Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

I thank Senator Whish-Wilson. The first point I would make is a correction to what the senator has just said: we are not excluding any small business. If you are a small business with up to 20 employees, you are eligible for this extended protection from unfair contract terms, which at present is only available to consumers.

This is ultimately a matter of balance. What we have said is that we only propose to extend this protection from unfair contract terms to transactions of up to $100,000 when they are payable under a contract of 12 months or less and $250,000 for the up-front price payable under a contract for more than 12 months. Obviously, this is a matter of balance. It does cover 80 per cent of small business transactions. In the context of the small businesses and the stakeholders that we have surveyed, the threshold is set to provide the right balance between giving small business confidence to engage in contracts while encouraging them to seek legal advice for more substantial contracts.

Obviously, when you make a decision to extend to business a protection that, historically, has only applied to consumers, you do need to draw a line somewhere in order to ensure that you do not go too far. The current figure was the product of very extensive consultation with the sector about what would be a suitable way to capture most day-to-day contracts. The thresholds take into account that lengthy consultation with industry. Our consultation included liaison with the states and territories, and they all endorsed that figure. Our bill, in its current form, gives small business protections that they have never had. Amendments that force this back to consultation could derail this process and, therefore, prevent small businesses from enjoying these benefits. I would have thought that it would be better to get this bill through, see how it operates in practice and then make a judgement on what further adjustments may or may not be appropriate after the review, which has to take place within a five-year period.

I know that Senator Whish-Wilson has flagged an amendment to essentially increase the threshold of the up-front price payable under a contract of 12 months or less from $100,000 to $300,000 and to increase the up-front price payable under a contract of more than 12 months from $250,000 to $1 million. The government will not be able to support these amendments. Indeed, if the amendments carried, we would not be able to support the amended bill in that form in the House of Representatives, which would mean a delay in this additional protection, which we are proposing to put in place for small businesses in appropriate circumstances—namely, in the context of contracts of up to $100,000 where the up-front price is payable under a contract of 12 months or less and up to $250,000 where the up-front price is payable under a contract of more than 12 months. So I would encourage the Senate to keep that in mind.

I understand the argument that Senator Whish-Wilson is putting forward. Ultimately, it is a matter of judgement; it is a matter of balance. We believe that we got the balance right, based on the extensive consultation that we have conducted. Ultimately, the safeguard is that there is a review due to take place down the track, so we will be able to reassess as to whether there ought to be an adjustment to where that line in the sand is drawn. I would very much urge the Senate today to support this bill, as proposed by the government, in order to get this additional protection for small business underway as soon as possible and for us to have a conversation about what further improvements might be made down the track at a later stage.