Slade Brockman (WA, Liberal Party) Share this | Hansard source

I will start by, just as Senator O'Neill did, acknowledging the work in this space of members on this side, particularly the long and enduring interest of Senator 'Wacka' Williams into this particular topic. That is a tradition that has been carried on by a number of others in this place. We have been joined recently by Senator Ben Small, who has a very strong background in the small business sector. We have Senator David Van sitting in the chamber at the moment, who has a keen and abiding interest in this topic as well. So former Senator Williams's concerns expressed over a great number of years in this place are being continued and acted upon by those on this side. For the small business community, there is nothing better than a strong and durable economy. We have faced an extraordinary shock to the global economy, an extraordinary shock to the Australian economy over the past 12 months but, in a piece of very good news today, I will just inform the chamber that Fitch has reaffirmed Australia's AAA credit rating. They said:

The Australian economy has weathered the pandemic well compared with peers. … This performance reflects successful virus containment and an effective fiscal and monetary response consistent with a policy framework that has underpinned the economy's resilience to shocks over the medium term.

One of the drivers of this is our small business sector and one of the key drivers of the small business sector is our franchise sector and, in particular, the many, many small business franchisees. So with respect, Senator O'Neill, I understand where you're coming from with this bill but what you are doing is misguided and it fails completely to acknowledge the commitment of this government to the small business sector, to the franchise sector, and what this government has done and what this government is doing to assist this sector. It completely fails to acknowledge those facts. I think that comes down to a very simple proposition of why that's the case—because those on the other side do not understand small business and have never understood small business. The franchising sector of our economy is predominantly made up of small businesses, so those on the other side will always struggle to understand it.

Franchising is a very significant part of the Australian economy. It's a $154 billion sector in the 2020-21 financial year. There are around 91,000 franchisees across Australia and 1,200 franchise systems, with half a million people employed within the franchise sector. And, as I have said, almost all of the franchise sector is made up of small businesses. When we think of the franchise sector, all too often it's too easy to think of just your retail fast food chains, be it a McDonald's or a Coffee Club, or perhaps a chain of hotels that operates under a franchise model. That's the obvious part of the franchising sector. But when you think about it a little more deeply, you see that the franchising sector operates right throughout the economy, whether it's in sign-making, whether it's in graphics and printing businesses, whether it's in the construction sector. It also operates in the wholesale trade sector, including the food sector. The retail trade sector is obviously the predominant sector, but we also see it significantly in the transport sector. We see it in the financial services sector, in rental, hiring and real state services. We see it in things like administrative support services such as mowing services, in trampoline parks, swim schools, pet care services, auto repair shops, auto servicing, IT, hairdressing and beauty salons. The franchising sector spreads across the entire economy, and that means we have a diverse range of small businesses, a diverse range of franchising models and a diverse range of Australians who are working and living in these businesses.

We, as a government, have to support them in a responsible manner, to acknowledge that what we do is a very valuable part of the economy and to put in place a regulatory structure that actually delivers for those small businesses right across the Australian economy. Support for small and medium sized family businesses and the franchising sector is something the Australian government does have as a very important priority, and we absolutely acknowledge the issues that came out of the Fairness in franchising report. The report identified a range of misconduct by franchisors. Egregious conduct was not widespread but it was present and did significantly and devastatingly impact on a number of franchisees. In August 2020 the Morrison government announced its commitment to introduce stronger protections and greater transparency for the franchising sector. In fact, the government has already outlined a suite of reforms to restore confidence in this sector. I must say, I think a large part of the sector demonstrated its confidence through its continuing and successful operation throughout the pandemic year. But to add to that, we want to lift franchisor standards of conduct and improve the information available to all franchisees. Draft amendments to the franchising code have been released. These include such things as improving disclosure on significant capital expenditure, supplier rebates and, most importantly, marketing funds. Draft amendments also include preventing franchisors from passing on legal costs to franchisees and retrospective variations to franchise agreements to improve end-of-franchise relationships including cooling-off periods, early exits, terminations and any restraint-of-trade arrangements. They also include strengthening the dispute resolution options and doubling penalties to deter poor conduct in this sector. The government will provide franchisees greater protection by ensuring they have the information they need before they enter a franchise agreement.

Senator O'Neill's bill does not address these much-needed protections. The government will implement a stronger framework to lift franchisor standards of conduct. We're committed to timely implementation of reform, to restore confidence in the franchising sector and to getting these reforms right. This will mean working with the sector to make sure that the implementations of the reforms are done properly. In particular, that means working with that great diversity in the franchising sector I spoke about earlier. This is not a one-size-fits-all sector. This is an extraordinarily complex sector. It has an extraordinary number of participants in it and a large number of different business models. The idea that one size will fit all in such an environment just shows how little understanding of the small-business sector those on the other side have.

The government's response will comprehensively address a much larger range of issues identified in the Fairness in franchising report than the few limited measures that appear in Senator O'Neill's private senator's bill. That would amount to a piecemeal approach, an approach which doesn't address many of the systemic problems identified in that report, and fails to take into account that great diversity and variation in franchising that we see in the Australian economy.

I know my colleagues have contributions to make as well, so I will curtail my remarks there. But let me just say that those on this side of the chamber are the strongest supporters of our franchise sector, the strongest supporters of franchisees, small-business people who are out there trying to do the best for themselves, their families and their employees. We certainly have their backs.