Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

Labour supports the Competition and Consumer Amendment (Industry Code Penalties) Bill 2014. This bill amends the Competition and Consumer Act 2010 to implement a number of changes that have been proposed as a result of a review commissioned by Labor in government. This review was known as the Wein review into the franchising code of conduct. The recommendations from the Wein review were mostly accepted by Labor in government under Minister Gary Gray and Parliamentary Secretary Bernie Ripoll following extensive consultation with the franchising sector.

It is important to note 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 in the sector, as well as improve some of the regulations, including an agreement, right across the sector, that pecuniary penalties ought to be matters that are regulated appropriately.

The specific purpose of this bill is to introduce changes to the Competition and Consumer Act that allow for the provision of pecuniary penalties to be prescribed in the Franchising Code of Conduct. The changes proposed are consistent with the majority of feedback from the Wein review and are consistent with the view of the former Labor government.

Labor has an excellent record of reform in this area and did the heavy lifting whilst in government. Labor commissioned the Wein review and was in the process of drafting legislation that would have taken forward a majority of the recommendations.

The contribution that franchised businesses make to the Australian economy is significant. There are 73,000 franchisees in Australia and 1,180 franchisors. Their contribution to the national economy amounts to more than $130 billion annually and represents one of the most important and exciting segments of the diverse small business community.

The code is a mandatory industry code under the Competition and Consumer Act that regulates the conduct of franchisors and franchisees. 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 franchisees. The code provides minimum standards of disclosure and conduct to assist both franchisors and franchisees in undertaking the due diligence process. The Australian Competition and Consumer Commission—the ACCC—energy enforces compliance with the code.

Franchising has been subject to 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 of both franchisees and franchisors. Most notably, following the 2008 report of the Parliamentary Joint Committee on Corporations and Financial Services into the Franchising Code of Conduct, recommendations and some changes were made that were further enhanced in 2010. Subsequently, a full review was undertaken by the eminent Mr Alan Wein and handed down in 2013. This review has been received across both sides of the parliament and his recommendations have been almost fully accepted.

The changes proposed involved all major stakeholders and representative organisations plus more than 160 responses from the community, and provided the way forward to remove unnecessary regulation and red tape duplication with the states, and to provide a consistent approach across the country. It also provides a balance in the relationship between franchisees and franchisors. The key changes include building on an effective disclosure regime by ensuring that disclosure remains relevant, timely and effective, and reflects modern changes in our economy such as the growth of online shopping; by clarifying that the government expects franchisors and franchisees to act in good faith toward one another by making it a requirement under the code; by enhancing compliance and enforcement of the code by providing additional tools to the Commonwealth regulator, the Australian Competition and Consumer Commission; and by clarifying the policy intent of provisions of the code which have caused unintentional confusion or an administrative burden without any corresponding benefit.

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 ACCC 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.

The intent of the changes in the bill is substantially similar to what we did in government. If it were not for 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. However, whilst we believe this legislation could have been enacted sooner, we do recognise the bipartisan way in which the government has continued the reforms Labor designed in government. Labor's record in government on small business is one we can be proud of. We were a doing government; we were a government that took note of some of the challenges small business had and that the economy was going through, and we made sure that in practical ways we did all the things that some just talk about. We actually did them.

In spite of the cooperation the government has shown on this legislation, I note that this week the Prime Minister and his Minister for Small Business have again demonstrated how little regard they have for Australia's two million small businesses. By pushing through the repeal of the minerals resources rent tax this week in what can only be described as a dirty backroom deal, the government has removed Labor's small business tax concessions, the tax-loss carry back and the instant asset write-off provisions plus the special depreciation rules for motor vehicles. This will be a significant cost to small businesses across Australia, with the government cutting more than $5 billion of direct tax assistance. Small businesses employ more than five million Australians and 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. Labor initiated and completed many reforms in government to assist small business. In opposition, we will continue to support any work that better supports small business. Labor is pleased to support this bill.

Simon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

I thank Senator McLucas for her contribution—or at least the first half of her contribution—to this debate and I thank the opposition for their support of the Competition and Consumer Amendment (Industry Code Penalties) Bill. This government believes a strong economy is essential to the small business sector, as it is to all businesses in Australia, and our reforms, including the repeal of the mining tax, are all about ensuring we have the strongest possible economy to create the competitive conditions that will allow small business and other sectors to survive and thrive. We have gone through the proper processes in bringing this legislation to the chamber. I acknowledge the work of the Wein review that occurred under the previous government.

Contrary to the assertions made by Senator McLucas, the heavy lifting of proper consultation and proper process still had to be done to bring this legislation to the parliament. That is why it has taken 12 months. We have acted as fast as possible to bring this forward because we are committed to making sure that the franchising sector in Australia, as with all small businesses, is as successful as possible. We acknowledge the employment of more than 400,000 Australians in this sector and the annual turnover of $131 million, and we are committed to the introduction of a new franchising code of conduct later this year. As has been discussed, this legislation will provide and strengthen the penalties and provisions the ACCC has to provide for strong deterrent against breaches of such a code. They will add flexibility to the ACCC's toolkit and ensure that when the code comes into being we can have confidence that it will work. Both the bill and the new code are expected to commence on 1 January 2015. These are important reforms that will give confidence to an important sector of our economy. I commend the bill to the house.

Question agreed to.

Bill read a second time.