Retail and Commercial Leases (Designated Anchor Lease) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 11 November 2020.)

The SPEAKER: The member for Florey.

Mr KNOLL: Sir, I am on my feet.

The SPEAKER: I am sorry; it is not a standing order 106 issue, member for Florey. I am corrected. The member for Schubert is on his feet.

Mr KNOLL (Schubert) (11:12): Thank you very much, Mr Speaker. Continuing the remarks I started last time on this piece of legislation, at the end of the day I understand the intent of the legislation but actually think it will end up having the opposite effect to that which the member proposing the bill seeks.

As someone who, in a previous life, operated a number of specialist tenancies inside shopping centres, I understand the differential in power that exists between an anchor tenant and specialty shops. In essence, the specialty shops end up paying much higher per square metre rates for their tenancies than the anchor tenant does. That is not unfair; at the end of the day, the anchor tenant is the one who tends to drive foot traffic to a centre, and specialty shops then work off that.

The difficulty is that the shopping centre owner and their shareholders have a specified rate of return in mind that they are seeking to achieve. In fact, that is why shopping centres are built the way they are; getting a balance in the tenancy mix helps to deliver the returns the shareholders are looking for. If we see a situation where negotiations are triggered, as this bill would likely do, what I think will end up happening is that we will see prices rise for specialist tenancies to offset the loss of anchor tenancy income.

Another thing is that it actually strengthens the hand of the anchor tenant in negotiations with the shopping centre owner: 'You had better give me an even better deal than you have given me before because, if I leave, there is now an act that has passed the South Australian parliament that means you have to go and talk to your specialist retailers. You don't want to do that, so therefore I want an even better deal than the one I have now.'

That will have the effect of placing greater pressure on those specialist tenancies to make up the shortfall as part of their renegotiation of leases as and when they fall due. It is also true to say that any business that seeks to operate, operates in moving landscapes, and none more so than retail and shopping centre spaces, where tenancies come and go quite regularly and where the fortunes of shopping centres change quite regularly.

Taking my own electorate of Schubert as an example, the Barossa Co-op—of which I have to declare that I am a shareholder, and so are about 17,000 other Barossans—is a centre that sought to redevelop itself to provide a better offer for customers in the Barossa. It decided to bring a second supermarket into the centre in the form of an Aldi, which created greater competition that has actually hurt the Co-op. I can say that because I was at their AGM only a few weeks ago. What is clear is that the retail landscape up there is changing. That is just one example of a regional town. It is not just competition from within a centre that specialist tenancies need to contend with, but other shopping centres in and around.

We have seen fierce competition, for instance, in the eastern suburbs with the building of the new shopping centre in Kensington, where Woolworths is the anchor tenant. That placed pressure upon the Norwood and Burnside shopping centres. Again, it is part of broader market and competitive forces that are at play on an ongoing basis. Aldi and Costco now come into an already competitive grocery landscape and create more intense competition for the grocery spend in South Australia.

I bring this up because that is what is supposed to happen in a market-based system. To try to mess with those forces, as I think this bill seeks to do, does nothing other than create externalities and perverse incentives that make things worse, and further from how a free market should operate, rather than try to fix some ill that is perceived by the proposer, so I am glad that we are opposing this bill. Again, I think the bill comes with good intent, but I do not think that it will actually achieve the aims that it states to achieve.

At the end of the day, we as a government do not need to pick winners and losers: we need to create a competitive and low-cost environment in which all businesses, the best businesses—the ones that innovate, that grow, that thrive, that put their own capital at risk—can survive, thrive and get ahead. It is why this government has taken steps to reduce payroll tax; it is why this government has taken steps to reduce land tax, which directly affects shopping centre owners; and it is why this government has sought to provide cost of doing business relief, whether it be water, whether it be electricity, whether it be taxation or whether it be NRM levies. We have tried in every way that we can to create a lower cost environment in which businesses can operate.

Another thing that we as a government should be doing and are doing is creating a level playing field. It is not up to us in here to decide where customers should spend their dollars. It is not up to us in here to decide how competitive forces should operate, because we will end up stifling creativity and innovation and not supporting those businesses that are doing things that are new and innovative and what their customers want them to do. We will be just essentially propping up the status quo, and I do not think that is healthy. I think in the longer term that will have far more negative consequences for employment and jobs growth in this state than seeking to manipulate the market in this way.

So, with those words, I put on the government's record that I will be very happy to vote against this bill in trying to help all business to grow and thrive here in South Australia.

The Hon. G.G. BROCK (Frome) (11:19): I move:

That the debate be adjourned until 3 February 2021.

The house divided on the motion:

Ayes 21

Noes 23

Majority 2

Motion thus negatived.

The Hon. A. KOUTSANTONIS (West Torrens) (11:25): I have to say this measure seems to be a relatively sensible—

Members interjecting:

The SPEAKER: Order! Members leaving the chamber, do so in silence.

The Hon. A. KOUTSANTONIS: This private member's bill, moved by the member for Florey, seems to be a relatively sensible and simple request of the house. I do not believe it deserves the controversy it is being assigned.

The bill is about the very idea that there are a lot of satellite tenants around an anchor tenant in a shopping centre, large or small, and that after losing that large anchor tenant it would not seem to be unreasonable to perhaps consider those smaller tenants, those satellite tenants, those small businesses, those mums and dads who have taken a risk to go out to get a lease, who have taken a risk to go out to invest in a small business, perhaps starting for the first time in a small business, the forgotten Australians the Liberal Party used to talk so passionately about, those mums and dads who perhaps were unskilled, people like my parents who started a small business. After working in manual labour, they saved enough money to get a tenancy.

If you are in a large shopping centre and the anchor tenant decides to leave, often those anchor tenants can be government leases. A good example of that would be a Service SA centre. Service SA centres are like lights: they attract lots of customers because the government, through legislation, compels people to use these Service SA centres. We require them by statute to attend in person and often an ecosystem develops around these Service SA centres, whether it is a newsagency, a delicatessen or a food outlet, a Wokinabox—a successful one maybe that does not go broke through mismanagement.

Perhaps these businesses rely on these anchor tenants and, if these anchor tenants have moved because they are multinationals and they can afford to move, often the rent burden falls on those smaller satellite tenants to make up the difference. Why does the Liberal Party of South Australia think that these people have no voice and should not be heard or sympathised with? Shouldn't they at the very least have the consideration of this house? I think it sends a terrible message to those families who have risked it all to put their livelihoods on the line. They are people who probably have been longtime supporters of members opposite and, if they were here today, they would be horrified by the speeches they are hearing, by the callous way their lot in life is disregarded.

The Liberal Party no longer is about small business. The Liberal Party is about big business, multinational business, international business, not about local South Australian family business, which is the difference. Why would anyone in the modern-day Liberal Party, the heirs to Tom Playford's legacy and Robert Menzies' legacy, take the side of a multinational over a small business? I seek leave to continue my remarks.

Leave granted; debated adjourned.