Where a contract term implies a liquidated damages term and that liquidated damages term is greater than the genuine pre-estimate of the loss, our common law allows our courts to rule that term out and deem it unfair. That common-law provision has no threshold of $300,000.

I welcome the amendments from the Senate. I welcome what it has done. I welcome the way the parliamentary processes have worked. I thank the crossbenchers, who went forward and enabled the raising of that threshold from $100,000 to $300,000. Those crossbenchers should be congratulated on their efforts. Ultimately, it is about the imbalance of power. In our country, we have so many markets that are overly concentrated, where one or two large players have immense bargaining power. This is exactly the type of legislation that we need for our small-business community.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

The Greens secured amendments in the Senate to give the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 some teeth. It is very easy to talk big on business, but then what we find most of the time with the government is that they talk big on small business and then they vote for big business. We have seen it happen time and time again. In the same way that the Nationals come in here and talk up the country and then vote with their city counterparts, the Liberals come in here and talk up small business and then vote for big business.

The bill before the Senate was trying to sneak an election promise under the radar and turn it into a Clayton's election promise. The government was called on it by people like Senator Peter Whish-Wilson, who is a small-business owner and understands what this bill would have meant. He moved amendments in the Senate on behalf of the Greens and we managed to give this bill some teeth and put a meaningful threshold into this bill. What the government wanted to do was be seen to be delivering on an election commitment but do it in a way that would have meant not that many businesses would get the protections from these unfair contract terms. So we moved amendments to lift the threshold and we are very pleased for the Greens to have delivered a win for small business in this bill.

I hope that this House accepts the amendments and gives this bill some teeth so that the unfair contract provisions apply to a greater range of small businesses who need them. Everyone knows that, when it comes to small businesses dealing with big businesses, there is very often an imbalance—an imbalance that, in many ways, is similar to that which workers face when they try to deal with their employers. Small businesses often need some protection when dealing with those larger businesses. We have been able here to deliver some of that protection. Thanks to the Greens, we managed to give this bill the improvements that it needed so that protections will now be available to a range of small businesses across this country.

There is much more that needs to be done because, as I said, the government often talk big on small business but then vote with big business. We have seen it with this bill, which they tried to get through until we called them on it in the Senate and the Greens managed to improve the bill. We saw it when they ran away from the effects test. You talk to many small businesses around this country and they will tell you about the significant power that the supermarkets have. The government have made some noises to people to say, 'We might do something in that area,' but then, when they get the opportunity to do it, they squib on it.

I hope that these amendments are accepted. I hope the government say, 'We are prepared to work with those in the Senate,' who do a bit more than just talk rhetorically about small business but know what it would mean to have some meaningful protections for small business. I hope that this is the beginning of the government saying, 'Maybe there are a range of other protections that we can extend to small businesses as well. Maybe we need to take off the veil of always just supporting big business and actually support small business as well.' This is a set of amendments that the Greens are very proud of and I urge the House in the strongest possible terms to agree to the Senate amendments.

Michelle Rowland (Greenway, Australian Labor Party, Shadow Assistant Minister for Communications) Share this | Link to this | Hansard source

In summing up, I note the comments from the member for Melbourne. Labor will be supporting these amendments—and, as I said, I give credit where it is due. I also give credit where it is due to the member for Hughes, who is at least in the chamber for the debate, although I disagree with him on matters such as the effect on unemployment in this country—we have never seen higher levels of unemployment than we do today in Australia—and his arguments about the unfair contract terms in the Australian Consumer Law. Let's remember that these were provisions that Labor brought in. Labor brought in the definition of where contract terms become unfair. It is exactly as he was saying about a significant imbalance in parties' rights and obligations, where provisions were not reasonably necessary to protect the legitimate interests of the party who would be advantaged by that provision and where it would cause detriment, whether financial or not, to a party who applied or relied on these provisions. These were all Labor amendments that were brought in for the reason of protecting small businesses.

As I said, I will give credit to the member for Hughes. I went through his speech in this place from 17 August. I note that he talks about the threshold—firstly, the business can only have fewer than 20 persons by headcount, and the consideration that the contract has disclosed must not exceed $100,000, or $250,000 if it is more than one year in duration. He did make the point that these are debatable provisions, and he repeated some of the words he said just then. I also would concur with him on the relative ineffectiveness compared with the promise of the provisions in relation to unconscionable conduct in small business that arose out of the Bruce Baird review, which went on for some time. The provisions that were enacted then, under the Howard government, were touted as having the ability to solve many of the problems that this very bill is seeking to address now.

It is quite clear that those provisions either were not adequate or, as I have argued previously, have not had the opportunity to be litigated to a significant extent to determine whether they are effective in practice. So, I will give the member for Hughes credit where it is due. What I will not give credit for is some of the misinformation that has been coming out—and, again, the independent contractors have used words such as 'trickery'. In this quote from 11 September, in relation to this very issue, Independent Contractors Australia noted:

The Abbott government is engaging in the worst of political double-dealing against the interests of Australians—

with their refusal to budge on the issue of the thresholds and the amendments. ICA said further, on 17 September, in terms of the contract protection threshold limits being increased to $300,000:

In fact, its (Senate) amendment to move the contract protection limit to $300,000 was based on a pragmatic assessment (by the Senate) of what the government might accept. We wanted no limit, so we didn’t get what we wanted, but the Senate outcome is a big improvement.

Amazingly, the government rejected this outright.

As I said, Labor supports these provisions. It is a bit rich for the small business minister to come in here and talk—and also put out a media release a week ago—about how this government had delivered for small business. They did have to come here, after voting against these provisions in the Senate. We are pleased that these amendments are coming back here and will be supported—it looks like they will be supported unanimously—because ultimately this is about addressing not only the asymmetry of information but also the power imbalance that inherently exists between big interests and small interests. We know that a majority of Australian small businesses are sole traders. They do not have any employees. These are people who rely on their own judgements, on their own assessments, and in many cases cannot afford the complex legal advice that is so readily available to big business. So, I endorse the amendments that have come before us here, and Labor will, as I said, be voting in support.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

This is a very, very rare day, because I actually find myself in agreement with the member for Melbourne that the threshold should be increased. Who knows: the member for Melbourne and I might find a piece of artwork somewhere in Parliament House that we agree is something we both enjoy!

But to return to some of the points I raised before—that the genesis of the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 goes back to the Finding a balance inquiry back in 1997—I would like to read some of the notes of that report. It said:

Unfair conduct by big business towards small business is one such major concern. Indeed, it has been a matter of grave concern for many years. Not only has such conduct the potential to impact heavily on the economic health of the small business sector, and on the allocation of resources generally, it can also involve heavy social costs. Consequently, the Minister for Small Business, the Hon. Geoff Prosser MP, asked the House of Representatives Standing Committee on Industry, Science and Technology to investigate and report on business conduct on 26 June 1996.

almost 20 years ago—

After a detailed investigation the Committee has concluded that concerns about unfair business conduct towards small business are justified, and should be addressed urgently.

In fact, the very first recommendation of that inquiry—recommendation 1.1—back in 1997 was:

The Committee recommends that the Australian Competition and Consumer Commission be proactive in promoting compliance with the proposed new unfair conduct provisions of the Trade Practices Act 1974.

That was 18 years ago. Today, this coalition government delivers on that promise and has achieved that goal for small business—something that was 18 years in the making.

Robert Gottliebsen, the business commentator, has said of this provision:

It was probably the best employment generating measure that we have seen out of Canberra in a decade or so.

And he is correct, because it is small business that creates the new jobs in this economy. It always has and it always will. If we are going to encourage entrepreneurial activity in this country, we have to say that we are going to stand behind those small business people and not allow them to be exposed to the misuse of market power and the imposition of unfair contract terms by large companies. And that is what we are doing in this parliament today.

It has been refreshing to hear the new Labor small business shadow minister talk about her support for small business, although I am looking to see what the Labor Party proposes to do about section 46 of the Trade Practices Act. Will they further stand with the small business community? Will they work with the government and introduce provisions on anticompetitive price discrimination, to strengthen those provisions we have on predatory pricing, to give the ACCC the resources and encouragement to go after them? I would hope that the new shadow small business minister does so, but I do have a concern that this may not happen.

There was a book written a few years ago called The Latham Diaries, in which former Labor leader Mark Latham sets out why we could never expect the Labor Party to join hands with us and work on section 46. Here is a quote from The Latham Diaries:

Monday, 3 November (2003)

My submission to Shadow Ministry this morning on competition policy – to beef up the Trade Practices Act—

This is Mark Latham speaking about himself—

met with surprising resistance from Tanner—

Lindsay Tanner.

How’s this from the intellectual spearhead of the Labor left? He says we shouldn’t touch the supermarket duopoly between Coles and Woolworths because they have an agreement with the SDA, the Shoppies. This is the bloke who made his name in the 1980s by winning control of the Clerk’s Union of Victoria from the Groupers. Now he’s defending their sweetheart deal with the bosses.”

Latham goes on in his notes in his book:

… The SDA had an agreement with Coles and Woolworths to maintain unionised workplaces. Inside the ALP the Shoppies have lobbied to protect the market share of Coles and Woolworths against competition from independent grocers and retailers.

This is an extract from page 241 from The Latham Diaries. (Time expired)

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

The question is that the amendments be agreed to.

Question agreed to.