House of Assembly Fifty-Second Parliament, First Session (52-1) 52 1 Parliament of South Australia House of Assembly published Grievance Debate Small Business SMALL BUSINESS Mr PICCOLO House of Assembly Light Mr PICCOLO (Light) (15:15): On Thursday 29 March 2007, I rose in this place and spoke for the first time on a matter regarding small business, particularly franchises. I am almost at the four-year anniversary mark of that initial speech in this place. At the time, I spoke about how small businesses are also consumers. Like ordinary consumers, they are sometimes subject to appalling and predatory behaviour by other businesses. Again, like ordinary consumers, they suffer injustice at the hands of corporate villains whose behaviour is both unethical and reprehensible. Now that it is getting close to the fourth anniversary I would like to reflect on those four years and where we are today. I also mentioned in that speech how the Dunstan government pioneered consumer protection laws to protect ordinary consumers from shonky business practices, and how the Whitlam government pioneered trade practice legislation to promote fair competition in the marketplace. I said that I was not at all confident that current laws protected small business in their capacity as consumers. Unfortunately, four years on, I am still of that view. However, there is a light on the horizon—and I will come to that in a second—in proposed legislation by the Minister for Small Business. As a result of that speech and other discussions—at the time I was a member of the Economic and Finance Committee, and that committee held an inquiry into franchises in this state, and the member for Goyder opposite was also a member of that inquiry. Unbeknown to that committee, there was a similar inquiry in Western Australia, as a result of issues arising from franchising there. On 6 May 2008, the report was tabled in this place, and on 28 June 2008 I spoke to that inquiry report. At the time, I mentioned that the inquiry looked at three key areas of the franchise relationship, namely pre-contract, the contract period, and when the relationship breaks down, and we also looked at a whole lot of different matters. My view at the time, and continues to be now, was that people who invest in small business—in other words the mum and dad franchisees—should be treated no differently than those who invest in the sharemarket. Yet people who invest in small business, particularly in franchises, have a lot less protection than the person who invests their dollars in the sharemarket, and yet no-one has explained to me why that should be different. There was a subsequent federal inquiry, which I think was partly motivated by the two state inquiries and, from memory, that inquiry reported in December 2008. Interestingly, the federal inquiry, which was again bipartisan like the state committee, came up with similar recommendations to our own state inquiry. They talked about four key areas: good faith dealing provisions; improved dispute resolution mechanisms; imposing financial penalties for breaches of the code; and compulsory requirement for termination clauses in franchise agreements. Given that there was little action at the federal level, I must again state that I believe that franchising laws should be reformed at a national level. However, in the absence of any reform, I think it is appropriate for the state to act, and I introduced a private member's bill. That was in December 2009. I can now report that some parts of the state inquiry are about to be implemented by our state government, and I commend the Minister for Small Business for doing that. He is now consulting on a bill to introduce a commissioner for small business. In fact, that commissioner will deal with two of the issues raised by our inquiry, namely, improved dispute resolution mechanisms and, also, the good faith dealing provisions. I am confident the minister will be able to deliver on those two major reforms in this parliament with the support of the opposition which, hopefully, will be forthcoming. One matter that was dealt with by the federal government was the issue regarding the requirement for termination clauses in franchise agreements. That has been undertaken but the other three have not, and I think now the time has come for us to move on that. As I said, the small business minister has acted on parts of those recommendations and I also understand that he intends to introduce a second bill dealing specifically with franchising which will deliver on the rest of the recommendations made by that inquiry. I am also aware that the Economic and Finance Committee is undertaking a subsequent inquiry at the moment which, hopefully, will support the cause.