House of Assembly Fifty-Fourth Parliament, Second Session (54-2) 54 2 Parliament of South Australia House of Assembly published Bills Bills Retail and Commercial Leases (Designated Anchor Lease) Amendment Bill Retail and Commercial Leases (Designated Anchor Lease) Amendment Bill Introduction and First Reading Introduction and First Reading Ms BEDFORD House of Assembly Florey Ms BEDFORD (Florey) (10:31): Obtained leave and introduced a bill for an act to amend the Retail and Commercial Leases Act 1995. Read a first time. Second Reading Second Reading Ms BEDFORD House of Assembly Florey Ms BEDFORD (Florey) (10:31): I move: That this bill be now read a second time. I rise to introduce the Retail and Commercial Leases (Designated Anchor Lease) Amendment Bill 2020. In this era of COVID-19, it is clear we must do all we can to support struggling retailers as they fight to retain their businesses in the face of the economic downturn we are now experiencing. If the consequences of COVID-19 have laid bare the financial squeeze already confronted by many shop owners and retail businesses, perhaps, too, it enables us to look with fresh eyes at complex issues. That aside, this bill has its genesis in circumstances which preceded the COVID-19 lockdowns. It is common knowledge retailers in Adelaide were struggling before the advent of this pandemic and its consequences. The exit of Kaufland—one of the world's leading retail brands—before it even opened its Prospect or Keswick stores, was one obvious warning sign. The economy has been flat for some time and, as members may recall, was undergoing what some commentators termed a 'per capita recession' and, as well, a glut of retail supply. I note, for example, a number of submissions to the State Planning Commission warning against zoning models allowing for unrestricted retail development, including out-of-centre development, and I hope these submissions will be properly heeded. In August 2018, the average supermarket floorspace provision rate across Adelaide was 0.41 square metres per capita, significantly higher than the national figure of 0.35 square metres. All of this makes it even more bizarre the government continues to zealously pursue deregulation of shop trading hours, and according to SA Independent Retailers, who have access, you would argue, to the most current statistics, South Australian-owned retail businesses are bleeding, continually losing 25 per cent plus turnover on weekends since the deregulated regime has been put into effect under the cover of COVID-19, turnover that will be lost forever for SA business owners. Many of the retailers lost in excess of 55 per cent turnover on the Queen's Birthday public holiday. Some lost up to 75 per cent turnover on the day. As I said, that turnover is just never going to come back to those small businesses. The extraordinary action of the Treasurer to issue a blanket shop trading hours exemption under the cover of a response to the COVID-19 pandemic has only further illustrated this point. I note this week, the Treasurer is at it again, extending the exemption, placing smaller mum-and-dad operated supermarkets, the ones who support SA the most, at further peril. Someone has suggested to me this could be to transfer sales and labour to multinational operations because they actually pay payroll tax. That would be a cynical thought if it were true, wouldn't it? I am not the only one to question the legitimacy of the exemption so evidently not coming at the recommendation of either the Chief Public Health Officer or the State Coordinator, and not requested or desired by any of Adelaide's supermarket chains. It puts me in mind of a similar blanket exemption issued by the last Liberal government, which was rightly overruled by the High Court as an abuse of power. It is, of course, interesting to see virtually no supermarkets have taken up the opportunity for extended trading hours other than a few minor hour-long extensions. The oversupply of supermarkets in Adelaide has significant impacts on small retailers at shopping centres across the state. As anchor tenants, supermarkets are major retail attractors and help drive business, helping in turn other shop owners in centres to thrive. Adelaide's supermarket oversupply is making small retailers in shopping centres more vulnerable. The effects of oversupply include: sharply reduced profitability for existing supermarkets and specialty food retailers; aggressive promotional activities to maintain sales; reduced pedestrian traffic at centres, which can in turn impact other non-food retailers and services; and deferred investment in existing centres or planned centres. I know there will be those who argue competition increases consumer choice and reduces prices. The problem with that line of logic is, in a system with finite demand, consumer choice is not enhanced by endlessly increasing supply. All that results in is a net transfer from local small retailers to national or international chains without a real stake in South Australia. Regardless, we have to deal with the situation as it stands and it is clear there will continue to be threats for small retailer viability for some time from the oversupply situation in the supermarket sector. That is why I have brought forward this legislation today. Small retailers in shopping centres rightly need to have some surety that, in the event the major retailer attractor at the shopping centre closes, they are able to reprofile their rental costs. This does not recognise the equally important issue of maintaining a significant percentage of tenanted shops in a centre, the often experienced impact of months of renovations affecting turnover or situations amplified by COVID implications where negotiations with landlords for rent waivers or reductions by small tenants in terrible circumstances have fallen on deaf ears. Earlier this year, in pre-COVID times, I was approached by concerned shop owners at one significant shopping centre in the north-eastern suburbs. Their concern was a simple one: the supermarket at their site was looking wobbly. Reports suggested it was no longer able to restock its shelves, owing to cashflow problems with suppliers—all this on top of a very long period of renovation and vacant shops within the centre. On examination of the lease paperwork and the governing legislation, it became evident the options available to these tenants were virtually zero. This bill intends to address that limitation. This bill is intended to give shop owners who are shopping centre tenants a right to request a rent review if a designated anchor tenant is terminated or not renewed. A designated anchor tenant is defined to mean a shop lease at a shopping centre that: is for a supermarket, department store or cinema; exceeds an area prescribed by regulation (which must be greater than half the size of the retail shopping centre); and is otherwise of a kind specified by a regulation. Consistent with the process for rent reviews in other legislation, a rent review must be conducted by an independent valuer. Pending the outcome of a review, a tenant is entitled to a rent reduction of 10 per cent or such other amount as may be prescribed by regulation. A rent review comes into effect on a day specified and either lessee or lessor can further dispute the outcome of the rent review using the existing dispute resolution provisions of the act. For smaller retailers, I hope this will provide them with an option giving the surety they need in these difficult times. I look forward to debate on this very important issue and commend the bill to the house. Debate adjourned on motion of Mr Pederick.